What is a Tax Opinion Letter?
MDPT is a powerful tool that can be utilized by farmers and farm/ranch land owners. Within the IRS code are very strict guidelines to follow to ensure that MDPT is being utilized correctly. The question becomes, how does the farmer or farm/ranch land owner know that all the variables included with the filing are applied correctly? The answer is a tax opinion letter.
A tax opinion letter provides the farmer or farm/ranch land owner an opportunity to minimize their tax exposure with the added protection from penalty assessments. The application of MDPT can be structured in a multitude of ways with countless applications applied to each different farm operation and farm land sale. Contracting with an experienced tax attorney early in the process of MDPT, allows the attorney to provide input to assure that any favorable tax impact is upheld.
The Treasury Department published Circular No. 230 in June 2014 that provided an updated guidance to tax opinions when filed with a tax return. If tax opinions do not meet the standards of Circular 230, taxpayers will still be subject to IRS penalties if the IRS determines a deficiency exists. Therefore, the law firm providing the tax opinion letter must be in position to review and provide the tax law rigor necessary for each transaction.
We will introduce you to Carlson & Burnett Attorneys at Law, a leader in the application of monetized installment sales, the structure provided within the MDPT process. They will work along side your CPA and personal attorney to write the tax opinion letter for your MDPT transaction before you file the current year’s tax return.
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