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

INCENTIVE STOCK OPTIONS

Stock options may comprise a significant portion of compensation to key employees. Incentive stock options (ISOs) are subject to various nontax requirements, e.g., that the options be granted within 10 years of plan adoption, that they be exercised within 10 … Continue reading

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Gain, Loss, Basis & Debt Issues in Like-Kind Exchanges

Where a taxpayer “trades up” in a like-kind exchange by acquiring property more valuable than the property relinquished and no boot is received, Section 1031 operates to defer recognition of all realized gain. However, if the taxpayer “trades down” and acquires property less valuable than that relinquished — thereby receiving cash or other nonqualifying property in the exchange — like kind exchange status will not be imperiled, but the taxpayer will be forced to recognize some of the realized gain. Continue reading

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PRESIDENT BUSH URGES CONGRESS TO MAKE TAX CUTS PERMANENT

President Bush has urged Congress to make permanent various tax relief provisions which include (i) the $1,000 per child tax credit; (ii) the 15% dividends and capital gains tax rates, expiring after 2008; (iii) “bonus” depreciation provisions applicable to qualifying … Continue reading

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Estate Fails to Qualify for Innocent Spouse Relief

The 10th Circuit Court of Appeals has held that a decedent’s estate cannot initiate an innocent spouse claim for relief under IRC Sec. § 6015(c). Jonson, CA-10 (12/30/03). [The spouses claimed deductions attributable to the husband’s interest in a limited … Continue reading

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2007 Estate & Gift Tax Cases

The 11th Circuit, reversing the Tax Court, held that an estate properly reduced the value of the decedent’s interest in a company holding marketable securities by the company’s entire $51 million built-in capital gain tax liability. Estate of Jelke Est. … Continue reading

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MINIMIZING THE IMPACT OF THE ALTERNATIVE MINIMUM TAX (AMT)

Originally intended as a backstop to prevent tax-avoidance by high income taxpayers, the AMT now affects a soaring number of middle income taxpayers. The AMT applies if it is higher than the taxpayer’s regular tax liability. Continue reading

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2007 Estate and Gift Tax Decisions of Note

President Bush Proposes $150 Billion Stimulus Package Continue reading

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USE OF DISCLAIMERS IN POST-MORTEM ESTATE PLANNING

Many Wills have been drafted to eliminate the estate tax at the first spouse’s death by (i) funding a credit shelter trust with the maximum amount such that no estate taxes are due and then (ii) leaving the remaining share … Continue reading

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IRS ISSUES GUIDANCE FOR HEALTH SAVINGS ACCOUNTS

Notice 2004-2 provides guidance for new Health Savings Accounts (HSAs) which, beginning in 2004, may be funded by an “eligible individual” with tax deductible cash contributions which grow tax-free. Tax-free distributions from the account may be made by the taxpayer … Continue reading

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Partnership Assessment Extends Collection Statute Against Partners

Reversing the 9th Circuit Court of Appeals, the Supreme Court has held that a timely assessment against a California partnership extends the statute of limitations for collection of tax against the general partners. U.S. v. Galletti et al, 541 U.S. … Continue reading

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2007 IRS REGS., RULINGS AND PRONOUNCEMENTS

Printer-friendly PDF:  2007 Regs., Rulings & Pronouncements.wpd A. New Regs Govern Estate Deductions All federal circuits, except the Eighth, have long adhered to the view that post-mortem events must be ignored in valuing claims against an estate. Ithaca Trust Co. … Continue reading

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Tax Aspects of Incorporating

Deciding whether to incorporate a business requires careful analysis.  Often the taxpayer will be faced with competing choices of operating the business as a sole proprietorship, or as an S corporation.  Simply because nontax factors favor incorporating, do not assume … Continue reading

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Tax Aspects of Partnerships

A partnership, for tax purposes, is defined by negative implication.  It is a “joint venture” or similar organization engaged in business that is not classified as a trust, corporation or estate.  Partnerships, unlike corporations, generally pay no income taxes.  Taxes … Continue reading

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IRS Audit Procedures

PDF format:  IRS Audit Procedures.wpd The process used to select returns for audit is not a random one.  The oft-repeated phrase “audit lottery” is in many ways misleading since certain items, such as claiming a loss on the sale of … Continue reading

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Timing of Income and Deductions

The timing of income and deductions is of paramount importance in taxation.  Just as a dollar today is worth more than a dollar a year from now, so too is a current deduction worth more than a future one, and … Continue reading

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