Protest Letter to the IRS

Protest Letter to the IRS

To:J. Accountant

From: S. Partner

Re: Leeman Vegetable Mutual Fund, Inc.

The mutual fund are governed by Law No. 18,815, by these rules, internal regulations approved for each background by the Superintendency of Securities and Insurance and mandatory instructions it will given by him. They also apply to these entities the laws and regulations relating to traded companies in all that do not conflict with the special provisions which govern it. Mutual funds manages will be subject to oversight by the Superintendency of Securities and Insurance, which shall exercise this function with the same powers to monitor and punish open corporations and insurance companies. Whenever this regulation refers to the Superintendent, may be understood by the Securities and Insurance.

The administrators have as the sole purpose the fund management investment, which they exercised on behalf of and at the risk of the contributors, for which they can charge a fee to be deducted from such funds, and shall include in its name the phrase "Mutual Fund Administrator."

In relation to the concern presented in the case regarding the Leeman Vegetable Mutual Fund, Inc. a mutual fund owning various different securities of different companies. The issue presented is quite clear that Cabbage filed the bankruptcy and now it's time for the Vegetable to recover its investment. The issue of taxation of repurchase of units is controversial for several months.

According to the tax authorities of tax levied by mutual funds (as taxpayers) should be levied on the total value units. Tax authorities claim that in the case of acquisition of mutual funds by a decrease in the taxpayer does not bear expenditure on the acquisition, which according to Article. Paragraph 23, 1 point 38 of the Income Tax Act from individuals are deductible costs when determining the income from the sale of these mutual funds, deposits and other securities. According to the tax authorities in case of filling the bankruptcy, who was entitled to mutual funds, the legal right to place an order is heir. The heirs, who have received the title of the units fall, do not assume, however, expenditure on the acquisition of these units. In other words, there is a reduction in their property by amount equal to mutual funds from their assists. They should not therefore set deductible. Consequently, the value of repurchase being the proceeds of the mutual funds is taxable at the same time.

The arguments presented in front of the tax authorities, and thus mutual funds (which probably do not want to conflict with the tax office, particularly given the number of persons who buy back the unit), but it is hard to agree. The tax authorities do not take into account the provisions of Article. 97 § 1 of the Tax Ordinance of 29 August 1997 (Journal. Laws of 2005, No. 8, item. 60, as amended.).

According to this article heirs take a taxpayer under the tax law to property rights and obligations of the testator. Additionally - in accordance with Article. 922 of the Civil Code of 23 April 1964 (Official Journal 64, ...