Forbes reports that Leon G. Cooper, the prominent New York billionaire hedge fund manager, has managed to get out of paying the IRS $5 million in penalties.
The IRS filed a complaint against Cooper when his personal private foundation was given a $43 million gift by one of his hedge funds. Cooper provided the start-up money for the fund, but did not personally manage the fund. His family wrote the gift off as a deduction in both 2005 and 2006. This kind of deduction, however, is not allowed by federal law.
Cooper and his lawyers conceded that the deduction was illegal and instead spent their time fighting the $5 million in penalties that the IRS assessed against Cooper. The courts ultimately found in favor of Cooper. He is still required to pay $14 million in fees, but only has to pay $29,191 in penalties. Pennies when compared to his original fines.
Cooper claimed that he followed bad advice from his advisers. Thus, he claims to have made a good faith mistake and argued that he should not be assessed the accuracy-related penalties that are common with the Internal Revenue Service. His advisers told him that he only needed an independent appraisal to deduct the charitable gift to his personal foundation. According to Forbes, his advisers claimed that they were not aware of the federal provision that forbids a tax deduction for non-publicly traded investments in one’s own private foundation. When he realized that he had been given bad advice, he focused on trying to make his bill as low as possible.
This story proves that it is possible to receive bad advice from those you have trusted to protect your money and financial interests. Cooper’s advisers were charged with being aware of the applicable tax provisions related to everything Cooper intended to do. Their failure ended up costing him millions of dollars. The Huntsville estate planning attorneys at Martinson & Beason will provide you with the highest level representation and will ensure that your interests are protected. Please do not hesitate to contact Martinson & Beason for all your estate planning needs from a simple will to trust, or full blown estate plan, the Alabama probate attorneys at M&B address all your estate planning needs.
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