[Retric]

If the government wanted an unlimited Roth IRA cap they wouldn’t have added a Roth IRA cap. The fact they added a cap shows clear intent, which is definitely how the courts view such forms of Tax Evasion.

Now the government doesn’t go after the vast majority of criminals be that the IRS, FBI, or your local cops. However, that has no impact on what is or isn’t breaking the law as written. As such this was clearly tax evasion because it’s illegally reducing taxes he would owe and it’s fraudulent activity because it’s falsifying financial records for personal benefit. Hell was likely also wire fraud depending on how he submitted tax documents, not that such charges are normally tacked on to such cases but they still apply.

[vmception]

He complied with the contribution cap and the income cap that year.

You know, 22 years later you can still do this as well and it wouldn’t be tax fraud or wire fraud.

You can do it even better now, than then, by doing backdoor Roths.

Play the game by a more efficient set of assumptions because yours are just self limiting.

[Retric]

> He complied with the contribution cap and the income cap that year.

Not if he used am old pre round validation after the investment occurred at a higher valuation as has been reported.

Also your penalties where off: However, if the individual for whom the IRA was established or the IRA’s beneficiary engages in a PT with respect to the IRA, the sanction is the loss of the tax-exempt status of the IRA as of the first day of the taxable year in which the PT occurs.

As such, all transactions after the original transaction lack their tax exempt status. As such based on listed rules and including interest and penalties and he’s potentially facing a multi billion dollar tax bill.