Estate Planning for Nontaxable Estates

In the wake of the Tax Cuts and Jobs Act, P.L. 115-97 (Dec. 22, 2018), estate planning has seen a return to its genesis. At its core, estate planning is about making sure assets pass to the right people, at the right time, and in the right manner. For most estates, the estate tax tail…
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199A Proposed Regulations: Clarifying Scope Of Specified Services Trade or Business Under Section 199A

The Internal Revenue Service (“IRS”) recently issued proposed regulations on the new deduction for qualified business income (“QBI”) under new Code section 199A. Among other things, the proposed regulations address the hotly debated interpretive issue regarding the term “specified service trade or business” (“SSTB”). SSTB is a key term under section 199A because, if an…
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An Avalanche on Rose Hill: 5th Circuit Upholds Denial of Conservation Easement Deduction

On August 14, 2018 the 5th Circuit upheld the Tax Court’s September 9, 2016 bench opinion in PBBM-Rose Hill, LTD v. Comm’r. The case involved a $15,160,000 conservation easement deduction under IRC § 170(h) that was denied based on a technicality relating to strict compliance with the extinguishment regulations under Treas. Reg. § 1.170A-14(g)(6)(i) and a rejection of…
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Where Does Your Trust Reside? State Income Tax Implications

Where does your trust reside? Does it reside in more than one state? Does it reside nowhere? What are the implications of a trust’s residence? One important implication is how the trust will be taxed for state income tax purposes. With a varied approach to the income taxation of trusts among the states, it is…
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Estate Inclusion: The New Estate Plan, Step-Up

Background The traditional estate planning game has been to: (1) ensure client wishes were achieved by drafting wills and trusts such that the assets within the client’s estate served the intended purposes and landed in the hands of the desired beneficiaries, and (2) minimize or eliminate estate (and generation skipping) taxes. Since 2000, a few…
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Interest Rates on the Rise: To Act or Wait?

The Internal Revenue Service recently released the Applicable Federal Rates (“AFR”) and the Section 7520 rate (“7520”) for August 2018. While the AFR remains low from a historical standpoint, as do interest rates in general, there has been a recent trend of rising interest rates. The short term AFR has increased from .56% for August 2016…
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Playing with a Loaded Deck: CARDS and the Economic Substance Doctrine

BACKGROUND THE PARTIES On July 2nd, 2018, the Tax Court released its ruling in Roy E. Hahn, et al. v. Comm’r, TC Memo 2018-100. The case revolved around whether the taxpayers were entitled to deduct certain losses from a Custom Adjustable Rate Debt Structure (CARDS) transaction. The primary reason for this article is not to…
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Case in Review: Cahill and Changes in the Family Estate Planning Landscape

The Tax Court has recently issued an opinion addressing several significant estate planning issues. In Estate of Cahill, T.C. Memo 2018-84, the Tax Court reviewed an inter-generational split-dollar arrangement under IRC §§2036, 2038, and 2703 (among other provisions). While this case may not break new ground in those areas, it shows the trend of the…
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Beneficial Giving Bites Taxpayer in Wendell Falls Development, LLC

Donors of conservation easements have just been put on notice by the Tax Court. Frequently, donors of conservation easements (or related parties) own nearby property. The Tax Court recently denied a deduction for a conservation easement where, without any expert opinion, it determined there was an expectation that contiguous property would increase in value. It…
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The Marital Partnership, the Joint Return, and the Non-Disregarded Entity

When husband and wife own a partnership together, a common misconception is that because a joint return is filed for the husband and wife, the partnership can be treated as a disregarded entity and not have to file its own return. Unfortunately for some, it is sometimes realized after the reliance on this erroneous fact,…
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