Abusive Tax Shelter
Barron's Finance & Investment Dictionary:
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Abusive Tax Shelter
any investment used to avoid taxes that is not in compliance with the law, such as a Limited Partnership the Internal Revenue Service deems to be claiming illegal tax deductions— typically, one that inflates the value of acquired property beyond its fair market value. If these writeoffs are denied by the IRS, investors must pay severe penalties and interest charges, on top of back taxes.
| Absorption Rate, Absorbed | |
| Accelerated Cost Recovery System (ACRS), Accelerated Death Benefit |
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Abusive Tax Shelter
Investopedia Financial Dictionary:
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Abusive Tax Shelter
An investment scheme that claims to reduce income tax without changing the value of the user's income or assets. Abusive tax shelters serve no economic purpose other than lowering the federal or state tax owed when filing. Often, these schemes channel funds through trusts or partnerships to avoid taxation.
Investopedia Says:
People who invest in abusive tax shelters can be penalized by the Internal Revenue Service (IRS). Typically, when the IRS determines someone has used such a scheme, the person will owe back taxes with accrued interest.
To help taxpayers recognize potential schemes, the IRS has compiled a list of transactions that are abusive tax shelters. If a tax shelter resembles a listed transaction, it is considered abusive and the users may face penalties.
Related Links:
If you report a tax evader to the IRS, you could be eligible for a reward. How To Report A Tax Cheat
Planning is essential for the affluent seeking tax breaks. Get to know the legal strategies for saving more. Safe Tax Planning For High-Net-Worth Filers
Follow these simple steps to get you ready for April 15. 10 Steps To Tax Preparation
Keeping thorough records and knowing the penalties make this experience easier than you'd expect. Surviving The IRS Audit
We give you seven guidelines to help you keep more of your money in your pocket. Tax Tips For The Individual Investor
Don't make yourself a target - steer clear of these attention-grabbing tax-filing practices. Avoid An Audit: 6 "Red Flags" You Should Know
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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