Tax Planning

  • "The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether to avoid them, by means which the law permits, cannot be doubted" (Gregory v. Helvoring, 293 U.S. 465, 469 (1935).

  • "The incidence of taxation depends upon the substance of a transaction" (Commissioner v. Court Holding Co., 324 U.S. 331, 334 (1945).

  • "To permit the true nature of a transaction to be disguised by mere formalisms . . . would seriously impair the effective administration of the tax policies of Congress" (id. at 334).

  • "One suspects that because the Internal Revenue Code . . . piles exceptions upon exclusions, it invites efforts to outwit the tax collector" (Estate of Levine v. Commissioner, 526 F.2d 717, ___ (2d Cir. 1975)).

  • “The freedom to arrange one's affairs to minimize taxes does not include the right to engage in financial fantasies with the expectation that the Internal Revenue Service will play along" (Saviano v. Commissioner, 765 F.2d 643, 654 (7th Cir. 1985).

  • "We recognize that it is axiomatic that taxpayers lawfully may arrange their affairs to keep taxes as low as possible. Nevertheless, at the same time the law imposes certain threshold duties which a taxpayer may not shirk simply by manipulating figures or maneuvering assets to conceal their real character" (Neonatology Associates P.A. v. Commissioner, ___ F.3d ____, ____ (3rd Cir. 2002).

  • "When . . . a taxpayer is presented with what would appear to be a fabulous opportunity to avoid tax obligations, he should recognize that he proceeds at his own peril" (id. at ____).

  • A reasonably prudent person should investigate claims when they are likely "too good to be true" (McCrary v. Commissioner, 92 T.C. 827, 850 (1989).