Finish that Rollover before Declaring Bankruptcy

In the recent case of In Re Jones, 123 AFTR 2d 2019-_________ (Bktcy. Ct. IL), an individual taxpayer and petitioner for bankruptcy relief under chapter 7 was able to withdraw $50,000 from his individual retirement account (“IRA”), deposit the funds into his personal account, spend $30,000 of the funds on personal items (primarily lottery tickets),…
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When Your Captive Is Not In the Insurance Business

In a recent Tax Court Memorandum opinion, the Tax Court (the “Court”) held that a microcaptive insurance arrangement did not meet the requirements to be classified as insurance for federal income tax purposes, and thus upheld the Internal Revenue Service’s (the “IRS”) Notice of Deficiency (the “Notice”) against the company and its related taxpayers who…
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Cavanaugh – Deduction Denied for CEO Misconduct Settlement Payments

In Cavanaugh v. Commissioner, the Fifth Circuit Court of Appeals addressed the deductibility of settlement payments made by a corporation to avoid liability arising from the misconduct of a shareholder-employee. Affirming the Tax Court ruling from 2012, the Fifth Circuit held that the settlement payments at issue in Cavanaugh were not deductible under IRC § 162(a) because the…
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Court Finds IRS’ Attempt to Foreclose on Trust Property Plausible

Are assets transferred by your parents into a trust for your benefit subject to your tax liabilities? In general, no, provided the trust has the proper spendthrift language. Longstanding common law has recognized spendthrift clauses in trusts which restrain voluntary alienation of trust assets, thereby preventing a beneficiary’s creditors from reaching trust assets to satisfy…
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DOJ vs. EcoVest Capital, LLC – A New Frontier in Tax Shelter Litigation?

Conservation easements have been in the news a lot recently. On Wednesday, March 27, 2019, the Senate Finance Committee launch a bipartisan investigation into the potential abuses involving syndicated conservation easement transactions. The Senate investigation is comes on the heels of an enforcement action initiated by the Department of Justice against EcoVest Capital, LLC (“EcoVest”),…
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Conservation in Bi-Partisan Crosshairs of Congress for 2019

On March 27, 2019, Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) announced an investigation into potentially abusive syndicated conservation transactions. Senator Grassley commented on the investigation saying: ““There are very legitimate purposes for the conservation easement provisions of the tax code. But when a handful of individuals cook up a scheme to cash in at the…
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The Sale of a Business – Part 3: Due Diligence

One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the third in a series of articles which will walk through and generally discuss the steps typically associated with the sale of a business. In Part 1, we discussed the breakdown of the business, the…
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Asset Protection Trust Protects Assets from Income Tax Liabilities

In the recent Tax Court opinion, Campbell v. Commissioner, T.C. Memo 2019-4, the Court held that assets in a self-settled offshore asset protection trust were not includable in assets collectible by the IRS to satisfy the taxpayer’s assessed income tax liabilities. The case involved John Campbell’s request for an Offer in Compromise, offering $12,603 to…
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Law Firm Technology – An Open Discussion

At our firm, we use a host of technological tools. As the attorney responsible for research, acquiring, and implementing our tools, I am required to invest a tremendous amount of time in our tools. This article changes pace a bit and may be geared to a different audience, our peers, in hopes to engage in…
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