The Second Circuit Court of Appeals has held for the second time that a preferred investor was not a partner for tax purposes, and it denied an allocation of taxable income to the tax-indifferent investor. The decision reversed the district court...
Continue reading "Second Circuit Again Holds That Preferred Investor Was Not a Partner"
In two 2011 estate tax cases, executors were denied timeliness-related claims even though they asserted that administrative failures by the IRS contributed to the errors. The courts said that the lapses by the IRS did not rise to a...
Continue reading "Recent Estate Tax Rulings Uphold IRS Regulatory Interpretations"
Tax Notes has published a "Letter to The Editor" from E. Lynn Nichols, CPA Nichols Patrick CPE, Inc., discussing Circular 230 disclosures in outgoing e-mail and conference presentations. In his letter, Mr. Nichols points out the overzealous use of the...
Continue reading "Practitioners are Overzealous in Their Use of Circular 230 Disclosures "
According to an article in the Eagle Tribune, an Essex County Superior Court Judge has awarded the Massachusetts Division of Medical Assistance $178,496 found in abandoned safe. In November 2008, firefighters in Lawrence, Massachusetts discovered an abandoned safe in a...
Continue reading "Judge Awards Division of Medical Assistance $178,496 Found in Abandoned Safe"
The IRS has released Publication 596, Earned Income Credit (EIC), for use in preparing 2011 returns. The publication discusses who qualifies for the tax credit, the rules regarding individuals with qualifying children, how to figure and claim the credit, and...
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Forbes has published an article by Ashlea Ebeling discussing how individuals, whose income is too high to contribute to a Roth IRA, may be able to contribute directly to a Roth IRA by opening a traditional IRA and then converting...
Continue reading "How to Contribute to a Roth IRA Even if You Make Too Much Money"
The Fourth Annual Estate Planning and Community Property Seminar will be held on February 24th at Texas Tech University Law School. Speakers will include: Professor Mark Ira Bloom, Professor Jeffrey N. Pennell, William D. Pargaman, Professor Gerry W. Beyer,...
Continue reading "Estate Planning and Community Property Seminar is Feb. 24, 2012"
Under our tax laws, married couples can gift up to $10.24 million together, or up to $5.12 million each, during their lifetimes, or at their death with no tax liability. Beginning 2011, if the surviving spouse files form 706 within...
Continue reading "Right of Tax Portability for Married Couples Who Suffer the Loss of a Spouse "
Representatives of the National Tax Sheltered Accounts Associations and the American Society of Pension Professionals & Actuaries have urged the IRS to include Section 403(b) plan documents in the agency's pre-approved plan program. The sponsors of these plans include...
A recent order by the Federal Circuit has helped bring some clarity to the availability of non-party taxpayer information in tax litigation. The order establishes firmer guidelines for when otherwise nondisclosable return information should be released by the federal government. The...
Continue reading "Federal Circuit Clarifies Third-Party Return Information Disclosure Exception"
The Court of Federal Claims has held that a taxpayer waived possible work product privilege for tax reserve workpapers by claiming reliance on the advice of its independent auditor in order to avoid penalties. The case is an example...
Continue reading "Work Product Privilege Waived For Penalty Defense Documents"
The Organization for Economic Co-operation and Development (OECD) has released a chapter from an upcoming report, "Economic Policy Reforms 2012: Going for Growth." The chapter examines the drivers of income inequality and the effects of tax and transfer systems....
Continue reading "OECD Recommends Measures to Promote Growth While Reducing Inequality"
Peter J. Reilly discusses a recent Tax Court holding concerning the termination of conservation easements. See Kayln M. Carpenter, et al. v. Commissioner, TC Memo 2012-1. He discusses how the IRS attacked the conservation easements based upon a clause in the contract instead of...
Continue reading "Tax Court Decision Concerning Conservation Easements"
A recent Northwestern Mutual study reported that two thirds of people 65 or older will require long-term care at some point in their lives. The study surveyed thousands of home health care organizations, assisted living facilities, and nursing homes. For home healthcare,...
Kara Friedenberg discusses the future impact of the new tax imposed by the Patient Protection and Affordable Care Act. The law imposes on individuals, estates, and trusts a new Medicare tax equal to 3.8 percent on net investment income....
Continue reading "Impact of New Medicare 3.8% Net Investment Tax"
The IRS ruled that the beneficiaries of a marital trust are eligible beneficiaries; that an IRA established to receive distributions from the deceased spouse's pension plan on behalf of the marital trust will be treated as an inherited IRA...
