There has been some rumbling (at least in my world) over the past few weeks regarding another Tax Court dealing with Roth IRAs and “excess contribution” issues. The case, Block Developers, LLC v. Commissioner, involves four family members (father, mother, two children) that formed Roth IRAs and attempted to shift income that would otherwise have been earned by the father into the Roth IRAs.
I consulted with Ashlea Ebling (of Forbes) as she prepared her article related to this case. Ashlea’s article was published today, under the title: Tax Court Nixes Roth IRA Tax Shelter
There are many lessons to be learned from the facts of this case, the way the IRS made (or didn’t make) their arguments, and the way the Tax Court analyzed the situation. At the end of the day, I believe these Roth IRA owners got off pretty easy.