Offshore and domestic asset protection trusts (“APT”) have been around for a while. Currently, there are seventeen states that allow a person to contribute assets to trust for their own benefit (i.e. a self-settled trust) and exempt those assets from claims of their own creditors subject to certain statutes of limitations and exception creditors. Other than…
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Overview The United States Supreme Court issued a unanimous opinion on June 21, 2019 in North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust ruling that a trust beneficiary’s residence alone is not sufficient grounds for a state to tax a trust’s undistributed income. This decision disallowed the assessment of more than…
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The Tax Court recently issued decisions in Kearse v. Commissionerand Commission v. Romano-Murphy (“Romano-Murphy II“). Both cases involved review of administrative determinations made by IRS appeals officers in collections due process (“CDP”) proceedings. Section 6330(c)(1) requires appeals officers conducting CDP hearings to verify that the requirements of any applicable law or administrative procedure related to the assessment…
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This week, I have decided to take a break from our normal more technical writing and discuss some recent celebrity estate planning blunders that have come to light. Not only are these cases interesting and entertaining, but they also can provide valuable lessons when it comes to estate planning. In a previous article, I wrote…
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The Tax Court’s denial of a $33 million charitable deduction was affirmed by the D.C. Circuit Court of Appeals in a decision handed down on May 24, 2019. While the purported dollar value of the donation makes this case stand out, it involves a number of important issues including gift substantiation, substantial compliance, valuation, and…
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After the Summa Holdings case, the substance over form doctrine was left with a significant black eye by the Sixth Circuit. On May 15, 2019, the Sixth Circuit, upheld a transferee liability claim against shareholders of a Tennessee corporation while also clarifying its holding is Summa Holdings. While the Summa Holdings discussion is certainly interesting, the…
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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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