NEW ORLEANS - The owners of a controlled foreign corporation seeking to have income taxed as qualified dividend income lost at the U.S. Court of Appeals for the Fifth Circuit.
The IRS sent appellants - Osvaldo and Ana M. Rodriguez, owners of Mexico-based Editoras Paso del Norte S.A. de C.V. (Editora) - notice indicating income tax payments for 2003 and 2004 were deficient. The IRS determined that the appellants' income from Editora should have been taxed as ordinary income versus the lower rate of qualified dividend income.
Judge Harold R. DeMoss, James L. Dennis and Edward C. Prado, oversaw the case and affirmed the original ruling by the tax court, which ruled in the favor of the IRS.
Case no. 12-60533.