Continue reading "PLR 201203033: Rollover of Pension Plan Is Tax Free to a Marital Trust"
Dick Patten, president of the American Family Business Institute, discusses why Maryland's estate tax on farmers should be repealed. He contends that the tax takes money away from family farmers, and that money could be used to pay employees and upgrade machinery. He also contends...
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The Wealth Strategies Journal has posted a new article entitle "2011 in Review" by Robert Moshman, Esq.From the article: "The past year, 2011, was undoubtedly commendable in many respects that will become evident to historians someday...but for the rest of us,...
David Brunori outlines his view of the necessary components of a practical libertarian tax policy. Rather than calling for a shutdown of the entire tax system, as some libertarians might hope for, he advocates a trimmer and more understandable tax...
The IRS has released a revised version of Publication 969, Health Savings Accounts and Other Tax-Favored Plans. It gives 2011 tax information onHealth savings accounts (HSAs).Medical savings accounts (Archer MSAs and Medicare Advantage MSAs).Health flexible spending arrangements (FSAs).Health reimbursement arrangements...
A new Tax Notes article on small business provides food for thought in this election season. Martin A. Sullivan expresses doubt that tax cuts for small business, a favorite campaign pledge, really create jobs or grow the economy. Sullivan's review...
Lewis Saret has made available his article "Retirement Benefits in the Context of Estate Planning--Part II: Income Taxation of Retirement Benefits With Basis." Published in Taxes magazine, it discusses the income taxation of retirement benefits with associated basis. The full...
The IRS's fact sheet on 2011 tax law changes is available. It's suitable for client use. It quickly summarizes, in layman's terms, various filing deadlines, new credits, and reporting rules in a number of areas. Health insurance costs issues...
As of January 1, U.S. taxpayers are facing the return of the Alternative Minimum Tax (AMT) as well as the loss of other key tax deductions. These lost deductions include: college tuition expenses, charitable IRA contributions, teachers who spend their own...
Large financial brokerages used to shun anyone with less than $250,000 in net assets, considering them not worth spending time on. Oh, how a financial crisis changes everything! Today large financial brokerages are developing products to cater to a broader segment...
Continue reading "New Opportunities for Those With Small Savings"
Income tax rates paid by the wealthiest Americans have dropped significantly over the past decades. According to date from the IRS, from 1985 to 2008, the top 400 richest Americans have seen their federal income taxes drop from 29 percent...
Continue reading "Investment Income Tax Cuts Make the Rich Get Richer"
A hobby is usually something we do in our spare time, or as an escape from daily cares. However, if properly structured and planned, the costs of a hobby can be turned into a tax deduction. Specifically, if the activities in the hobby can...
Wal-Mart will offer tax return preparation services, coordinating with Jackson Hewitt and H&R Block. This will include free filing of Forms 1040EZ at more than 3,000 locations this year. Also, Wal-Mart will offer flat fees of $3 to $6...
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PLR 201202012 - There have been three recent PLRs issued by the IRS: The IRS ruled that the income of a city's trust, established to provide medical benefits to eligible retirees, is excludable from gross income under Section 115(1) because...
World Research Group is hosting a weekend-long event for family-run offices and businesses in Beverly Hills, California. Several asset management and financial services firms are sponsoring the event. WRG, "a US-based conference and training development company focused entirely on providing...
Continue reading "The National Family Office Forum is Jan. 30-31, 2012"
Friction can arise when a loved one dies and leaves a vacation home to family members. A family member who lives a long distance away and lacks money to maintain the inherited property often opts to sell his or her...
Continue reading "Sharing an Inherited Vacation Home with Intra-Family Members"
The Court of Federal Claims originally dismissed a complaint by an estate for lack of jurisdiction because third-party issues still needed to be resolved. However, the Court has now amended the opinion for this tax refund case, stating that...
Continue reading "Court of Federal Claims Amends Opinion on Estates Lack of Jurisdiction"
National Taxpayer Advocate Nina Olson outlined six problem areas regarding international taxpayers in her annual report to Congress released on January 11. The report prioritizes international enforcement and represent a significant expansion of the international recommendations in Olson's report compared with prior years. The...
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While the economy is still sluggish to say the least, there are a lot of very happy people in silicon valley. Many new internet companies have had their IPO and with it newly minted millionaires (and billionaires). For financial companies,...
It was a difficult and acrimonious year for the President and Congress. Taxes, spending, and the deficit caused for many battles. However, approaching an election year for both the Congress and the President will present new challenges on the issue of...
Terry Weaver, CEO and owner of Chief Executive Boards International, discusses why limited liability companies (LLCs) should consider electing S-Corporation tax treatment. Mr. Weaver opines that as an S-Corporation, you would only pay FICA and Medicare taxes on only your own W-2 income and...
