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Proving Estate and Gift Tax Value: Evolving Lessons From Recent Cases

[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...

Taxation of Charitable Remainder Trust Beneficiaries on Sale of Trust Interests

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...

ALERT! More Corporate Inversion Regs On The Way

The IRS and Treasury have issued Notice 2015-79, 2015 IRB LEXIS 583 (Nov. 19, 2015) , announcing the government’s intention to issue additional regulations targeting corporate inversion transactions. The initial announcement of the government’s plan to issue regulations addressing inversion...

Suellen Wolfe on King v. Burwell

By Suellen M. Wolfe * The Patient Protection and Affordable Care Act (hereinafter referred to as ACA) [PL 111-148, 124 Stat 119 (Mar 23, 2010)] provides for health care reform law in the United States. The ACA consists of the Affordable Health Care for America Act, the Patient Protection Act, health...

Avoiding Net Investment Income Tax on Sale of S-Corporation Stock

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...

Consistent Basis Reporting Requirements

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...

Global Positioning of IP

by William H. Byrnes IV and Marvin Petry * @ A multinational enterprise is ordinarily organized as a parent company having subsidiaries, branches, or joint ventures in foreign locations where the enterprise may have employees, agents, business assets, or customers. The parent and its subsidiaries...

Property Acquired from a Decedent and the Consistent Basis Requirement

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 Challenge of Taxing the Sharing Economy

by Jessica L. Kerner, J.D., LL.M. * In 2007, a hotel room shortage in San Francisco prompted two roommates to create a website to rent out air mattresses in their apartment. Less than eight years later, the company they founded, Airbnb, has been valued at more than $25 billion. ["Value of Airbnb...

April ’16 Inversion Regs Impose Anti-Earnings Strippings Rules

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...

Temporary Regs Take on Previously Unaddressed Inversion Issues

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...

Officials Open to Clarifying Political Subdivision Regs

Officials on June 6 appeared willing to clarify provisions in controversial proposed regulations that would redefine the meaning of political subdivision in issuing tax-exempt bonds. At a hearing at IRS headquarters in Washington, Spence Hanemann, branch 5 attorney, IRS Office of Associate Chief Counsel...

Subchapter K: In or Out?

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...

Application of the Accuracy-Related Penalty to an Inconsistent Estate Basis

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 §...

New Law Allowing IRS to Seize Passport

by Mark A. Muntean * Introduction A new law allows the Internal Revenue Service ("IRS" or the "Service") to revoke or deny passports for certain taxpayers who owe unpaid federal taxes. This change to the tax law was included in the Fixing America's Surface Transportation...

Dodd-Frank and Oil & Gas Audit Fees

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...

Tax Reform Policies of the Presidential Candidates

INTRODUCTION When the Tax Reform Act was enacted 30 years ago, Congress was able to implement major tax reform by collaborating across bipartisan lines. [1] It was the last time the Internal Revenue Code underwent a major overhaul, and the elements that came together to create such a major change...

Estate Planning Aspects of Qualified Pension & Profit Sharing Plan Distributions

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...

IRC Section 2704 Proposed Regulations

Treasury published long-awaited proposed revisions to the existing I.R.C. Section 2704 regulations on August 4, 2016. 81 Fed. Reg. 51413 . If published as final regulations in current form, the revisions will inhibit transfers of closely-held business interests to family members. Treasury provided a...

New Regs on Earnings Strippings Transactions

On October 13, 2016, the Treasury and IRS issued regulations [T.D. 9790 (Oct. 13, 2016)] finalizing and revising proposed regulations issued earlier in the year that targeted post-inversion earnings strippings transactions, which are certain related-party debt transactions that inverting companies engage...

Classifying Debt and Equity

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...

Qualified Terminable Interest Property Trust Basics

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...

IRS Attack on Earnings Repatriation Strategy Has Familiar Feel

Practitioners say the IRS and Treasury's recent notice announcing plans to crack down on transactional strategies in a triangular reorganization that attempt to repatriate earnings and basis of foreign corporations tax free, represents another attempt, in a long line of guidance, to limit the tax...

McCarthy Prefers GOP Tax Reform Plan to Trump's Tariffs

President-elect Donald Trump's proposal to hit offshoring companies with a 35 percent punitive tax or tariff is getting a lukewarm reception from prominent members of his own party, but some Republican leaders still think there's common ground. "I do not believe in a trade war; I do not...

House Passes Bill to Refund Improper Withholding to Veterans

The House unanimously backed legislation December 5 to refund improperly withheld taxes on severance pay to wounded military veterans. Two-hundred and twenty-three Republicans and 169 Democrats voted to pass the Combat-Injured Veterans Tax Fairness Act of 2016 (H.R. 5015) in late voting. Forty-one House...