Can the material participation tests of Section 469 be met remotely? The Tax Court says yes. In a recent Memorandum Opinion, the Tax Court (the “Court”) held that Fred Barbara (“Barbara”) satisfied the requirements for materially participating in his Chicago based business despite living in Florida approximately 60% of the year. The Internal Revenue Service (the…
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Introduction The do-it-yourself (DIY) movement has been very popular in recent years. Some people are attracted to the idea of DIY because they like the feeling of satisfaction that comes with accomplishing a task, whatever it may be. Others perceive DIY as a way to save money (i.e., they are just cheap). Some tasks are…
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After the Tax Cuts and Jobs Act which came into effect in 2018, charitable deduction planning has changed. This is a result of a handful of changes, but the primary changes for purposes of this discussion relate to a doubling of the standard exemption, elimination of most itemized deductions, and reduction in individual income tax…
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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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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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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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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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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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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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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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