By Alison Stemler, J.D. * The golden parachute rules in IRC Section 280G state that if an employee or contractor receives or will receive compensation that is triggered by or closely related to a change in control, and that change in control compensation is in total more than three times the employee or contractor's average taxable pay, the compensation that exceeds one times average taxable pay is not deductible...

by Alison Stemler * One of the main purposes of the Dodd-Frank Act is to promote financial stability in the US economy, including through a significant number of provisions relating to financial institutions. [Incentive-Based Compensation Arrangements, 81 Fed. Reg. 37669 (proposed June 10, 2016) (to be codified at 12 C.F.R. pt. 1232, 12 C.F.R. pt. 236, 12 C.F.R. pt. 372, 12 C.F.R. pt. 42, 12 C.F.R. pt. 741, 17 C.F...

The Qualified Terminable Interest Property (QTIP) Trust was a creation of ERTA-1981 pursuant to IRC § 2056(b)(7) which qualifies for the marital deduction, even if the surviving spouse is not given a general power of appointment during life or at death. Under a QTIP Trust, the surviving spouse need only be given all the income for life, which makes it similar to the traditional general power of appointment trust...

by Shahzad A. Malik J.D. LL.M and Ryan C. Gaglio J.D. * In General "There is no dearth of cases in this province of tax law. So large is their number and disparate their facts, that for every parallel found, a qualification hides in the thicket. At most they offer tentative clues to what is debt and what is equity for tax purposes; but in the final analysis each case must rest and be decided upon its own unique...

I. Overview II. Income Tax Treatment [1] Income Tax Deferred Until Receipt by Employee or Beneficiary [2] Income Tax on Distributions [a] Averaging Methods No Longer Generally Available [b] Rollovers of Lump Sum Distributions [c] 10% Penalty on Early Withdrawals [d] Income in Respect of a Decedent III. Minimum Distribution Requirements [1] Distributions to the Participant [2] Distributions After Death of Participant ...

by Max Choi, Dr. Rudolph Jacob and Dr. Susanne O'Callaghan * The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), was passed in response to the financial crisis of 2007-2009. The purpose of this exploratory study is to examine whether the Dodd-Frank Act resulted in significantly different audit fees for the largest thirty publicly traded oil and gas companies based...

Last year, IRC Section 1014 was amended by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 to provide that the basis of inherited property must be consistent with the estate tax return. [Pub L No 114-41, 114th Cong, 1st Sess, § 2004(a) (July 31, 2015); IRC § 1014(f) .] In addition to adding this consistent basis requirement, the 2015 act added to IRC Section 6662 an accuracy...

by Dmitriy Kustov CPA EA MS Tax * Sub K's Cubist Period The word, "partnership," has so many common place meanings and could mean so much these days that we should not blame those taxpayers who do not understand all the technicalities of partnership for tax purposes. Curiously, the Wikipedia's article on partnerships admits that federal law does not have a clear rule for what is a partnership....

The IRS and Treasury recently issued the latest set of rules aimed at corporate inversions. The temporary, proposed, and final regulations target: (1) transactions structured to avoid the objectives of IRC Section 7874 ; and (2) certain post-inversion tax avoidance transactions. [ T.D. 9761 (final and temporary regulations) and 81 FR 20858 and 81 FR 20912 (proposed regulations)]. Included in the temporary regulations...

On April 8, 2016, the IRS and Treasury took additional action against corporate inversions and issued temporary, proposed, and final regulations targeting inversion transactions. Among the proposed regulations were much anticipated rules that address earnings strippings transactions. This article briefly discusses the new rules. Earnings Strippings. The goal of the proposed regulations in 81 FR 20912 is to discourage...

Under IRC Section 1014, the basis of property acquired from a decedent is the fair market value of the property on the date of the decedent's death. [ IRC § 1014(a)(1) .] The provisions of IRC Section 1014, along with the Treasury Regulations under IRC Section 1401, contain the rules for determining the basis of property acquired from a decedent. Under the provisions of IRC Section 1014, if the executor of the...

Executors of decedents' estates required to file federal estate tax return must also file a form reporting estate tax value of assets distributed to beneficiaries. Certain beneficiaries must use a consistent value for purposes of determining income tax basis and consequently capital gains and depreciation deductions as is used for purposes of determining the estate tax. The consistent reporting of basis requirement...

by Matthew Cavitch, J.D. * An S corporation can save certain shareholders—shareholders who are treated as non-passive under Section 469—the 3.8% net investment income tax. The 3.8% net investment income tax is imposed to the extent the taxpayer's modified adjusted gross income exceeds $250,000 for married couples and $200,000 for individuals. So taxpayers do not want income to be characterized as "net...

