As the IRS has increased pressure on family limited partnerships and LLCs in recent years, that focus has widened to boost estate and gift tax audits. What practitioners must understand is that those audits are where any legal case is fully developed, according to John W. Porter, an experienced tax litigator. Porter writes in a recent issue of the Journal of Practical Estate Planning that it has become necessary to consult with a trial lawyer early in the estate-planning process to ensure that the non-tax reasons for creating an entity are properly documented in a way that will withstand examination in court. The early documentation steps will be critical, as is any information provided to IRS field agents during the audit examination, Porter notes.
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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.
Read this article from CCH’s Journal of Taxation of Financial Products.