IRS Issues Warning on Tax Schemes Targeting Wealthy Taxpayers
The IRS has alerted wealthy taxpayers to steer clear of three potential tax schemes perpetrated by “dishonest promoters and shady tax practitioners.” These scams involve art donations, where promoters advise taxpayers to purchase art at discounted prices, artificially inflate its value, and claim large charitable contribution deductions; Charitable Remainder Annuity Trusts (CRATs), where promoters encourage the contribution of appreciated property to a CRAT, incorrectly asserting no gain on the transfer and misapplying the law relating to CRATs; and Monetized Installment Sales Transactions (MISTs), where taxpayers sell appreciated property to an intermediary in exchange for an installment note. Proposed regulations aim to tighten reporting rules for these transactions.
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