While the cooler weather and changing colours are a sure sign that fall has arrived, for some of us, it also means that tax shelter season is upon us.
Tax shelters are most heavily marketed during the last few months of the year as taxpayers scramble to reap the purported tax savings in 2012, which often entails buying the shelter before Dec. 31. While you may have not been approached about this year’s crop of tax shelters yet, a recent decision of the Tax Court may be enough to send a chill down any potential tax shelter investor’s spine.
The case involved a leveraged charitable donation arrangement, known as the Berkshire Program, which allowed participants to receive donation receipts far in excess of the out-of-pocket cash outlays. Under the program, the donations were funded by 20% cash while the other 80% was funded by a 25-year, non-interest bearing loan provided to the participant by one of the promoters.
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