Effect backdating contract

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However, they did not report their ownership as being changed as of the retroactive effective date in filing their tax returns.

The IRS sought to apply the retroactive date – and the taxpayers argued that such a retroactive date would be an unenforceable backdating of a document and should be ignored. It is interesting that this is the opposite of what you would expect – normally it is the taxpayer that wants to use the prior effective date and the IRS seeking to ignore it.

Therefore, the documentation will often indicate a date the documents are signed, and a retroactive "effective date" for the transfer.

In the case mentioned above, the taxpayers had such a retroactive effective date.

In some cases, a party might ask to backdate a contract for fraudulent reasons.This is an example of legally backdating a contract.As with all backdating, you should ensure its disclosed clearly and agreed upon by all parties. Any attempt to do so should be done with the backing of professional legal advice.That said, there are many circumstances where it may be common or appropriate to backdate a contract.However, in these circumstances, it is important to transparently record any backdating in the contract.

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