Thursday, January 26, 2006
Interesting article in the Wall Street Journal, IRS Steps Up Scrutiny Of Family Partnerships Agency Uses Tougher Tactics To Gauge Legitimacy Of Popular Tax Strategy, by Tom Herman & Rachel Emma Silverman:
As part of its deepening probe into family limited partnerships, the IRS is questioning more of these transactions and taking a harder line during audits, seeking evidence of whether they really were set up for legitimate business purposes -- or merely as an elaborate tax dodge, officials say. In an increasing number of cases, auditors are interviewing taxpayers' adult children and others involved in a partnership for details on how it was set up and run. Officials are sometimes even scrutinizing partners' medical records, or interviewing doctors, to determine if a partnership was improperly created mainly to save taxes by someone on the verge of dying.