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

TAX PLANNING FOR DIVORCE: PART II

Tax planning in the context of divorce requires familiarity with IRC §§ 71 and 1041, the first of which governs the taxation of alimony (support) payments and the second of which sets forth the general rule of nonrecognition with respect … Continue reading

Posted in Asset Protection, Divorce | Leave a comment

Article 81 Guardianships

Article 81 of the Mental Hygiene Law provides for the appointment of a guardian to satisfy personal or property management needs of a person who may require some assistance but does not require a traditional conservatorship and judicial committee. Guardianship … Continue reading

Posted in Guardianships | Leave a comment

Split Interest Trusts

Split interest trusts can effectively remove appreciating assets from the grantor’s estate at little or no transfer tax cost. They can also serve to shift income, since all income generated by the property held in trust will continue to be taxed to the grantor during the trust term. As discussed in Part I, these trusts also possess attractive asset protection features. Because of their ability to reduce transfer taxes, split interest trusts have been the subject of treasury regulations and also recent proposed legislation. Continue reading

Posted in Charitable Entities, Tax Decisions, Tax News & Comment | Leave a comment

Tax Court Rejects Sale-Leaseback; Upholds $87 Million Assessment

In a lengthy opinion, the Tax Court voided the claimed tax benefits of an intricate sale-leaseback transaction involving foreign partners presumed immune from U.S. tax, and upheld an IRS income assessment of $87 million and a disallowance of $50 million … Continue reading

Posted in Tax Decisions, Tax News & Comment | Leave a comment

President Clinton Submits 1999 Budget Proposal

President Clinton’s 1999 budget proposal contains the first balanced budget in thirty years. The proposal recommends $23 billion in tax cuts, which include tax reductions for environmental cleanup, child care, retirement savings and educational incentives. Revenue proposals made by Mr. … Continue reading

Posted in From Washington, Tax News & Comment | Leave a comment

FINAL PENSION REGULATIONS ISSUED

Final regulations have been issued which govern required minimum distributions from IRAs and qualified plans. They generally follow the scheme articulated in the proposed regulations issued in January, 2001. Their use is mandated on January 1, 2003, but optional for … Continue reading

Posted in Tax Decisions, Tax News & Comment | Leave a comment

Supreme Court Declares NY Tax Statute Unconstitutional (July 1998)

On certiorari, the Supreme Court, in a 6-3 decision written by Justice O’Connor, voided New York Tax Law § 631(b)(6), which the Court held violated the Privileges and Immunities Clause of the Constitution by effectively denying only nonresidents of New … Continue reading

Posted in Tax Decisions, Tax News & Comment | Leave a comment

IRS Restructuring and Reform Act of 1998

By a vote of 402 to 8, the House has overwhelmingly approved the IRS Restructuring and Reform Act of 1998. The proposed legislation follows months of Congressional testimony alleging IRS abuses. The new law would establish an “IRS Oversight Board” … Continue reading

Posted in Tax News & Comment | Leave a comment

Self-Employment Tax for LLC Members: New Regs. Proposed

LLCs are tax-favored business entities which possess the essential features of limited liability and flow through taxation. Their allure was greatly enhanced by a recent decision of the IRS to withdraw a 1994 NPRM which would have required LLC members … Continue reading

Posted in Tax News & Comment | Leave a comment

Businesses Cope with 1997 Tax Act

Many of the tax cuts granted to individuals by the 1997 Tax Act will be fueled by corresponding increases in taxes paid by businesses. Those increases will result primary from (1) the imposition of significant limitations on NOLs and on … Continue reading

Posted in IRS Matters, Tax News & Comment | Leave a comment

Perspectives in Estate Planning

Effective estate planning actually encompasses many objectives, the most obvious of which is to implement a legally effective method of transferring wealth to loved ones. Estate planning should also reduce the incidence of gift and estate taxes, through full use of available tax credits and their leverage where possible. Estate planning should seek to maximize the value of the estate through use of tax-favored investment vehicles. Finally, estate planning should also seek to preserve and protect estate assets. Continue reading

Posted in Estate Planning, Tax News & Comment | Leave a comment

Estate Tax Reform: New York Joins Sunbelt States (Janaury 1998)

New York State has long imposed the highest gift and estate taxes in the nation. New legislation signed by Governor Pataki in August, however, will bring New York into line with other states which impose a much lower rate of … Continue reading

Posted in Federal Estate Tax, Tax News & Comment | Leave a comment

Planning for Family-Owned Business (QFOBI — November 1999)

Until 1997, no special estate tax rules existed for family-owned businesses. Limited relief was available under §2010, (unified credit), the special use valuation of qualified real estate under IRC §2032A,  and the deferral of estate taxes under §6166. In 1997, … Continue reading

Posted in Tax News & Comment | Leave a comment

Tax Court Finds Premium for 76 Voting Shares is Percent of Equity of Entire Corporation (November 1999)

Finding that 76 shares of voting stock of a closely held corporation were each worth $215,539, rather than $2,650 as had been reported, the Tax Court upheld most of a $17,643,886 deficiency asserted against the Estate of Richard R. Simplot, … Continue reading

Posted in Tax Decisions, Tax News & Comment | Leave a comment

Planning for Capital Asset Status

The maximum effective marginal tax rate for individuals can now reach 41.4 percent (after limitations on itemized deductions and phase-out personal exemptions). By contrast, the long-term capital gains tax rate for noncorporate taxpayers is 20 percent (25 percent on unrecaptured § 1250 gain). For corporate taxpayers, ordinary income and long-term capital gains are taxed at 35 percent. From a rate perspective, it is therefore desirable, where possible, to structure individual business transactions so that capital asset status will be accorded. Continue reading

Posted in Capital Gains, Property Transactions, Tax News & Comment | Tagged , , , , | Leave a comment