paul@tikal.UUCP (Paul D. Samson) (07/23/86)
I recently read where Louis Rukeyser (of "Wall Street Week") is petitioning the Tax Court to challenge a IRS claim the he owes $500,000 in back taxes. It seems he was involved in limited partnership tax shelters where master sound recordings were purchased. I too have gotten involved with such an "investment" and thought I might share this experience. First, let me explain how the partnership works. A partnership is formed for the purposes of purchasing master sound recordings which are to be used for the production of consumer records. The masters are purchased using highly leverage creative financing -- sometimes using 'non-recourse' notes, or financing with foreign banks. Since they are used for the production of goods, they can be depreciated and investment tax credits (ITC) can be applied for current and past taxes due. Appears on the surface to be all perfectly legal and in accordance with IRS rules and regulations. However, the kicker is that the IRS claims that the masters are grossly overvalued. The result is the the ITC and depreciation is not allowed and all back taxes plus interest plus penalties plus ... plus ... are now due. And that's where the situation stands today. Notices of Deficiency have been sent, petitions to Tax Court filed, and *expensive* (aren't they all) attorneys retained. Representative cases have been tried in court and briefs are being prepared and filed. The next step is Tax Court determination which should occur sometime during the first half of next year. The chances for a favorable determination appear to be between slim and none (and Slim left town, hoo, hoo, hoo). This means that an assessment of approximately 2x annual gross salary is very likely to come down next year. Worse yet, "I ain't got the bread" nor a rich girl friend [or a poor one either]. Has anyone out there in net land gone through such an agonizing experience or any advice? I'm concerned as to what will happen on assessment day (A-day). We'll probably appeal to the 9th circuit court, but I understand that the assessment has to be paid first. But what if you can't? Should I consider taking a vow of poverty -- becoming a wondering guru and look for wealthy followers? Paul Samson -- "Drinkin' 'n Smokin' Heavily" e-mail: {backbone}!uw-beaver!tikal!paul
ark@alice.UucP (Andrew Koenig) (07/24/86)
> Has anyone out there in net land gone through such an agonizing > experience or any advice? I'm concerned as to what will happen on > assessment day (A-day). We'll probably appeal to the 9th circuit > court, but I understand that the assessment has to be paid first. But > what if you can't? Should I consider taking a vow of poverty -- becoming > a wondering guru and look for wealthy followers? I suppose you should have thought about it beforehand. My understanding is that not even declaring bankruptcy can wipe out a tax debt.
hrs@homxb.UUCP (H.SILBIGER) (07/30/86)
While I sympathise with the possibility that a large penalty may be assessed, these kind of tax avoidance schemes are a way of cheating the government out of taxes that then have to be paid by legitimate taxpayers. You did not pay your money and tou took a chance.