Oct 042012
 
Time Is Running Out To Take Advantage Of 2012 Estate And Gift Tax Planning Opportunities

Time is running out to take advantage of the liberal estate and gift tax exemptions of 2012.  Currently, the exemption amount is $5.12 million for both gift and estate tax purposes.  This exemption is scheduled to sunset on December 31, 2012, after which it will revert to a much harsher $1 million exemption and the estate tax rate will rise from 35% to 55%. Before the end of 2012, a married couple may transfer assets with a value of up to $10.24 million (reduced by any previous taxable gifts) to their children or grandchildren and such transfers to the next More…

Aug 142012
 
Life Insurance Planning Will Be Very Important If Estate Tax Exemption Rolls Back

While many people are aware that life insurance policies are generally exempt from income tax, they may not be aware that the value of these policies may be included in their estate for the purpose of calculating estate taxes.  Under IRC § 2042, the value of a decedent’s gross estate includes the value of any life insurance policy that is either (1) receivable by the executor of the decedent’s estate (i.e. where the estate is a beneficiary); or (2) receivable by any other beneficiary when the decedent had any “incidents of ownership” over the policy at the time of death.  More…

Jul 232012
 
Bizarre IRS Estate Tax Decision Leads To $29 Million Tax Bill

A dispute with the IRS over the estate of a modern art dealer has taken a strange turn along the way to a $29 million dollar estate tax deficiency.  The controversy centers over a piece of art created by Robert Rauschenberg known as “Canyon.”  This particular piece incorporates a stuffed bald eagle, a federally protected species, which means that under federal law anyone who tries to sell the piece would be committing a crime.  Therefore, estate appraisers thought that they were justified in valuing the piece at $0 for estate tax purposes.  Unfortunately, the IRS disagreed, and determined that the More…

Jul 202012
 
Tax Court Decision Upholds Annual Exclusion Treatment For Gifts Of Family Limited Partnership Interests

A recent U.S. Tax Court decision has established the parameters for qualifying gifts of an interest in a family limited partnership as annual exclusion transfers.  Under § 2503 of the Internal Revenue Code, a person may gift away up to $13,000 each year per individual without suffering any gift tax consequences.  This is commonly referred to as the “annual exclusion.”  In order to be considered a transfer that is eligible for the annual exclusion, the gift has to be of a “present interest,” and not just an interest in a future right or benefit.  Courts have held that in order More…

Jun 062012
 
Challenges To DOMA May Lead To Changes In Same-Sex Couple Tax Planning

As challenges to DOMA keep mounting, the status of tax planning for LGBT couples find itself in a state of flux.  DOMA, fully known as the Defense of Marriage Act, is a 1996 federal law that defines marriage as a legal union between one man and one woman.  Under the law, no U.S. state is required to recognize a same-sex marriage from another state and same-sex marriage is not recognized for all federal purposes, including for tax purposes.   The Obama administration has previously announced that it will no longer defend legal challenges to DOMA in federal court, and the past More…

May 142012
 
Facebook Co-Founder Eduardo Saverin Renounces U.S. Citizenship Ahead Of Facebook IPO

Facebook co-founder Eduardo Saverin, best known for his bitter legal battle with Facebook founder and CEO Mark Zuckerberg which was highlighted in the popular 2010 film The Social Network, has renounced his American citizenship ahead of Facebook’s impending initial public offering (IPO), which is currently scheduled for Friday, May 18.  Born and raised in Brazil before moving to the U.S. in 1992, the 30-year old Mr. Saverin now lives in Singapore.  Saverin renounced his citizenship on September 30, 2011 but the information did not become public until the IRS released his name on April 30. This maneuver was obviously done More…

Feb 172012
 
IRS Releases 2012 List Of The  “Dirty Dozen” Tax Scams

Once again, tax season is upon us and the IRS has issued the annual “dirty dozen” tax scams. Topping this year’s list is identity theft.  In response to growing identity theft concerns, the IRS has declared its intent to embark on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible.  In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued and has been working to help victims of the identity theft refund schemes. The entire list is More…

Feb 142012
 
Examining The Tax Consequences Of Whitney Houston’s Death

On February 11, 2012, artist Whitney Houston was found dead in her suite at the Beverly Hilton Hotel, in Beverly Hills, California, submerged in the bathtub.  At this time, the cause of death is not known, although prescription drug abuse has been speculated. So what can be expected tax-wise, following her death?  Two important concerns may be the estate tax, as well as the issue of income in respect of a decedent. Currently, the estate tax rate is 35% and applies only to estates worth more than $5 million (or $10 million for couples).  Perhaps as famous as her singing More…

Dec 012011
 
End Of The Year Tax Planning - GRATs

With interest rates continuing to hold at near record lows, now is the time to consider adding a GRAT to an estate plan.  A Grantor Retained Annuity Trust (GRAT) is an estate planning technique based primarily on interest rate assumptions.  It utilizes a trust that is set to exist for a specific number of years and then terminate when the term ends.  The GRAT is funded using assets that are considered likely to appreciate in value at a rate greater than that projected by the IRS, which for GRATs established in December is 1.6%.  Essentially, the GRAT mechanism allows capital More…

Nov 282011
 
End Of The Year Tax Planning - Making The Most Of The Gift & Estate Tax Exemptions

We are now nearly a year removed from the expansion and unification of the gift and estate tax credits, and now is the time to take advantage of this liberal tax exemption.  Currently, the exemption amount is $5 million for both gift and estate tax purposes.  This exemption is scheduled to sunset on December 31, 2012, after which it will revert to a much harsher $1 million exemption if no legislative action is taken.  The estate tax rate will also rise from 35% to 55% if no action is taken. Before the end of 2012, a married couple may transfer More…