Continue reading "S-Election Approach for Limited Liability Companies"
The Wealth Strategies Journal has posted a new article entitled. "New Risks for the New Generation: Encouraging Families and Family Owned Businesses to Implement a Family Risk Management Policy," by Patricia M. Annino.From the article: "Families and family owned...
WealthCounsel, LLC has released a summary of the key findings of the 2011 Industry Trends Survey that it, along with Trusts and Estates magazine, conducted with over 1,000 professionals. These respondents, mostly attorneys, left impressions including that 57 percent stated...
According to Alan Krueger, the chair of the White House Council of Economic Advisers, the growing inequity between the upper class and the rest of the country has largely been due to tax policy. Krueger was quoted at the...
Continue reading "White House Official: Tax Policy Contributed to Widening Economic Class Gap"
In a recent holding by the Tax Court, an individual was not a real estate professional and thus the proceeds of real estate sales must be netted against losses from his passive activities. However, the Tax Court sustained an...
Continue reading "Tax Court: Real Estate Gains By Non Professional Passive Activity"
Jodi Schwartz recently submitted a New York State Bar Association Tax Section report on the tax deductibility, under section 170 and related provisions, of contributions made to a disregarded entity subsidiary of a tax-exempt organization eligible to receive tax-deductible contributions.The full article...
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For willful failure to file foreign bank account reports with the IRS, Michael Reiss, a doctor, professor, and medical researcher of Princeton, N.J., was sentenced to one day in prison and eight months community confinement. The full article is published by Tax...
Continue reading "Princeton Doctor Receives Jail Time for Failure to File FBARS"
Tax season 2011 is almost around the corner, and taxpayers are facing many uncertainties for the future. Some important issues that will be addressed in the upcoming year include the presidential election, tax cuts due to expire, a reform to...
As the saying goes, you only get one shot to make a good first impression. In difficult economic environments, the first impression may be the only opportunity you have to impress a prospective employer. Forbes magazine has laid out some...
Continue reading "Seven Tips On Making A Good First Impression"
A small change that will likely have a huge impact on private placement investments was recently passed by the SEC. In calculating a person's net wealth to determine if they are considered an accredited investor, the SEC will no longer...
Continue reading "Your House is No Longer Considered Wealth"
As Paul Sullivan of the New York Times notes, the most common measure of who can participate in private placements is wealth. Those who have an annual incomes of over $200,000 for individuals or $300,000 for couples or a net...
Continue reading "Who Can Really Invest in Private Offerings?"
The Tax Court has sustained an IRS determination disallowing a couple's deduction for contributions to the wife's IRA. The court found that both the husband and wife were active participants in a qualified retirement plan; thus they were subject to limitations under...
Continue reading "Gallant v. Comm'r: Tax Court Sustains Disallowance of IRA Contribution Deduction"
The Tax Court has granted an individual innocent spouse relief under Section 6015(f), finding that her former husband's "egregious misconduct," which included violations of a financial restraining order, shifted the analysis in favor of relief. The case is Zaher...
Form 8939 (Allocation of Increase in Basis for Property Acquired From a Decedent) is due on January 17, 2012 for the estates of decedents who died in 2010. This form is required if the executor chooses to elect out...
Continue reading "Carryover Basis/GST Exemption Form 8939 Due January 17, 2012 for 2010 Decedents"
The Texas Society of Certified Public Accountants have provided comments on re-proposed regs (REG 128224-06) explaining which costs incurred by estates or non-grantor trusts are subject to the two percent floor for miscellaneous itemized deductions. The comments suggest that...
The IRS has determined that a taxpayer may use any reasonable method, including the exact method described in temporary regulations, to calculate the amount deductible as qualified residence interest when debt exceeds the acquisition or home equity debt limitations....
In Tax Notes comments, Sanford Millar discusses some of the disclosure and enforcement issues that may arise with the filing of Form 8938. Millar notes that the noose is tightening for U.S. taxpayers with undisclosed foreign assets and with...
Continue reading "Form 8938 May Create Disclosure and Enforcement Issues"
The law firm of Mcguire Woods has recently published a legal update on developments in fiduciary administration law. The various updates and topics are discussed by examining nine recent cases dealing with various topics in fiduciary law. For the full report See "Mcguire Fiduciary...
Continue reading "Mcguire Woods Publishes Update on Changing Fiduciary Law "
When an American lives abroad, the most common examples of taxable gifts are property and monies given to ones children and grandchildren. The rules for levying transfer tax are roughly the same for expats as they are for U.S. citizens...
