Abusive Tax Shelter

Abusive tax shelter

A limited partnership that the IRS judges to be claiming tax deductions illegally.

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abusive tax shelter

A tax shelter in which an improper interpretation of the law is used to produce tax benefits that are disproportionate to economic reality.

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Abusive Tax Shelter

An investment vehicle or other structure with no purpose other than to reduces one's tax liability. Often, an abusive tax shelter takes the form of a partnership or trust. Taxpayers caught using abusive tax shelters to avoid or evade taxation must pay the applicable taxes plus interest. To bypass accusation of arbitrary enforcement, the IRS publishes a list of investment vehicles that are considered abusive tax shelters, though one may face penalties for using a scheme that even resembles something on the list.