The laws of tax planning that I developed over my writing career that will be expounded in the upcoming Reilly’s Laws of Tax Planning, published by Think Outside the Tax Box, lean a little on the conservative side, as tax planners use the term – conservative versus aggressive, not conservative versus liberal. This results, in large part, from their primary source being court decisions.
The 18th law stands out from the others in this regard. “Honest objective trumps realistic expectation” encourages practitioners to be somewhat more aggressive in claiming losses from activities that seem a little dubious . I still hold that view, even though there have been no encouraging developments in 2023. Here is a roundup on the action last year through December 2, 2023.
Editor’s Pick: Tax Planner Faces Malpractice Claims Over Decades-Old Tax Advice—What Went Wrong?
In a case that every tax professional should take note of, the prominent law firm Sidley Austin LLP finds itself defending against claims that it provided faulty tax advice over two decades ago, leading to massive IRS liabilities for a family. The plaintiffs, the Cáceres family, are seeking to recover $7 million after settling with the IRS, claiming Sidley’s advice on a complex asset liquidation set them up for disaster. The kicker? The lawsuit was filed over 25 years after the advice was given. So, how are the plaintiffs still able to pursue the case? It all boils down to a claim of fraud—and how that could toll the statute of limitations.