I'm a recent law graduate and I'm thinking of walking down a fine line in the future, and I wanted to run it by everyone here.
My single girlfriendless father is about to retire (in about a year.) He expects to get around 100-150k a year from a mixture of old pension plans, social security, and (primarily) from capital gains on his various stock investments.
He would be amenable to providing some additional assistance to my cost of living. My father's afraid he is going to be bored as **** when he retires, and was considering doing some part time work just for the sake of working.
I want to start my own practice (in a few years). I pitched taking him on as a paralegal/assistant.
I would start my own firm, which would presumably lose a substantial amount of money.
Whatever money I did make, I would pay to him up to 50k or so, as a hopefully reasonable salary, further assuring I would be in the red or at least minimally in the black.
He would continue to support me financially, likely assuring I would have at least a minimal standard of living although I would be (in theory) reporting virtually no income.
1. Would I qualify for Government assistance? Welfare? Foodstamps? Subsidized Health Insurance?
2. Would I be committing tax fraud?
3. Would I be committing fraud of any sort, violating any ethical rules, or committing any sort of crime?
Clearly, this is an attractive concept - Having some available money as gifts from my father, while simultaneously making next to no money and receiving government aid.... while working a job as a self-employed attorney.
But it seems too good to be true, and I'm afraid I would be crossing some sort of line and committing fraud.
Why?
Because although I would be paying my Father a reasonable salary, and he would actually work for that salary, he would be gifting virtually everything he receives back to me, and I would receive considerable benefit solely because of that arrangement.
Give me your best shot, or point me to an attorney (name and contact info if possible) that might know the answer.
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More pointed questions:
For those of you with IRS litigation experience, do you believe that the above conduct would qualify as a "Nominee" or "Alter Ego" arrangement?
If you are unable to answer that question, have you ever read an opinion where "Nominee" or "Alter Ego" status was applied, for TAX purposes, in even semi-similar arrangements?
For those of you with business entity or benefit administrative law experience:
Have you ever encountered a situation where family transfer of money via a business entity was used to qualify for benefits, which was later found to be illegal, fraudulent, or in *any* way improper?
For those with business entity experience:
Have you ever encountered an opinion where alter ego status was applied by a court in a remotely similar circumstance?
My single girlfriendless father is about to retire (in about a year.) He expects to get around 100-150k a year from a mixture of old pension plans, social security, and (primarily) from capital gains on his various stock investments.
He would be amenable to providing some additional assistance to my cost of living. My father's afraid he is going to be bored as **** when he retires, and was considering doing some part time work just for the sake of working.
I want to start my own practice (in a few years). I pitched taking him on as a paralegal/assistant.
I would start my own firm, which would presumably lose a substantial amount of money.
Whatever money I did make, I would pay to him up to 50k or so, as a hopefully reasonable salary, further assuring I would be in the red or at least minimally in the black.
He would continue to support me financially, likely assuring I would have at least a minimal standard of living although I would be (in theory) reporting virtually no income.
1. Would I qualify for Government assistance? Welfare? Foodstamps? Subsidized Health Insurance?
2. Would I be committing tax fraud?
3. Would I be committing fraud of any sort, violating any ethical rules, or committing any sort of crime?
Clearly, this is an attractive concept - Having some available money as gifts from my father, while simultaneously making next to no money and receiving government aid.... while working a job as a self-employed attorney.
But it seems too good to be true, and I'm afraid I would be crossing some sort of line and committing fraud.
Why?
Because although I would be paying my Father a reasonable salary, and he would actually work for that salary, he would be gifting virtually everything he receives back to me, and I would receive considerable benefit solely because of that arrangement.
Give me your best shot, or point me to an attorney (name and contact info if possible) that might know the answer.
------------------------------
More pointed questions:
For those of you with IRS litigation experience, do you believe that the above conduct would qualify as a "Nominee" or "Alter Ego" arrangement?
If you are unable to answer that question, have you ever read an opinion where "Nominee" or "Alter Ego" status was applied, for TAX purposes, in even semi-similar arrangements?
For those of you with business entity or benefit administrative law experience:
Have you ever encountered a situation where family transfer of money via a business entity was used to qualify for benefits, which was later found to be illegal, fraudulent, or in *any* way improper?
For those with business entity experience:
Have you ever encountered an opinion where alter ego status was applied by a court in a remotely similar circumstance?
Federal Taxes: Alter Ego or Nominee (and Other Legal Questions)
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