Struggling with the Canal Decision, Less Protection From Tax Opinions

A recent article by Tax Analysts discusses the struggle that practitioners have with the recent Canal Corp. v. Commissioner decision.  In Canal the Tax Court classified a leveraged partnership transaction as a disguised sale and applied an accuracy-related penalty to the taxpayer.  In imposing the penalty, the Court discredited the taxpayer's reliance on advice given by the taxpayer's adviser citing the adviser's conflict in interest having structured and managed the transaction.  The case is of particular interest to estate planning professionals who frequently help structure and manage tax motivated transactions for advanced estate plans.

See "Practitioners Struggle With Canal Decision's Impact on Reasonable Cause," 2011 TNT 42-1 (March 2, 2011).

Posted by James G. Haskell, Senior Associate Editor, Wealth Strategies Journal.