Income tax planning opportunities using non-grantor trusts have been around a long time, whether focused on state or federal income tax.[1] The One Big Beautiful Bill Act[2] (“OBBBA”) has renewed attention on non-grantor trusts as income tax planning vehicles. This is due to a number of provisions in OBBA that can benefit from including one…
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In Tooke v. Commissioner,[1] the United States Tax Court recently reaffirmed the considerable discretion afforded to the Internal Revenue Service Independent Office of Appeals (“Appeals”) when evaluating collection alternatives. Although the taxpayer presented compelling evidence of significant personal hardship, including a Parkinson’s disease diagnosis, the financial consequences of a contentious divorce, and substantial expenses associated…
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The administration of inherited qualified retirement accounts can present difficult tax and procedural issues when an estate, rather than an individual, is the beneficiary of the relevant account, which generally occurs by default when an account does not have a designated individual beneficiary. Those issues become particularly important when a decedent’s estate must divide an…
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Looking for opportunities to reduce tax liability is common. There is nothing wrong with seeking to reduce tax exposure. The late Judge Learned Hand is famous for a commonly quoted opinion from the Second Circuit Court of Appeals, saying: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he…
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Allocating value to personal goodwill can materially affect the tax consequences of a business sale, estate valuation, or gift transfer. But the planning only works when the facts support that the goodwill truly belongs to an individual rather than the business entity. In any business enterprise, goodwill can be a significant and valuable asset. Goodwill…
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In a recent Tax Court case, Shryock v. Commissioner, T.C. Memo. 2026-44, the Tax Court sustained income tax deficiencies and additions to tax against a taxpayer who failed to file federal income tax returns for 2011, 2012, and 2013, failed to report income from a for-profit business operating under the name Boobies Rock! Inc. (“BR”),…
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In a significant taxpayer-favorable decision[1], the Fourth Circuit recently held that erroneous refunds of underpayment interest may constitute “unpaid tax” eligible for equitable innocent spouse relief under Section 6015(f) of the Internal Revenue Code (“Code”). Section 6015(f) provides an avenue for relief (at the IRS’s discretion) for unpaid tax or a deficiency when it would…
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In a recent Private Letter Ruling (“PLR”), the IRS ruled that the relevant estate (“Estate”) was allowed a charitable deduction for income tax purposes for amounts paid or to be paid to charity during estate administration which were traceable to taxable income, a requirement for the deduction under IRC 642(c).[1] Since the ruling is private,…
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A recent Tax Court case involved estate tax valuation and procedure relating to a deceased founder’s interest in a medical device company.[1] Following his passing, his estate reported based on an alternative valuation date, including the business interest to be valued at zero.[2] Later, the company sold for $15 million. The IRS asserted a large…
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A recent United States Tax Court memorandum[1] opinion provides an important reminder that life insurance policies with outstanding loans can create unexpected income tax consequences when the policy lapses or is surrendered.[2] In Sawyer v. Commissioner, the Tax Court held that a taxpayer realized taxable income when the cash surrender value of his life insurance…
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