The U.S. Court of Appeals for the Eleventh Circuit upheld the imposition of
40 percent gross valuation misstatement penalties against an individual with
almost 30 years of business experience
Circuit Judge Frank Hull said that although a tax shelter can be legitimate,
William Gustashaw Jr. participated in one that was not, and Gustashaw's level
of tax-related sophistication was particularly relevant “because Gustashaw was
presented with the incredible opportunity, for a fee of only $800,000, to claim
a loss of $9,938,324, which offset the entirety of the tax liability generated
by his exercise in 2000 of his remaining Merck Medco stock options.”
Taking into account Gustashaw's personal experience and characteristics that
included the years of experience, business education courses—which included
courses in accounting—and history of handling his own finances and preparing
his own tax returns; the Tax Court did not clearly err in finding
that, under the particular combination of factual circumstances, Gustashaw did
not have reasonable cause for his underpayment of tax or act in good faith with
respect to it.
Source
Gustashaw v. Commissioner, 11th Cir., No. 11-15406, 9/28/12
Circuit Judge Frank Hull said that although a tax shelter can be legitimate,
William Gustashaw Jr. participated in one that was not, and Gustashaw's level
of tax-related sophistication was particularly relevant “because Gustashaw was
presented with the incredible opportunity, for a fee of only $800,000, to claim
a loss of $9,938,324, which offset the entirety of the tax liability generated
by his exercise in 2000 of his remaining Merck Medco stock options.” 
Taking into account Gustashaw's personal experience and characteristics that
included the years of experience, business education courses—which included
courses in accounting—and history of handling his own finances and preparing
his own tax returns; the Tax Court did not clearly err in finding
that, under the particular combination of factual circumstances, Gustashaw did
not have reasonable cause for his underpayment of tax or act in good faith with
respect to it.
Tax Problems Got you Down? Contact the Tax Lawyers at Marini & Associates, P.A.
for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).
Source
Gustashaw v. Commissioner, 11th Cir., No. 11-15406, 9/28/12
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