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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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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One of the more common engagements for our firm is to assist with business sales and acquisitions. This article is the second 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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Original Tax Court Opinion I have previously written about the case of Wendell Falls Development, LLC v. Comm’r, T.C. Memo 2018-45. In that case, the Tax Court denied a charitable conservation easement deduction relating to a 125-acre parcel that was part of a total 1,280-acre development outside of Raleigh, North Carolina. I noted that the…
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Background Surprising to many, qualified retirement accounts received by a spouse in divorce may lose creditor protection, a significant beneficial feature of retirement accounts. In the case of In re Lerbakken, filed on October 16, 2018, the Bankruptcy Appellate Panel of the Eighth Circuit held that qualified accounts received by the non-participant spouse pursuant to…
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Background In a recent case out of the Seventh Circuit, a large corporate taxpayer lost a involving three like-kind transactions under IRC 1031. Applying the substance over form doctrine, the Court upheld the imposedtax liability of approximately $437,000,000 and accuracy related penalties under IRC 6662(a) of approximately $87,000,000. In this case, Exelon Corporation (“Exelon”) sold…
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