In a recent article on Forbes, Erik Carter debunks five common gift tax myths. These rules are especially pertinent post-holiday season. The complete article can be accessed here. See Erik Carter, "5 Common Tax Myths About Gifts," Forbes (December...
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Giving a gift worth more than $13,000 usually means a gift tax return must be filed. There are, however, exceptions to this rule, such as gifts to charities or the payment of school tuition or medical expenses. Even if the...
Continue reading "Beware of Gift Tax Rules in Estate Planning"
A district court has is allowing the IRS to issue a summons to the State of California Board of Equalization in order to detect transfers of property between non-spouse relatives that were not reported on gift tax returns. See Michael...
The article discusses steps that heirs can take to figure out how much money is owed to the state or IRS. The first recommendation is to take inventory. Heirs must make sure to determine what the estate is truly worth. The...
The article discusses how Bush-era tax cuts will expire at the end of 2012. Two dozen tax experts were solicited for their opinion concerning what the tax rates would be in 2013. A majority of the experts believe that the...
Experts agree that there will be a surge in estate tax planning to take advantage of an estate exemption that expires at the end of 2012. The exemption allows an individual to pass on $5 million dollars in assets tax-free. ...
Continue reading "Surge Expected Before Expiration of Estate Exemption"
Under our current tax laws, the maximum tax exemption a person can claim during his lifetime for a gift is $5.12 million ($10.24 million for a married couple). There is generally a $13,000 annual gift-tax exclusion which does not count...
The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes. It also announced the collection of more than $4.4 billion so far from the two previous international programs....
Sanford Millar has published "New Offshore Traps" at JD Supra describing some of the foreign assets that the IRS expects to be reported, including foreign trusts and other holdings (related to aggregate value).Posted by Michael Nissenbaum, Associate Editor, Wealth Strategies...
Continue reading "Form 8938 "Specified Foreign Financial Assets""
Melissa Cover Selinger has published "On The Money: Estate Planning Window of Opportunity" at BizTimes.com. The article describes the favorable estate tax and gift tax circumstances that will expire Jan 1, 2013, namely the 35% top rate on gift and...
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Continue reading "IRS Issues Guidance On Rev. Proc. 2012-9, 2012-2 IRB 261"
Senator Rand Paul, R-Ky., late in 2011 placed a hold on proposed protocols to U.S. tax treaties with Switzerland and Luxembourg, as well as a new treaty with Hungary. According to sources, the senator did not like the idea of...
Continue reading "Senator Paul Places Hold On New International Tax Protocols "
When stock options are taxed, both the corporation and employee receive a tax benefit. Stock options allow corporations to claim a deduction when the employees exercise their stock options. Likewise, employees of the corporation get the benefit of paying ordinary...
Estate planning is generally considered to be a good idea. However, not realizing that each individual will need to have an estate plan that is tailored to their needs and future outlook is not the best idea. Specifically, factors such...
An article in the New York Times discusses two investment strategy books which can help the average investor maintain a solid portfolio by avoiding certain pitfalls. The two authors are out to inform of the real possibility that you...
Continue reading "Investment Books Aid Investors in Making Sound Decisions "
Tax evasion has become a popular political theme. In movies and popular stories swiss banks have been known for their bank secrecy tradition. However, often overlooked is the role of small banks in hiding bank identities which leads to tax...
Dividend funds have had a very good year and more investors are looking at them. However, the price-to-earnings ratio for traditionally strong dividend stocks are higher than the S&P average. The price for dividend stocks presents the question whether they...
Peter J. Reilly discusses how difficult it is to interpret legal advice from field attorneys (LAFA). LAFA documents are prepared by Field attorneys in the Office of Chief Counsel that are reviewed by an Associate Office, and subsequently issued to...
Continue reading "Attempting to Interpret Legal Advice from Field Attorneys"
Courage Campaign, a progressive grassroots advocacy group, thinks that Kim Kardashian should pay higher taxes. The group claims that Kardashian earned $12 million dollars in 2010, but paid taxes only one point higher than middle-class Californians. Many avergae Americans believe...
The IRS has released new proposed guidelines to provide relief to more innocent spouses requesting equitable relief from income tax liability. Notice 2012-8 revises the threshold requirements for requesting equitable relief and revises the factors used by the IRS...
Continue reading "More Innocent Spouses Qualify For Relief Under New IRS Guidelines"
The Wealth Strategies Journal has posted a new article, entitled "When Higher Marginal Tax Rates Helped the Economy: Professor Paleveda's Paradox," by Nick Paleveda, MBA, JD, LLM.From the article: "Generally, it is the thinking of the hoi palloi that...
