| Lawyer 4 Audits .com |
| "Tipping the scales of justice in your favor." |
| The Law Firm defending & protecting businesses & financial professionals from IRS audits, Insurance co's & Brokerage firms. |
| Email : LAWallach@aol.com |
| Telephone: 516-938-5007 |
| Copyright (C) 2009 Lawyer4Audits.com All rights reserved. |
| Lawyer 4 Audits .com The Law Offices of Ira Kaplan |
 |
| |
 |
| |
 |
| |
 |
|
| |
|
| |
|
| |
|
TAX MATTERS
Journal of Accountancy January 2008
TAX BRIEFS
ABUSIVE INSURANCE PLANS GET RED FLAG
The IRS in Notice 2007-83 identified as listed transactions certain trust
arrangements involving cash-value life insurance policies. Revenue
Ruling 2007-65, issued simultaneously, addressed situations where the
tax deduction has been disallowed, in part or in whole, for premiums paid
on such cash-value life insurance policies. Also simultaneously issued
was Notice 2007-84, which disallows tax deductions and imposes severe
penalties for welfare benefit plans that primarily and impermissibly benefit
shareholders and highly compensated employees.
Taxpayers participating in these listed transactions must disclose such
participation to the Service by January 15. Failure to disclose can result
in severe penalties--- up to $100,000 for individuals and $200,000 for
corporations.
Ruling 2007-65 aims at situations where cash-value life insurance is
purchased on owner/employees and other key employees, while only
term insurance is offered to the rank and file. These are sold as 419(e),
419(f) (6), and 419 plans. Other arrangements described by the ruling
may also be listed transactions. A business in such an arrangement
cannot deduct premiums paid for cash-value life insurance.
A CPA who is approached by a client about one of these arrangements
must exercise the utmost degree of caution, and not only on behalf of the
client. The severe penalties noted above can also be applied to the
preparers of returns that fail to properly disclose listed transactions.
Prepared by Lance Wallach, CLU, ChFC, CIMC, of Plainview, N.Y.,
516-938-5007, a writer and speaker on voluntary employee’s beneficiary
associations and other employee benefits.
Journal of Accountancy January 2008
TAX BRIEFS
ABUSIVE INSURANCE PLANS GET RED FLAG
The IRS in Notice 2007-83 identified as listed transactions certain trust
arrangements involving cash-value life insurance policies. Revenue
Ruling 2007-65, issued simultaneously, addressed situations where the
tax deduction has been disallowed, in part or in whole, for premiums paid
on such cash-value life insurance policies. Also simultaneously issued
was Notice 2007-84, which disallows tax deductions and imposes severe
penalties for welfare benefit plans that primarily and impermissibly benefit
shareholders and highly compensated employees.
Taxpayers participating in these listed transactions must disclose such
participation to the Service by January 15. Failure to disclose can result
in severe penalties--- up to $100,000 for individuals and $200,000 for
corporations.
Ruling 2007-65 aims at situations where cash-value life insurance is
purchased on owner/employees and other key employees, while only
term insurance is offered to the rank and file. These are sold as 419(e),
419(f) (6), and 419 plans. Other arrangements described by the ruling
may also be listed transactions. A business in such an arrangement
cannot deduct premiums paid for cash-value life insurance.
A CPA who is approached by a client about one of these arrangements
must exercise the utmost degree of caution, and not only on behalf of the
client. The severe penalties noted above can also be applied to the
preparers of returns that fail to properly disclose listed transactions.
Prepared by Lance Wallach, CLU, ChFC, CIMC, of Plainview, N.Y.,
516-938-5007, a writer and speaker on voluntary employee’s beneficiary
associations and other employee benefits.