Legal Updates & Commentary for Tax & Estate Planning
The Code provides various rules that may limit the ability of an individual taxpayer, who owns an interest in a closely held business, to deduct losses that are attributable to such business.
Under the passive activity loss (“PAL”) rules, for example, the losses realized by a taxpayer from passive activities that exceed the…
Late last year, we discussed how the IRS has found it increasingly difficult to audit partnerships as they have grown in number, size, and complexity, and to collect any resulting income tax deficiencies, especially in the cases of large partnerships and tiered partnerships.
We noted that, in response to these…
No, I am not referring to some fleeting summer romance. After all, “. . . summer friends will melt away like summer snows.” (George R.R. Martin, A Feast for Crows).
Rather, I am referring to the abundant guidance that the IRS has issued or proposed this summer regarding the requirements that must be satisfied…
Underlying the corporate reorganization provisions of the Code is the principle that it would be inappropriate to tax a transaction as a result of which the participating taxpayers – the corporations and their shareholders – have not sufficiently changed the nature of their investment in the corporation’s assets or business, provided the transaction is motivated…
Deferred Compensation
It is not uncommon for a closely-held business to provide an economic incentive to its key employees. The incentive may take the form of compensation the payment of which is deferred until the compensation is “earned,” which may be upon the occurrence of some specified business-related event, such as the sale of the…
It is a basic precept of the tax law that, for purposes of determining the tax consequences of a transaction, a taxpayer will generally be bound by the form of the transaction that the taxpayer has used to achieve a particular business goal.
The taxing authorities, however,…
Nothing Ventured…?
Ask any tax practitioner, “Have you ever advised a client not to do something, only to discover later that they did it anyway?” Or, have you ever reminded a client of the old adage, “if something sounds too good to be true, it probably isn’t?” The likely responses would be “Oh yeah.”
How…
Appraisal
Is it an art or a science? Is it equal parts of art and science? Is one part weighted more than the other? Do the answers to these questions depend upon the purpose for which the appraisal is being sought? Do they depend upon who is asking the question?
Yes, no, maybe, sometimes.
Not…
COD & QRPBI
The discharge of indebtedness generally gives rise to gross income to the debtor-taxpayer. The law, however, provides several exceptions to this general rule. Among these exceptions are rules providing that income from the discharge of indebtedness of the taxpayer is excluded from income if the discharge occurs in a Title 11…
Come Fly With Me
What is a like-kind exchange? Many would respond that it is a transaction by which a company exchanges one real property that it has used in its trade business for another property that will also be used by the company in its trade or business.
Generally speaking, this response would be…
