The IRS wants some cash from Juan Pablo Montoya. Cash that it says he didn't report on his income taxes.
The report from Forbes says that Montoya has admitted to having $800,000 more in receipts and items that he didn't report, but that he's challenging the rest of what the IRS says he owes of $2.7 million in a lawsuit.
The lawsuit states that Montoya sold his image licensing rights to a Bahamanian company his father set up called "JPM Motorsport." That was in 2001, when Montoya was in F1. Before Montoya made the switch to NASCAR, tax advisers told them to "domesticate his foreign assets to the U.S." So an LLC was set up in Delaware named Monty Motorsport.
From Forbes:
Here?s where it gets interesting, becoming either a sham (the IRS view) or a clever, if aggressive, tax arbitrage between Montoya?s status as a non- U.S. resident in 2006 and a U.S. resident in 2007. In 2006, Montoya?s JPM Motorsport sold his Driver Identification to his Monty Motorsport for a $15 million note. Monty Motorsport then began amortizing (writing down the value of) its $15 million investment, claiming a deduction of $1.4 million in 2007 and $1 million in 2008. The IRS disallowed the deductions, listing six possible grounds on which they could be thrown out, including that all the related party transactions were a sham and that their principal purpose was to ?improperly claim amortization deductions in self-created intangibles and to artificially create basis for such deductions.?
As Forbes notes, Montoya is joining Penske Racing next year to run in the IndyCar Series full-time. His future teammate is Helio Castroneves, who was acquitted on felony tax charges in 2009.
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Nick Bromberg is the editor of From The Marbles on Yahoo Sports. Have a tip? Email him at nickbromberg@yahoo.com or follow him on Twitter!
