Death of Grantor: Conversion of LLC to Tax Partnership

Estate Planning, Income Tax

Common in estate and trust planning is the gift or sale of assets to an irrevocable grantor trust[1] structured to be outside of the grantor’s taxable estate.[2] Often, such gifts or sales are made of interests in family entities such as LLC’s.[3] These entities can provide significant non-tax benefits including consolidation of assets, centralized management,…
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Yet Another Proposed Listed Transaction – CRATs and Annuities

Compliance, Income Tax, Regulatory, Tax Controversy

On March 25, 2024, the IRS issued Prop. Reg. Section 1.6011-15[1], which designates certain transactions involving charitable remainder annuity trusts (“CRATs”) in tandem with single premium immediate annuity (“SPIA”) products as listed transactions[2]. Last year, I wrote an article in which the Tax Court decided against a taxpayer couple who undertook this exact transaction.[3] Now,…
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Estate Planning with Partnership Interests: Income Tax Considerations

Estate Administration, Estate Planning, Fiduciaries, Income Tax, Tax, Tax Related Cases

Small businesses predominate the United States.[1] Many of those businesses operate through entities taxed as partnerships.[2] Those entities may be general partnerships, limited partnerships, LLC’s, or other state law entity types.[3] Many partnerships are formed as part of family and estate planning. Some benefits of the use of partnerships in estate planning include, but are…
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Monetized Installment Sales – Proposed Regulations will Lead to Burdensome Reporting Requirements and Increased Scrutiny

Business Transactions, Compliance, Estate Planning, Income Tax, Regulatory, Tax, Tax Controversy

Monetized Installment Sales, as previously written upon by Gray Edmondson,[1] have been subject to increased scrutiny by the IRS in recent years, making its “Dirty Dozen” list in each of the last three years.[2] The IRS remains on the offensive in scrutinizing such transactions, issuing proposed regulation under Internal Revenue Code Section 6011 in August…
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Tax Effect of Protocol Updates to Blockchain-Based Cryptocurrency

Chief Counsel Advice, Cryptocurrency, Income Tax, Regulatory

A recent Chief Counsel Advice Memorandum (“CCA”) discusses certain tax consequences pertaining to a taxpayer owning cryptocurrency native to a blockchain that undergoes a protocol upgrade. CCA 202316008. In the hypothetical scenario discussed in the CCA, a hypothetical blockchain, very similar to Ethereum, underwent a change in the method in which it approved and processed…
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Charitable Remainder Annuity Trusts – An Excellent Tool, but Not a Gain Eraser

Cases, Charitable Giving, Estate Planning, Fiduciaries, Income Tax, Tax, Tax Controversy, Tax Court

Charitable remainder annuity trusts, or CRATS, are excellent estate planning vehicles and provide a litany of benefits to those who implement them, but as Devin Mills discussed in his recent article on the 2023 IRS Dirty Dozen list, the IRS considers CRATS as one of the legitimate tax strategies that are often abused by taxpayers.[1]…
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