In a recent Private Letter Ruling (“PLR”), the IRS ruled that the relevant estate (“Estate”) was allowed a charitable deduction for income tax purposes for amounts paid or to be paid to charity during estate administration which were traceable to taxable income, a requirement for the deduction under IRC 642(c).[1] Since the ruling is private,…
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On April 22, 2026, Acting Attorney General Todd Blanche signed a final order (“Final Order”)[1] immediately rescheduling state-licensed medical marijuana from Schedule I to Schedule III of the Controlled Substances Act (“CSA”),[2] pursuant to President Trump’s 2025 Executive Order directing federal agencies to expedite the rescheduling of medical marijuana.[3] This change may materially affect the…
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A recent United States Tax Court memorandum[1] opinion provides an important reminder that life insurance policies with outstanding loans can create unexpected income tax consequences when the policy lapses or is surrendered.[2] In Sawyer v. Commissioner, the Tax Court held that a taxpayer realized taxable income when the cash surrender value of his life insurance…
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We have written before the importance of a property prepared Form 706 Estate (and Generation Skipping Transfer) Tax Return (“706”)[1] as well as the importance of a properly prepared Form 709 Gift Tax Return[2]. In our prior article discussing the 706, we highlighted a Private Letter Ruling (“PLR”) in which the Estate was granted a…
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A recent federal district court decision[1] highlights the significant risk that beneficiaries and fiduciaries may face when estate assets are distributed before federal estate tax liabilities have been fully satisfied.[2] In United States v. Karst, the court granted summary judgment in favor of the government and held that the decedent’s sons, who were named as…
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We have previously discussed the impact of increasing transfer tax exemptions on income tax planning.[1] Those considerations have been solidified after passage of the recent tax legislation known as the One Big Beautiful Bill Act which increased transfer tax exemptions to $15 million, annually adjusting for inflation, without any scheduled sunset date. This can make…
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In a recent case out of the United States District Court in the Western District of Washington, the Court granted the Department of Justice’s (“DOJ”) Motion to Dismiss, dismissing the case on multiple fronts.[1] The plaintiff, Ferdinand Hafner (“Hafner”) sought to recover refunds on taxes paid by his late father, recoup amounts he claimed were…
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What provides a trustee with information about a settlor’s intent in administering a trust? Obviously, the trust agreement is the most relevant document. However, trust agreements are not always clear, do not always provide context, tend to lack more personal statements of the settlor, and raise many other aspects that could benefit from knowing the…
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In Palmwood Holdings, LLC v. Comm’r, the United States Tax Court granted partial summary judgment in favor of the IRS, holding that the Service satisfied the supervisory approval requirement of section 6751(b) with respect to a civil fraud penalty first asserted in the IRS’ answer. The decision reinforces a growing body of Tax Court precedent…
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Use of irrevocable trusts is common in a number of planning scenarios – tax planning, estate planning, business succession, Medicaid qualification, asset protection, etc. Just like there are several reasons irrevocable trusts are created, there can be reasons why a trust may be terminated before the expiration of the term stated in the trust agreement.[1]…
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