We have previously discussed the impact of increasing transfer tax exemptions on income tax planning.[1] Those considerations have been solidified after passage of the recent tax legislation known as the One Big Beautiful Bill Act which increased transfer tax exemptions to $15 million, annually adjusting for inflation, without any scheduled sunset date. This can make…
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In a recent case out of the United States District Court in the Western District of Washington, the Court granted the Department of Justice’s (“DOJ”) Motion to Dismiss, dismissing the case on multiple fronts.[1] The plaintiff, Ferdinand Hafner (“Hafner”) sought to recover refunds on taxes paid by his late father, recoup amounts he claimed were…
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What provides a trustee with information about a settlor’s intent in administering a trust? Obviously, the trust agreement is the most relevant document. However, trust agreements are not always clear, do not always provide context, tend to lack more personal statements of the settlor, and raise many other aspects that could benefit from knowing the…
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In Palmwood Holdings, LLC v. Comm’r, the United States Tax Court granted partial summary judgment in favor of the IRS, holding that the Service satisfied the supervisory approval requirement of section 6751(b) with respect to a civil fraud penalty first asserted in the IRS’ answer. The decision reinforces a growing body of Tax Court precedent…
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Use of irrevocable trusts is common in a number of planning scenarios – tax planning, estate planning, business succession, Medicaid qualification, asset protection, etc. Just like there are several reasons irrevocable trusts are created, there can be reasons why a trust may be terminated before the expiration of the term stated in the trust agreement.[1]…
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Undue influence disputes[1] often involve no allegations of overt fraud, coercion, or incapacity, instead turning on the fairness of transactions that occur within confidential relationships. A recent Mississippi Court of Appeals’ decision[2] provides a clear illustration of how courts analyze these disputes and why the burden imposed on a beneficiary who occupies a position of…
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Two different cash advances from a mother to a son highlight when a purported loan will be respected as such for tax purposes. One case is Estate of Bolles,[1] which is an opinion I wrote about previously.[2] The other case is Estate of Galli.[3] The outcomes of the two cases are opposites – one finding…
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A recent Tax Court memorandum opinion[1] presents a thorough illustration of the Court’s approach to valuation disputes in syndicated conservation-easement transactions. As is historically typical in these transactions, the case involved a partnership interest sale shortly before the donation and an associated appraisal asserting a dramatic increase in value when compared to the original purchase…
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A Mississippi Court of Appeals decision in a recent case illustrates what happens when personal conviction meets the weight of evidentiary rules.[1] The case had voluminous testimony and detail, yet it closes with a simple conclusion. No matter how genuine the belief that a later Will existed, Mississippi law demands clear proof that the document…
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In a recent Tax Court case, the Tax Court upheld the IRS assessments against the taxpayer (though he would not call himself that) for unreported income and failure to file, and even assessed sanctions under IRC 6673 for advancing frivolous arguments.[1] However, as discussed below, he was able to avoid the accuracy related penalty under…
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