Thursday, January 30, 2014

Legal advice for lawyers: If you win a massive fee, don't put it in an illegal tax shelter

This all started when a big tobacco company was sued through the office of Nix, Patterson and Roach. In 1998, the attorneys won $600 million in attorneys’ fees, to be paid over a period of time, as well as $68 million in connection with tobacco litigation in other states.
With this money in hand, the partners sought ways to shelter themselves from tax liability, and formed a partnership, NPR Investments, to invest in foreign currency.  . . .

The 5th Circuit found Thursday that the partnership and partners must pay penalties for underpaying the Internal Revenue Service through this investment scheme.
Pursuant to the Supreme Court’s recent decision in U.S. v. Woods, NPR is subject to a 40 percent gross valuation misstatement penalty.

Article here (via Above the Law).

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