IRS Can Impose $3.2M Penalty In Trust Case, 2nd Circ. Says

By David Hansen (July 28, 2021, 8:48 PM EDT) -- The IRS can impose a $3.2 million penalty on a dead man's estate because he failed to report a distribution from a foreign trust he owned and enjoyed as beneficiary, the Second Circuit held Wednesday, vacating a district court's ruling.

In sending back the case for reconsideration, the appeals court said the lower court erroneously interpreted the trust reporting requirements in Section 6048 of the Internal Revenue Code to approve an incorrect penalty. The New York district court had found the decedent, Joseph Wilson, should have paid a 5% penalty as the owner of the trust instead of a 35% penalty...

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