GOLD COINS AT HOME TAX COURT CASE PART TWO
Gold coins at home tax court case part two. This is the second part of the McNulty case where gold coins in a IRA where kept at home, and the tax implications of that. McNulty’s joint returns with her husband for the two years were prepared by a CPA, but they did not consult the CPA about the tax reporting of their IRA’s or physical possession of the coins. In 2018, the IRS issued the McNulty’s a notice of deficiency, determining in part that McNulty had distributions equal to her American Eagle coins cost of $374,000 in 2015 and $37,360 in 2016, resulting in deficiencies of $250,558 and $18,094 respectively. The IRS further proposed accuracy related penalties under Sec. 5662 based on these deficiencies. They could have used Tax Resolution Services at this point, as they also would have been at a severe risk for a IRS Wage Garnishment. Gold coins at home tax court case part two.
Under Sec. 408 (h), a custodial account is treated as a trust that can qualify as an IRA under Sec. 408(a) if its assets are held by a bank or another person who demonstrates to the IRS satisfaction that the person will administer the account consistently with Sec. 408s requirements, in which case the custodian can be treated as the account’s trustee, as further delineated in Regs. Sec. 1.408-2(e). IRA assets cannot be comingled with other property except in a common trust or common investment fund. This was the problem for McNulty, as the Gold Coins placed in her house, comingled with her other property. This then caused the taxable event and the large tax debt that the Tax Court eventually ruled for the IRS, and against McNulty.
When these life events happen and a large tax debt occurs, Tax Resolution is called for to determine every Tax Relief option available for a citizen, including the option of a IRS Fresh Start Program.