The Ninth Circuit affirmed the Tax Court's application of the Elliotts test and its determination that a portion of H's
salary should be disallowed as unreasonable compensation.
W is not covered under H's
health plan and has no other health coverage.
The limitations period on the assessment of H's
gift tax liability remains open based on fraud, despite the passage of more than three years from filing of his gift tax return.
The IRS apparently inadvertently missed the lack of signatures on H's
2518, citing H's
lists of property and his intent to disclaim W's property.
The problem with H's
position is that nothing in the plain language of Sec.
The Tax Court did not address H's
waiver argument except to state that there is no statutory language requiring the IRS to waive the signature requirement.
After a year of negotiations, H and P signed an agreement under which H agreed to pay DPH in return for the firm turning over 180 clients to H's
new corporation (HA).
In September 1991, the IRS appraised the T Steel stock and determined that it was worth approximately seven times as much as stated on T's and H's
1987 gift tax returns.
Based on the traditional seven-factor test, the Tax Court found H's
reasonable compensation to be roughly midway between his actual compensation and the Service's determination.
In 1994, W and her new husband filed amended returns to claim refunds, contending that they had erroneously included the installment payments received, from the 1986 sales in the years subsequent to H's
death in gross income.
Example 2: H's
will provided that income from a testamentary trust for which no marital deduction was claimed was to be distributed to his surviving spouse, W, during her life.