Don't Get Caught in Section 79 Trap One doctor almost lost everything.....

Don’t Get Caught in Section 79 Trap
One doctor almost lost everything ………..




In 2006 Doctor X found himself in what he thought was 
the pleasant position of having a substantial amount of 
cash on hand that was not essential to the operation of 
his practice. That comfortable feeling did not last long. 
He quickly fell prey to a predatory insurance agent who 
sold him on the idea of Section 79 scam as a vehicle to 
obtain tax deductions. Of course what really interested 
the insurance agent was the funding vehicle, a large 
life insurance contract with American General as the 
insurance carrier, which just happened to net the 
agent a large commission.


Unfortunately, the large, questionable tax deductions 
claimed by Doctor X indeed attracted the attention of 
the IRS. As a result of their audit, the IRS not only 
disallowed all of the tax deductions, but also imposed 
back taxes, an array of penalties, and interest, turning 
the doctor’s anticipated investment vehicle into 
something that could cost him everything he was 
saving and more. As if that weren’t bad enough, even 
that Draconian action was not the end of the story.


None of his so-called financial advisors had told Doctor 
X about IRC Section 6707A. Under this section of the 
Code, huge fines can be imposed on those who fail to 
inform the Service about participation in listed or 
reportable transactions, or transactions substantially 
similar to listed transactions. Loosely defined, a 
reportable transaction is any transaction that has the 
potential for tax avoidance or evasion. Since he had no 
knowledge of this requirement, the doctor did not make 
the proper filings under Section 6707A, and is now 
also being threatened with monstrous fines for that 
failure to submit the proper forms in the proper format.


Although these issues had the potential for great 
disaster and great financial loss for this doctor, all the 
anxiety and stress he has been suffering over this 
matter may soon have a happier ending than he 
expected at its onset because he had the sense to 
contact us for help, perhaps just in the nick of time. As 
a result of putting experts with a great deal of 
experience on his case, he now stands an excellent 
chance of having at least some of the penalties from 
the original audit abated. He will probably be able to 
recover the money that he sank into that large 
American General life insurance contract as well. 
Sometimes a properly worded letter to the insurance 
company is all it takes. Last, but certainly not least, 
Doctor X also has an excellent chance of avoiding the 
large Section 6707A penalties, as our experts in the art 
of filing late without paying fines are currently at work 
on that as well.


The information provided herein is not intended as 
legal, accounting, financial or any type of advice for 
any specific individual or other entity. You should 
contact an appropriate professional for any such 
advice.

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