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 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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We have previously written about the requirements to file a Report of Foreign Bank and Financial Accounts (“FBAR”) for foreign bank accounts held by US taxpayers pursuant to the Bank Secrecy Act.[1] In a recent case out of the United States District Court for the District of Idaho, the Court ruled that a decedent’s widow…
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A recent Tax Court opinion sheds light on how unauthorized withdrawals from a jail food account were treated for federal tax purposes.[1] An Alabama sheriff found some unexpected relief when her unauthorized withdrawals, totaling $155,000 from a jail food money account were treated as impermissible, albeit genuine loans, and not embezzled income, subject to taxation.…
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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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The recent Tax Court decision in McDougall v. Comm’r, 163 T.C. No. 5 (2024) provides important insights into the intersection of Qualified Terminable Interest Property (QTIP) trusts and the associated gift tax implications. This article delves into the case’s facts, legal issues, court holdings, and practical implications for estate planners and tax professionals. Factual Background…
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In a recent Tax Court opinion[1], the taxpayer Michael Shaut (“Mr. Shaut”), representing himself, contested the IRS’s determination of a tax deficiency. The court had to decide on several key issues, including whether Mr. Shaut was entitled to deductions for theft loss, legal fees, and net operating losses, as well as whether he was liable…
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We are often contacted by clients, other attorneys, CPA’s, or others, looking to deal with unjust tax outcomes. Often, we are able to assist in avoiding those results. Sometimes, however, tax law simply allows what many see as injustices to occur. This can be the case, for example, when owners of a pass-through entity, S…
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In a recent case out of the Court of Appeals for the State of Mississippi, the Court held that a writing titled an “Article of Agreement” (the “Agreement”) was sufficient to convey an interest in real estate to the decedent’s sisters.[1] The primary issue to be decided by the Court was whether the Agreement executed…
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In a recent decision, the Tax Court addressed the complexities of gift tax and qualified terminable interest property (“QTIP”) rules, providing important insights for estate planning professionals and taxpayers alike.[1] The case centered on the interpretation of provisions related to the taxation of transfers between spouses, and in this context, termination of QTIP interests and…
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