I HAVE MY DOUBTS ABOUT WHETHER THIS TAX AVOIDANCE STRATEGY WILL WORK – SOUNDS LIKE FORM OVER SUBSTANCE TO ME
Taxpayer operates a business that is not eligible for a favored tax treatment because of the nature of the services performed. Taxpayer creates two entities, one of which does the work that is not eligible for favored treatment, and the other of which claims all of the profit from that work. That way, all of the profit supposedly qualifies for the favored tax treatment.
Will that work? I think that falls into the category of form over substance. I don’t think it will work.
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