All too often, we see cases where failure to properly document a transaction or keep good records is a taxpayer’s undoing. A case recently handed down by the Tax Court illustrates how that can happen. In Moore v. Commissioner the taxpayer sought to expand his tax preparation business. To finance that expansion, Mr. Moore was able…
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By holding qualified small business stock (“QSBS”), noncorporate shareholders of qualifying C corporations can sell their stock tax free after a five-year holding period. Tax benefits associated with QSBS are nothing new. However, until recently, planning with QSBS has been neglected. The Tax Cuts and Jobs Act (“TCJA”) breathed new life into the potential benefits…
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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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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 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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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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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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Whenever I attend a large conference, I try to take some time afterwards to consider the most important takeaways. Having just returned from the 53rd Annual Heckerling Institute of Estate Planning which was held from January 14-19, 2019, I spent the last week reviewing the conference materials and my notes. From this, I have compiled…
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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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