Continue reading "When Higher Marginal Tax Rates Helped the Economy: Professor Paleveda's Paradox"
The Wealth Strategies Journal has posted a new article, entitled "Cross Purchase," by Martin M. Shenkman, CPA, MBA, JD.Summary: Buyout agreements are vital to family and closely held businesses. With the economic turmoil and rapidly changing laws you need to...
The IRS has released Publication 523, Selling Your Home. The Publication explains the home sale exclusion allowing gains of up to $250,00 ($500,000 on a joint return) to be excluded from income. It also notes the extension of the...
Continue reading "IRS Releases Publication 523: Selling Your Home"
The executor of the Dickow estate has petitioned the Supreme Court to review a First Circuit decision that upheld the dismissal of the estate's refund suit as untimely. The executor is arguing that under Section 6081 the IRS has...
Three Swiss bankers have been indicted by grand jury in the District Court for the Southern District of New York. They have been charged with having conspired to hide $1.2 billion from the IRS in undeclared Swiss bank accounts....
Continue reading "Swiss Bankers Indicted for Hiding Money From IRS"
The Sherayzen Law Office has published "Current Basic Estate and Gift Tax Rules" on their webpage. The article discusses the Unified Federal Estate and Gift Tax Exemption, Federal Estate and Gift Tax Rates, and Portable Exemptions for 2012. Posted by...
Doria D. Aronson has written "United States: Know the Law - Paying Gift Tax" In the Manchester Union Leader. The article makes four suggestions to minimize the impact of the gift tax. They are:1) Pay for your children's education. Tuition...
Continue reading "Four Tips to Minimze One's Gift Tax Liability"
Jane Hodges has written "First-Time Buyers Lean on the Bank of Mom and Dad" at Reuters. The article discusses the frequency and nature of familial assistance to first-time home buyers. Nearly one-third of first-time home buyers received help from their...
Continue reading "Parental Assistance for First-Time Home Buyers"
Kenneth M. Cymbal and Michele B. Collins have written "The Flexible Irrevocable Trust" at LifeHealthPro. The article describes the irrevocable life insurance trust (ILIT), a gifting instrument that provides more flexibility to the grantor than other types of irrevocable trusts. Posted...
Continue reading "Gifting Flexibility in an Irrevocable Life Insurance Trust"
For owners of Advisory firms, it is important to deepen your relationship with clients by providing cutting edge strategies which increase the value and service you provide to clients. Due the to risky economic times, clients are seeking the risk...
Continue reading "2012 Resolution: A Trusted Advisor to Clients"
The Association of Foreign Investors in Real Estate (AFIRE) recently published their 2012 forecast results for the best places with earning potential, with the U.S. ranking first, followed by Brazil, with a difference in margin points of 23.8 percent, and...
Rep. Nita M. Lowey, D-N.Y has introduced H.R. 3747 to increase the alternative minimum tax exemption amount and index the amount for inflation.See H.R. 3747 (Dec. 20, 2011).Posted by Brian Spring, Associate Editor, Wealth Strategies Journal....
In Gaitan v. Commissioner, Javier Gaitan and Monica Gaitan owned a clothing-export business and a car-wash business. In 2006, they filed a joint income-tax return and attached two Schedule C: one for a clothing-export business and one for a car-wash...
Continue reading "Tax Court Denies Divorced Couple's Deductions"
The Internal Revenue Service announced that taxpayers have until April 17 to file their tax returns. The IRS encourages taxpayers to e-file as it is the best way to ensure accurate tax returns and get faster refunds.The IRS also announced...
Continue reading "IRS Extends Tax Return Deadline to April 17, 2012"
The Internal Revenue Service has published "IRS Offers Top 10 Tax-Time Tips" to provide some guidance to filers as tax season approaches.Posted by Michael Nissenbaum, Associate Editor, Wealth Strategies Journal. ...
The Congressional Research Service has released a report analyzing the 2012 rules for health savings accounts (HSA). The report will be updated as the rules change. The annual contribution limit for 2012 is $3,100 for individuals and $6,250 for...
The Wealth Strategies Journal has posted a new article entitled, "Intra-Family Loan Valuation Issues" by Aaron M. Stumpf and Jesse A. Ultz.From the article: "With the looming threat of Congress passing legislation that would curtail the application of valuation discounts for minority...
Some state-run 529 plans are offering new incentives. For example, Nevada has introduced two matching grant programs: one for low-income families and another for family members of Nevada Purple Heart recipients. Other states have chosen to reduce fees. Connecticut lowered...
Continue reading "Some States Are Increasing Perks and Reducing Fees for 529 Plans"
