Aspro, Inc. v. Commissioner, T.C. Memo 2021-8 (January 2021) is a cautionary tale for C corporations that look to zero out taxable income through post hoc management fees. In total the three shareholders received management fees in excess of a $1 million dollars a year for the years at issue (2012-2014). Although the management…
In order to avoid the flow-through of examination adjustments, the Taxpayer in Mowry v Commissioner[1] attempted to argue that an S corporation, in which he was a minority shareholder, had ceased to be a valid S Corporation. The Taxpayer argued that disproportionate distributions to the majority shareholder (i.e., not the Taxpayer) over several years created…
In Garcia v. Commissioner [1], the Taxpayers were a married couple embroiled in litigation over alleged corporate fraud by an international bank specialist. The specialist’s fraud devalued the couple’s minority interest in a “South African exploration and gold mining investment company” (“R&E”). The Taxpayers along with other investors funded most of the expensive litigation from…
