Fantastic tax planning strategies

Technical topics regarding tax preparation.
#1
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Just to consolidate some posts here...

Can everyone list their favorite tax planning strategies that clients love until the IRS looks at them?
We're all free to play the "audit lottery" right?
I mean, that's a perfectly acceptable risk to assume when "planning" with "sophisticated taxpayers", right?
~Captcook
 

#2
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Good rant.

Each of us draws our own lines we won't cross. For example, I won't set up a foreign asset protection trust.

If you are uncomfortable engaging in sophisticated planning, then don't. But blowing them off without understanding is ignorant. I'm showing you techniques which are valid and useful in certain contexts. For example, there is no reason whatsoever that asset sale stockholder agreements are not part of your practice.

Playing the audit game happens in the real world every day. It's getting worse because the IRS is underfunded. I'd like to see far better enforcement because I'm tired of seeing fraud and pathetically incorrect tax positions which ultimately succeed.

I consider your snarky criticism of my attitude to be hypocritical. For example, I presume you don't tell your S clients to take all the income as salary because they obviously earned all of it via personal services. The idea of a lower salary is there. It works in practice. What are you gonna do when the issue is before you? Like I said, it's a matter of degree and each of us draws our lines in different places.

I tell my clients I can't beat fraud. I assume they want to achieve similar results without committing fraud. So I do all my planning assuming the IRS is fully aware of the facts -- which in my view means I am not playing the audit lottery. On the other hand, it is a factor in the client's decision-making process.

I consider taxation as theft, a necessary evil. I have no moral considerations in tax planning unless a third party is involved. So I pay extra attention to ethics as my only limitation.

Many transactions can happen in alternative ways which generate different results. That's tax planning. If the transaction meets all the black letter law, then the only issues are judicial doctrines designed to protect the spirit of the law. As a lawyer, that's the gray area in which I dwell.

I've often heard it said that filing a tax return is like filing a pleading. If you want to see ludicrous stories, read some pleadings. Almost all are filed in (supposedly) good faith.

Again, inform the client and let the client decide. You're not the IRS. Please don't act like it.
Steve
 

#3
novacpa  
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https://www.justice.gov/tax/program-shu ... -and-scams

Here is a list of tax scams & people behind them shut down by the Tax Division of the Department of Justice.
Google search "tax prosecutions doj" to read case by case tax prosecutions, that is chilling.
When I have a client suggesting that I assist him/her with a scam deal, I have them read this first,
I ask them to read for several hours then we'll discuss.
Usually that does the trick.
 

#4
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Of course tax scams suck. But they can be the source of ideas that we can ethically use. Buying into a syndicated deal is always shaky. I've often found that similar results can be achieved in other, more standard, ways.

It seems you are equating my posts to scams. That's BS. Read them closely and criticize the merits, not the messenger. If your practice is such that none of this appeals to you, then ignore it and be pleasantly pleased with yourself. It's probably the better path anyway. My posts take work to understand which is not likely to benefit your bottom line in the long run. But if you're trying to keep or generate clients who are anxious to reduce their taxes legally, then you should pay attention.

BTW, I tell people that the difference between a preparer and a planner is that the former was trained to record historic events and the latter was trained to create future facts. It's a completely different mindset, which is being amply displayed in these posts.
Steve
 

#5
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Theft is not a necessary evil. Not ever.
 

#6
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For example, I presume you don't tell your S clients to take all the income as salary because they obviously earned all of it via personal services.


Oh, what a flawed understanding of things. Here’s my presumption: If Captain has a 1-man S-corp client, wherein that 1-man does all the work, he would legitimately tell the client to not take all profits as salary because it wasn’t the 1-man’s personal efforts that generated all the profit. There were some valuable corporate intangibles at play, likely not even on the Balance Sheet, and getting a return on those, via a dividend, is perfectly acceptable. That’s what Captain would tell would tell his client. That’s advice backed up by reality.
 

#7
JR1  
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Exactly my J bro. I'm shocked that Steve, who IS an actual attorney and not just playing one on TV.....has no respect for case law when it comes to reasonable comp!!! The bottom line is the cost to replace yourself as a worker bee. My profits, as Jeff says, don't come merely from my services. Geez, I'm not worth that much per hour when you look at the hours worked!! I've been in practice for 30 years, so goodwill and client reluctance to change amount to a lot over that time. I could hire someone PT to do what I do for 50-60k. I pay myself more than that, by the way....
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#8
Frankly  
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gatortaxguy wrote:I consider taxation as theft, a necessary evil.

If taxation is "theft", then so is driving your car down the interstate highway, or enjoying a picnic at the local park.
 

#9
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This is my first experience with chatting. I quickly got addicted and went overboard. The negative reactions have caused me to apologize and stop chatting. I'll be happy to respond to a private message.
Steve
 

#10
deniz  
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US Taxpayer expatriating to random foreign jurisdiction to shelter crypto gains - Scam of the day.
 


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