In a recent opinion out of the United States Court of Appeals for the Seventh Circuit, the Court upheld the Tax Court’s ruling that cash payments made from a family owned company to the son of the founder were not bona fide debts, and thus not deductible as bad debt expenses.[1] Additionally, the Court sided…
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In trust planning, it is common that a trust beneficiary is appointed as trustee. A lot of confusion surrounds the consequences of appointing a beneficiary as his or her own trustee. On one hand, I have heard people say it is not allowed to have a beneficiary serve as trustee. On the other hand, I…
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It is not uncommon for a property owner to experience a large loss on the sale of a piece of property. It is also not uncommon that an issue exists regarding character of the loss and whether the asset sold was a capital asset or a business asset used in carrying on a trade or…
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It’s common knowledge among tax practitioners that the IRS is not a fan of formula gift clauses that attempt to pin the amount of the gift to a dollar figure such that the actual gift is adjusted in the event of a successful valuation challenge by the IRS.[1] However, in a recent Tax Court case,…
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As a basic matter, creditors of a trust beneficiary generally do not have access to assets of the trust.[1] The primary exception is that creditors generally can access trust assets distributable to the settlor of the trust, such a trust being considered “self-settled.”[2] Many states have abolished this exception for trusts that satisfy certain statutory…
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On July 1, 2020, the new Mississippi Uniform Estate Tax Apportionment Act went into effect under Sections 33-46 of S.B. 2851, replacing the old Uniform Estate Tax Apportionment Act under Title 27 Chapter 10 of the Mississippi Code. What does apportionment of estate taxes mean anyway? Apportionment of estate taxes is the determination and allocation…
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The Mississippi Legislature made some sweeping changes to Mississippi laws governing estates and trusts, as well as one significant change to real property law. With the passage of S.B. 2850 and S.B. 2851, Mississippi is set to get some much needed updates in these areas of law. Both bills were signed by the governor and…
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Those of us who handle acquisition transactions can take for granted that asset acquisitions avoid the buyer assuming unintended liabilities of the seller. As a general rule, acquisitions of an entity’s equity cause the buyer to take any liabilities of the business conducted by the entity. However, asset acquisitions generally allow the buyer to selectively…
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In a recent opinion, the Tax Court held that business expenses of a medical marijuana dispensary in California were not deductible for federal income tax purposes. Richmond Patients Group (“Richmond”) sought to deduct its business expenses including compensation to officers, wages, rent, taxes and licenses, and other business related expenses, but the Tax Court denied the…
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On March 13, 2020, under the Stafford Act, the President issued an emergency declaration as a part of the government’s attempts to mitigate the effects of the COVID-19 pandemic. Since that time, business owners have had a lot to handle including mandatory closures, remote working, issues under preexisting contracts (leases, loans, supply contracts, employment agreements,…
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