Tag Archives: listed transaction

Abusive Tax Shelter, Section 79 Plan

WHO ARE BAD AGENTS?

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WHO ARE BAD AGENTS? FINANCIAL PLANNERS AND  INSURANCE AGENTS ARE THE MAIN TWO.

Bad Insurance Agent 

  • They are very restricted in the products they offer.
  • They sell the same products again and again even though there are better products to fulfill their clients needs.
  • They don’t disclose the restrictions the products have.

Bad Financial Advisor

  • If they try to sell you a Section 79 plan as a wealth building tool.
  • Most financial advisors are restricted by the types of investment products they can offer to clients. Many of them aren’t able to offer Retirement Life products. The majority of them aren’t able to offer guaranteed return income for Life Insurance products.
  • Lack of disclosure is a very big problem nowadays. Anyone who doesn’t disclose the clients limitations is a bad advisor.

BUYER BEWARE AND BE AWARE

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THE DANGERS OF BEING LISTED

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THE DANGERS OF BEING LISTEDA warning for Section 79 Plans

Taxpayers who previously adopted 419, 412i, captive insurance or Section 79 plans are in big trouble.

In recent years, the IRS has identified many of these arrangements as abusive devices to funnel tax deductible dollars to shareholders and classified these arrangements as “listed transactions.”

These plans were sold by insurance agents, financial planners, accountants and attorneys seeking large life insurance commissions. In general, taxpayers who engage in a “listed transaction” must report such transaction to the IRS on Form 8886 every year that they “participate” in the transaction, and you do not necessarily have to make a contribution or claim a tax deduction to participate.  Section 6707A of the Code imposes severe penalties ($200,000 for a business and $100,000 for an individual) for failure to file Form 8886 with respect to a listed transaction.

But you are also in trouble if you file incorrectly.