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“Let’s make sure if they move, they have nowhere else to go because we’re all taxing them together.”[i]

Around the Globe

Earlier this year, the OECD observed there has been a significant increase in global wealth inequality over the last two decades. It also acknowledged that “taxation is a key instrument . . . that governments have at their disposal to address inequalities.” It added that, as “countries are looking for additional revenue sources to meet their long-term public spending needs,” it will be important to ensure “that everyone contributes their fair share,” specifically mentioning those individuals with “offshore wealth.”[ii]

Continue Reading Tax Authorities of the World Unite? Not Quite, But the IRS Joins the Movement to Tax the Rich
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Sale, or Contribution-Distribution?

Assume that X and Y agree to the following: X will transfer ownership of Prop to Y, and Y will transfer cash to X.

What just happened? Obviously, X has sold Prop to Y. If the amount of cash that X receives is greater than his adjusted basis in Prop (generally, his unrecovered investment in the property), then X will realize a taxable gain.

Continue Reading Partnership Transactions Lacking Economic Substance or Business Purpose: Investor Beware
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Notice of Deficiency

Over the years, I have observed there is only one thing that a taxpayer fears more than being notified by the IRS that their income tax return for a particular taxable year has been selected for audit, and that is being notified that the IRS has determined the taxpayer owes additional tax,[i] plus interest[ii] and penalties,[iii]  for such year.

A taxpayer who has received a timely[iv] notice of deficiency[v] is generally presented with three basic options:

Continue Reading Missing the Tax Court’s 90-Day Deficiency Deadline – Now What?
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Use Your Imagination

Imagine the IRS notifies Taxpayer that they have an outstanding tax liability with respect to Tax Year, and that the agency intends to levy on Taxpayer’s property to collect the allegedly unpaid tax. Taxpayer challenges the levy, arguing they had already paid the tax. The IRS Office of Appeals sustains the levy, and Taxpayer petitions the U.S. Tax Court to review that decision.

Imagine also, while the issue of the levy is pending before the Court, the IRS withholds from Taxpayer a refund for a later tax period, to which Taxpayer is concededly entitled, and that is unrelated to the levy.  

Continue Reading IRS Cannot Offset Taxpayer’s Refund With A Disputed Tax Liability
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Tax Season

As we approach the deadline for paying federal individual income taxes and, generally, for filing the returns on which such taxes are determined, some of you may be recalling how the Inflation Reduction Act of 2022 appropriated billions of dollars[i] to the IRS to bolster enforcement of the Code, including hiring more enforcement agents, providing legal support, and investing in “investigative technology.”

Continue Reading An Inveterate Golfer At the IRS
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It’s Still Pretty Bad

Depending upon what you read or, perhaps more accurately, depending upon how much you believe of what you read, you may be aware that many closely held businesses are concerned about their future.

Most of these survived the disruption caused by the pandemic lockdown only to be confronted with rising inflation, higher borrowing costs, a scarcity of available workers, the phaseout of COVID-era public support programs, and the potential for increased federal and state tax burdens.

Continue Reading Trust Fund Recovery Penalty & The Closely Held Business
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Last week, Sen. Warren reintroduced her “Ultra-Millionaires” wealth tax proposal to the Senate.[i] Query her timing. The measure has the proverbial snowball’s chance in Hell of being enacted by this Congress.[ii] Perhaps the Senator was inspired by the Administration’s Fiscal Year 2025 Budget, which includes its own equally ill-fated – at least for now – version of a wealth tax.[iii]   

The more likely explanation for the revival of the Senator’s tax plan is the upcoming contest for the White House, which has begun in earnest,[iv] and the Administration’s focus on what it has described as tax avoidance[v] by the “wealthy”[vi] and especially by the very wealthy.

Continue Reading “C’mon Man! Tax the Rich!” Business Owners Face Tax Increases*
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The Budget is Here![i]

Earlier this week the White House released its Fiscal Year 2025 Budget.[ii] Of course, the federal government has not yet adopted a budget for the Fiscal Year 2024 even as we approach that year’s halfway mark. But I digress.

The release of the budget comes four days after the State of the Union and only one day after the Oscar ceremonies.[iii] It seems appropriate that these three events should follow one another in relatively close succession considering each provides an opportunity for varying degrees of staging, theatrics, arrogance, and storytelling.[iv]

Continue Reading Estate, Gift, GST & Related Income Tax Proposals – What is the White House Doing?
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Can It Be Undone?

How many times have you wished that you could undo something from your past, perhaps a string of incoherent statements made at a client dinner while slightly under the influence, or an expletive-filled email composed and sent in anger?[i] Often enough, right?

I’m certain that those among you who are business owners can probably recall several things that you have done over the years that you regretted at the time, but from which you learned the proverbial lesson.[ii] Still, there are probably moments you wish you could unwind the event or statement in question.

Continue Reading Rescission, Repossession, Real Estate – The Three R’s of Unwinding a Sale
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Crossing the Streams[i]

It is not uncommon, in the context of a business entity in which a family owns a controlling or substantial interest, for an adviser to encounter intersecting gift and income tax issues.

This week’s post will consider one such instance in which the IRS was asked to determine the tax consequences of certain transfers of stock by an individual shareholder of the issuing corporation and by the trusts created for the benefit of the shareholder’s family.[ii]  

Before describing these transactions, it may be helpful to briefly review some of the applicable tax principles.

Continue Reading Transfers Within the Family Business: Gifts or “Ordinary Course” Transactions?