Charitable remainder annuity trusts, or CRATS, are excellent estate planning vehicles and provide a litany of benefits to those who implement them, but as Devin Mills discussed in his recent article on the 2023 IRS Dirty Dozen list, the IRS considers CRATS as one of the legitimate tax strategies that are often abused by taxpayers.[1]…
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It is fairly common to make charitable gifts of property prior to a sale transaction. Often, those gifts are of real property or closely-held business interests. This is for good reason. Structured properly, not only do donors generally receive a charitable income tax deduction equal to the fair market value of the donated property, they…
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While most people know the phrase not everything you read on the internet is true, many don’t know what can actually be relied upon in a legal setting. A reasonable person might think the instructions on an IRS publication or a web article or website published by a credible source, such as an accounting or…
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Most people believe that assets held in trust for their benefit, at least to the extent the trust assets were left in trust by a third party (such as, for example, a parent), to be exempt from the claims of their creditors. As a general rule, this belief is well founded. However, as for claims…
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The United States Tax Court recently decided yet another case[1] involving conservation easements and the corresponding charitable contribution deduction. Such cases have been prevalent lately, although recent cases have dealt more with syndicated conservation easements and the IRS’s failure to follow certain procedural rules.[2] In the subject case of this article, however, the Court, for…
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Being in the midst of the holiday season, many people are making gifts to friends, family members, employees, and others important to them. Rarely is much thought given to the income tax consequences of such gifts. A recent case from the Tax Court illustrates how gifts between an employer and employee are treated.[1] Income Tax…
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Passive Activity Loss Rules Lead To Yet Another Taxpayer Loss In Court – Why Keeping Adequate Records Is Essential In a recently issued Memorandum Opinion[1], the United States Tax Court found that a husband and wife who owned and operated real estate investment properties were not entitled to deduct losses derived from properties owned in…
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In a recent case from the Tax Court, two married taxpayers failed to establish that their settlement proceeds fell within a statutory exception to taxation.[1] This case is a bit more straightforward than others we may write about from time to time. Factual Background In September 2009, Chicago State University (“CSU”) hired Mr. Bryant Tillman-Kelly…
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Reasonable compensation has been a relatively hot topic this year. Charles Allen previously discussed the Blossom case in which the taxpayers were penalized for understating the compensation of the two owners/officers of an S corporation.[1] While Charles’s discussion focused on employment taxation, Josh Sage followed up with an article on the resulting income taxation consequences…
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In a recent full Tax Court opinion[1], the Tax Court set aside Notice 2017-10, holding IRC § 6662A penalties are not to be imposed upon the taxpayer.[2] The Court’s reasoning was that the IRS failed to properly follow the notice-and-comment procedure, required under the Administrative Procedure Act. On December 23, 2016, the IRS issued Notice…
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