Author Archives: David L. Silverman, J.D., LL.M. (Taxation)

Distributable Net Income and Income in Respect of a Decedent

In general, any distribution of income or principal by an estate will cause the beneficiary to be taxed to the extent of the lesser of (i) the estate’s “distributable net income” (DNI) or (ii) the amount of the distribution. Estate income is said to be “carried out” to the beneficiary. Capital gains are an exception. Since they are allocated to corpus and are not distributed to beneficiaries currently, they are generally excluded from DNI. Continue reading

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The Decedent’s Final Income Tax Return

A decedent’s final income tax return must be filed by the Executor by April 15 of the year following death. A joint return may be filed if the decedent’s spouse did not remarry during the year. If no Executor has been appointed by the due date of the return, a joint return must be filed by the surviving spouse. In that case, the later appointed Executor may revoke the surviving spouse’s election to file a joint return and file a separate return for the decedent’s estate within one year from the due date of the return, including extensions. Continue reading

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Revision of New York Power of Attorney Law Takes Effect

Effective 9/1/09, NY General Obligations Law §5-1501, which governs the content and execution of powers of attorney, was revised and amended. Powers executed prior this date remain valid, but are subject to the amended statute. Continue reading

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ASSET PROTECTION: ETHICAL CONSIDERATIONS

New York County Surrogates Court, in In re Joseph Heller Inter Vivos Trust, 613 N.Y.S.2d 809 (1994), approving a trustee’s application to sever an inter vivos trust to “insulate[] the trust’s substantial cash and securities from potential creditor’s claims that could arise from the trust’s real property, observed that “New York law recognizes the right of individuals to arrange their affairs so as to limited their liability to creditors, including the holding of assets in corporate form . . . making irrevocable transfers of their assets, outright or in trust, as long as such transfers are not in fraud of existing creditors.” Continue reading

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Revised New York Criminal Tax Statutes

Tax professionals preparing 2009 New York State corporate, income, employment and sales tax returns should be alert to statutory changes which create new tax offenses and which impose stricter criminal penalties for existing offenses. In some cases, tax professionals may be prosecuted under an accomplice theory for aiding or abetting dishonest taxpayers. This memorandum summarizes the new legislation, whose objective is to improve tax compliance and prevent tax evasion by drastically increasing penalties for serious acts of tax evasion and tax fraud. For more information about the new statute, and for legal guidance, please contact this office. Continue reading

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Business Succession Planning Involving Family Members

Business Succession Planning Involving Family Members Continue reading

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Tax Court Holds Single Member LLC Not Ignored for Gift Tax Purposes

Pierre v. Com’r, 133 T.C. No. 2 (8/4/09) Continue reading

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2009 REGS., RULINGS AND PRONOUNCEMENTS OF NOTE

2009 REGS., RULINGS AND PRONOUNCEMENTS OF NOTE
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DOMESTIC ASSET PROTECTION TRUSTS

DOMESTIC ASSET PROTECTION TRUSTS
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2009 Gift & Estate Tax Decisions of Note

2009 Gift & Estate Tax Decisions of Note

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2009 Decisions and Rulings Under IRC Section 1031

2009 Decisions and Rulings Under IRC Section 1031
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Estate Planning Synopsis

The level of sophistication of estate plans varies with the size and complexity of an individual’s estate. A carefully drafted Will or revocable inter vivos trust is the starting point for many estate plans. Continue reading

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Requirement of Filing Federal Gift Tax Return

The requirement of filing a federal gift tax return arises when one has made a completed taxable gift. Incomplete gifts do not impose any gift tax filing requirement. Thus, the donor’s gift of a diamond ring would exemplify a completed gift. However, if the donor reserved the power to revest beneficial title in the ring to himself at a later date, the gift would be incomplete.
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I.R.S. Says Its Audits of Wealthy Are Rising

The Internal Revenue Service is intensifying its scrutiny of wealthy Americans. The federal agency increased its audits of taxpayers who earned $1 million to $5 million by 33 percent last year compared with 2008, new I.R.S. figures show. The numbers, … Continue reading

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Refinancings Before and After § 1031 Exchanges

Cash (“boot”) received in a like-kind exchange results in taxable gain to the extent of realized gain. If the taxpayer exchanges Greenacre, whose adjusted basis is $1 million, for $1 million in cash and Whiteacre, worth $1 million, the taxpayer … Continue reading

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