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Injunctions Upheld Against Asset Preservation Trusts (APTs)
Finding APTs to be abusive tax shelters, an appeals court has upheld lower court injunctions against a promoter, lawyer and CPA involved in marketing and selling APTs, pursuant to Section 7408 (Abusive Tax Shelter Injunctions).
The promoter, Robert Henkell, organized Estate Preservation Services (EPS), which marketed trusts and asset protection programs designed to generate tax deductions and reduce tax liability. CPA William Sefton was an executive vice president of the firm.
The IRS began investigating APTs in 1995. After assessing $1.25 million in penalties against Henkell and the firm, Henkell opened New Dynamics Foundation to advocate private charitable foundations.
In 1997, the IRS sued EPS, Henkell and Sefton over the APTs. Among other things, the district court found that they falsely represented that taxpayers could deduct their utility and maintenance expenses relating to their personal residences by transferring their home to an APT.
Source: Investment News, January 28, 2000
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