Generally speaking, tax follows the facts. One can of course change those facts, but when done so merely superficially, intended results may not follow. Some may be more familiar with the phrase “putting lipstick on a pig.” Well, that seems to be more or less the case in the recent opinion released in the Eighth…
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In a recent Tax Court case[1], the Court held that husband and wife taxpayers failed to meet the so-called real estate professional exception to the passive activity rules resulting in the Court denying their excess deductions from rental real estate. The passive activity rules related to rental real estate activities are a little more complex…
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In a recent Chief Counsel Advice (“CCA”) issued by the IRS, the IRS concluded that the taxpayer’s sale of stock did not qualify for the gain exclusion as Qualified Small Business Stock (“QSBS”) under Section 1202 since the business of the corporation was akin to brokerage services.[1] The IRS concluded that the corporation’s business, one…
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The IRS Office of Chief Counsel recently issued CCA 202152018 (“CCA”), in which the IRS is attacking yet another business valuation.[1] The IRS takes the position in the CCA that because the valuation used failed to account for a potential acquisition, the grantor retained annuity trust (“GRAT”) failed to properly qualify as a GRAT even…
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In another recent case involving a multi-entity tax savings strategy, pitched as the “integrated tax plan,” particularly leveraging “management fees,” we see again the Tax Court scrutinizing the legitimacy of the structure, incorporating a C corporation and a partnership, and in turn allowing the IRS to whipsaw the taxpayers.[1] Facts Around late 2009 through early…
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Is your business worth more to the IRS than it is to you? Will you owe estate tax on more value than you receive? A recent tax case illustrates how this is possible.[1] It is very common, even advisable, that closely-held business owners enter into buy-sell agreements limiting transferability of interests and setting forth procedures…
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In a recent case out of the United States District Court for the District of Connecticut, the Court denied the IRS’ motion for summary judgment and refused to aggregate the gift of partial interests in real estate together for purposes of valuing the gifts and thus determining appropriate discounts.[1] The IRS alleged that no discount…
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In May of this year the U.S. Tax Court issued a memorandum of opinion on the value of several assets included in the Estate of Michael Jackson (“Estate”) for federal estate tax purposes.[1] This opinion comes more than a decade after Jackson’s death in June of 2009 and provides some resolution (albeit subject to appeal)…
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So, we did not write on the first District Court case which was a loss for CIC Services, LLC (“CIC”) and Ryan, LLC(“Ryan”), the Plaintiffs. But, a Supreme Court decision gave the Plaintiffs another bite at the apple. This case involves Notice 2016-66 (“Notice”), the older-sibling notice to Notice 2017-10, in which micro-captive insurance transactions…
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In a recent Tax Court case, a taxpayer was denied a contribution deduction for income paid into a sole proprietorship profit-sharing plan when the Court determined that such income had not been derived from the trade or business with respect to which the plan was established.[1] Rather, the income was paid to the taxpayer under…
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