The United States Supreme Court agreed with the Internal Revenue Service and sustained the assessment of a 40% penalty against the taxpayer who invested in a 1990s tax shelter.
The decision, U.S. v. Woods, reversed a 5th Circuit opinion which held that the 40% penalty did not apply in sham partnership cases and declared the issue “well settled.”
The Woods’ case got to the Supreme Court to resolve a split between two circuits that found for the taxpayers in these type of case and other circuits that found for the IRS. The issue involves the maximum income tax penalty that can be imposed on a tax shelter investor. More specifically, this decision resolved the issue concerning whether the penalty Read more