Tax Blog

The recent decision in Bemont Investments, LLC v. United States, USDC E.D. Tex., No. 4:07-cv-00009 (March 9, 2010) is another burr in the IRS’s saddle when it comes to enforcement of the substantial valuation and gross valuation misstatement penalties.  These two penalties, particularly the 40% gross valuation misstatement penalty, are powerful weapons in the IRS’s arsenal to deter taxpayers from entering into transactions the IRS considers abusive.  Bemont, out of the District Court for the Eastern District of Texas, was a Son of BOSS case that the IRS characterized as a sham ...