By G. Robert Smith Jr. CPA CGFM Continuing Professional Education and Dwayne N. McSwain CPA Associate Professor of Accounting Sam Houston State University * Introduction The United States economy is comprised of two major sectors: the private sector and the public sector. Most accountants are well-versed in the components of the private sector. After all, the great majority of courses in most accounting programs cover...

A charitable remainder annuity trust is required to pay out a fixed dollar amount to the income beneficiary or beneficiaries. A charitable remainder unitrust must in general pay out to the income beneficiary or beneficiaries a fixed percentage of the annually redetermined net fair market value of the trust assets. These distributions have tax consequences for the income beneficiaries. In August, the Treasury and Internal...

[1] Introduction The term, "fair market value," proves one of the most litigated in the Federal estate and gift tax code. Value lies in the eyes of the appraiser, often resulting in wide disparities between the Service's and taxpayer's appraised values. [ See, e.g., Est. of Giovacchini v. Comm'r, TC Memo. 2013-27 (taxpayer's appraisal asserted $7.4 million value and Service's over $25 million...

Notice 2015-54 , 2015 IRB LEXIS 335 (Aug. 6, 2015), announces the future issuance of regulations under IRC Section 721(c) to ensure that, when certain property is transferred by a U.S. person to a partnership with foreign partners that are related to the transferor, the transferor will take into account, either immediately or periodically, the income or gain that is attributable to the property. [ Notice 2015-54 , 2015...

by Stephen Looney* In Fargo v Commissioner [ T.C. Memo 2015-96 ], the Tax Court held that a couple had ordinary income from a property sale by a partnership in which they were partners because the property was sold in the ordinary course of business. The taxpayer, husband and wife, were partners in Girard Development, L.P. (GDLP), an entity subject to the partnership procedures under IRC Section 6626. The primary issue...

Budget & Taxes Chicago Mayor to Propose Major Property Tax Hike To help cover the cost of a big pension payment for police and firefighters next year and help shrink his city’s annual budget hole, Chicago Mayor Rahm Emanuel will reportedly call for the city’s largest property tax increase in at least decades, along with other taxes and fees. Emanuel is considering a property tax hike of between...

The Service and Treasury have issued proposed regulations affecting taxpayers who receive gifts or bequests from U.S. expatriates. [ 80 FR 54447 ]. The regulations are issued under IRC Section 2801 , which imposes a tax on covered gifts or bequests received by U.S. citizens or U.S. residents from covered U.S. expatriates. [See IRC § 2801 ]. The IRC Section 2801 Tax on Covered Gifts or Bequests. The taxation...

The IRS and Treasury have issued new guidance on the treatment of United States property held by a controlled foreign corporation (CFC) in connection with certain transactions that involve partnerships. The regulations are issued under IRC Section 956 , the Code section under which the amount a U.S. shareholder in a CFC must include in the shareholder’s gross income with respect to the CFC is determined. Under...

The Tax Court recently upheld the validity of Treasury Regulations Section 1.911-7(a)(2) in a case where the taxpayer sought application of the foreign earned income exclusion (FEIE) under IRC Section 911 , but was denied the exclusion because she had failed to make a timely election pursuant to Section 1.911-7(a)(2) . [ McDonald v. Commissioner , TC Memo 2015-169]. In the case, the taxpayer worked overseas in 2009 but...

On August 26, the Service and Treasury Department issued proposed amendments to the regulations under IRC Section 937 for determining whether an individual is a bona fide resident of a U.S. territory. [Preamble, REG-109813-11]. In general, IRC Section 937 defines a "bona fide resident" as a person who --- (1) is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana...

The U.S. Court of Appeals for the Federal Circuit has affirmed the Court of Federal Claims’ dismissal of a multinational corporation’s refund claims for tax years 1997 and 1998 based upon disallowed foreign tax credits attributable to the corporation’s payment of Belgian withholding taxes. [ Albemarle Corp. & Subsidiaries v. United States, 2015 U.S. App. LEXIS 14174 (Fed. Cir. Aug. 13, 2015 ) ] ...

by Daniel G. Mudd * ... The Basics of the Federal Excise Tax on Alcohol Federal taxation of alcohol generally follows the same tax structure and controls as are used with other commodities and products that are subject to excise tax ( e.g. , tobacco, gasoline, etc.). Accordingly, there are Federal Excise Taxes ("FET") related to the production, importation, and sale of alcohol. The FET includes three primary...