Wood and Sons Tax AdvisorsWood & SonsTax Advisors LLC

Strategy file

We do not take a strategy we cannot prove.

Robert Wood, EA, will not sign a return on a promoter slide. The statute, the facts, economic substance, and a proof pack — or the position is declined. This is a vetting file, not a covered opinion and not tax advice for your facts.

How we prove it

The authority ladder.

  1. 01

    The Code

    A named section of the Internal Revenue Code that actually authorizes the result. If nobody can point to the statute, there is no strategy.

  2. 02

    Treasury regulations

    How the statute is applied. A regulation that shuts the door is the end of the conversation, not a footnote.

  3. 03

    Published IRS positions

    Revenue rulings, revenue procedures, notices. Useful. Not a substitute for the statute.

  4. 04

    Case law

    Tax Court, Courts of Appeals, Supreme Court — on facts like these. A case on different facts is not proof.

  5. 05

    What is not authority

    A promoter deck, a podcast, an IRS publication, a blog, or “everyone does this.” Publications are guidance. They are not substantial authority.

Doctrine

Tests that must still be true.

Statutory fit

The claimed result is in the statute, on these facts — not a cousin of the statute.

Economic substance · IRC §7701(o)

The transaction changes economic position in a meaningful way apart from federal income tax, and the taxpayer has a substantial non-tax purpose.

Business purpose

A real non-tax reason a reasonable person would do this even if the tax disappeared.

Substance over form

What actually happened matches the labels on the paper. Circular cash and same-day round trips fail here.

Step transaction

The IRS may collapse steps done in substance as one deal. If the tax result depends on ignoring that, it does not hold.

Assignment of income

Income is taxed to the person who earned it. Moving a check to a child, a trust, or an entity you still control is not proof.

Listed and reportable · §6011 / §6707A

Listed transactions, transactions of interest, and §6662A bases. A promoter who says “do not file Form 8886” is the answer: decline.

Preparer standard · §6694

This practice signs a return only with substantial authority, or reasonable basis plus disclosure. A hope is not a position.

The gate

Run the file before the sitting.

This is a screen, not a ruling. A hold here still requires the proof pack and a written fee. Open the client portal to save a full workpaper.

Non-tax business purpose
Economic substance apart from tax
Listed or reportable transaction
Marks that usually end the file

Proof pack

What must be in the file.

  1. 01Written fee and scope — what this strategy is, and is not
  2. 02Signed statement of facts from the taxpayer
  3. 03Code, regulation, and (if used) ruling or case — cited, not summarized by a brochure
  4. 04Evidence of economic substance and non-tax purpose (contracts, capital, operations)
  5. 05Books and records that will exist at year-end, not a projection in a slide
  6. 06Related-party, basis, and contribution/distribution trail
  7. 07Michigan treatment — conformity, additions, and any state filing
  8. 08Whether Form 8886 / 8275 / 8275-R is required — decided in writing
  9. 09How the position is reported on the return, and who signs it

This page is general information, not tax advice for your facts. No engagement exists until the fee is in writing. Robert Wood, EA · Williamston office.