An opinion letter is an attorney’s written tax advice about the tax treatment and/or consequences of a transaction. Opinion letters provide the client with an opinion and guidance as to how the IRS and the courts will treat a particular transaction. In certain cases, clients are even required by law to obtain an opinion letter.
The opinion letters crafted by Lewis Business & Estate Planning, APC are comprehensible to the layperson, yet technically accurate. An opinion letter provides a client with one of five levels of assurance:
- “Reasonable basis.” An opinion letter providing that a transaction has a reasonable basis if it is based on one or more substantial authorities. It is a low standard—providing a confidence level of 5% to 25% in the transaction.
- “Substantial authority.” This standard is higher than the reasonable basis standard but still less than 50%. This threshold is met if the “weight of the authorities supporting” the transaction are “substantial in relation to the weight” against it.
- “Probable.” An opinion letter provides that a transaction is “probable” if it is more likely than not that it would be sustained if litigated by the IRS.
- “Should.” An opinion letter issued under this standard means a transaction is more than 70% likely to be sustained if litigated by the IRS.
- “Will.” An opinion letter issued under this standard means a likelihood of being sustained if litigated by the IRS of at least 95%, and the transaction is considered “clean.”
Our letters guide through the important tax details without losing the forest for its trees.
If you are interested in learning more about a particular tax issue or need a tax opinion letter, please contact us to schedule a complimentary consultation at (714) 581-8808.