Estate Planning in Volatile Markets

Anyone paying attention knows that stock markets have been volatile. As a simple example, the Dow Jones Industrial Average saw an increase of over 600 points (1.56%) on April 11 after dropping over 1,000 points (2.5%) on April 10. Similarly, the S&P 500 gained 9.5% on April 9, but dropped 3.5% on April 10. Generally,…
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Recent Microcaptive Case Undermines Promoted Structure

A recent Tax Court decision underscores an increasingly rigorous examination of Section 831(b) microcaptive insurance arrangements.[1] This ruling may be insightful to taxpayers considering or currently operating microcaptives, has broad implications for businesses seeking legitimate tax incentives created by Congress. Overview of the Case The case at hand involves the Internal Revenue Service’s (“IRS”) rejection…
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With Tax Season Upon Us, Only Take Deductions That Can Be Substantiated

With the filing deadline for individuals to file their income tax returns approaching and people becoming more acutely aware of how much in taxes they will pay for the last year, now, perhaps more than other times of the year, I receive comments from people about “starting an LLC to reduce taxes,” or “having expenses…
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Death of Grantor: Conversion of LLC to Tax Partnership

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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Alternative Dispute Resolution in Estates and Trusts in Mississippi

Litigation involving estates and trusts, while sometimes impossible to avoid, is usually exhausting to all parties involved, especially given that such litigation is often among family members and/or is following the death of a loved one. Alternative dispute resolution (“ADR”) is an alternative to traditional litigation, encompassing various methodologies, including mediation and arbitration, aimed at…
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Substantiate Those Deductions, But Not with Falsified Documents!

We have written numerous articles over the years about substantiating deductions, whether they be charitable donations or business expenses or any other type of deduction.[1] As noted by the Supreme Court, deductions “are a matter of legislative grace, and taxpayers bear the burden of proving their entitlement to any deduction claimed.”[2] A recent Tax Court…
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Another Untimely Filing Leads to Dismissal of Taxpayers’ Case

As I have written about previously[1], if a Tax Court petition is not timely filed, the Tax Court will generally[2] lack jurisdiction to hear such petition.[3] In the cases mentioned in my previous article, taxpayers’ petitions were dismissed for lack of jurisdiction despite the taxpayers having good excuses, such as (1) the taxpayers mailed their…
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Plaintiffs’ Attorneys: The IRS Is Coming for You

The IRS has recently announced a compliance campaign intended to address “the attempted deferral of contingent or court-awarded attorney fees by cash-method attorneys/law firms (taxpayers) who direct that such fees be paid to a third-party instead of the taxpayer.”[1] The IRS is concerned that plaintiff’s attorneys are deferring payment of income tax on legal fees…
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