Tax News

CCH (cch.taxgroup.com) reports:

A petition for review was granted in the following case:
M.H. Boulware , CA-9, 2007-1 USTC ¶50,516. --The lower court refused to admit evidence allegedly showing diverted funds were nontaxable returns of capital resulting in an individual's conviction for tax evasion and for filing a false tax return in connection with his failure to report funds diverted from his closely held corporation as income for the tax years at issue. The U.S. Supreme Court has granted a Writ of Certiorari on the issue of, "Whether the diversion of corporate funds to a shareholder of a corporation without earnings and profits automatically qualifies as a non-taxable return of capital up to the shareholder's stock basis...even if the diversion was not intended as a return of capital."
Other References:
Code Sec. 7206
CCH Reference - 2007FED ¶41,318.157
Tax Research Consultant
CCH Reference - TRC IRS: 66,102.05