Life Insurance – It’s for the Living
If you’re reading this post, you survived the Thanksgiving holiday – hopefully, without much family drama.[i] Then again, there may have been moments, inspired by an overload of obligatory togetherness, that caused you to think about life insurance, either on your own life or on that of
It’s not at all unusual to encounter the owner of a New York business who dreams about leaving the State. The reasons often given for the desired move include, among others, the cost of doing business in New York, the State’s over-regulation of business and, probably most of all, its hostile tax environment.[i]
Lately, however, many more New Yorkers are talking about leaving the State. When you ask them why, they’ll recite a litany of familiar reasons, including those mentioned above. Generally, they seem sincere when they tell you they’re committed to doing whatever it takes to make a new home elsewhere.[ii] That is until you explain that “whatever it takes”[iii] requires (i) a lot of patience which, it turns out, many of these individuals do not have, (ii) a lot of effort, which they are unwilling to invest, and (iii) some sacrifice, which . . . well, forget about that.
A recent decision of New York’s Tax Appeals Tribunal[iv] illustrates one couple’s attempt at leaving the State. The Taxpayers (Husband and Wife) implemented many of the steps that must typically be taken to establish a change of domicile away from New York. Unfortunately for them, they were premature in thinking they had succeeded in doing so. Their missteps may serve as a lesson for others who genuinely aspire to one day describe themselves as “former New Yorkers.”[v]Continue Reading Escape from New York – It’s Not That Easy
An Extension of Credit
When one person lends money to another, the lender expects the borrower to repay the loan by an agreed-upon time. In order to compensate the lender for the borrower’s use of the lender’s money (the loan proceeds), the lender will require the borrower – at least in an arm’s length setting involving unrelated persons[i] – to pay interest on the amount borrowed.Continue Reading Exercised Appraisal Rights? Deferred Payment of Contingent Value? Don’t Forget Imputed Interest
The enactment earlier this year of the One Big Beautiful Bill Act (the “Act”)[i] generated a fair amount of excitement in the business community.[ii]
If one had to identify a single provision of the Act in which the owners and prospective owners of start-up and emerging businesses have expressed particular interest, the amendment of the Code’s gain-exclusion rule for the sale or exchange of stock of a qualified small business[iii] may be the one most frequently mentioned.Continue Reading Qualified Small Business Stock – Be Mindful of the ‘Acquisition Dates’ When Applying OBBBA’s Enhanced Gain Exclusion Rule
Suspect Transactions (?)
It is axiomatic that a transaction between related businesses – i.e., businesses that are owned or controlled directly or indirectly by the same interests (a “controlled group”) – will generally be subject to heightened scrutiny by the IRS to ensure the transaction was not undertaken or structured for the purpose of gaining an improper tax advantage.
For example, when the IRS determines that related businesses have engaged in a transaction that lacked economic substance or a bona fide business purpose, but which generated a tax benefit, the IRS may, depending upon the facts and circumstances, void the transaction as a sham, collapse into one integrated transaction the ostensibly separate steps implemented by the related businesses, or ignore the form of the transaction to focus on its economic result, for the purposes of establishing the correct tax treatment of the transaction and ascertaining each business’s proper tax liability.[i]Continue Reading Reallocating the Payment of Income Between Controlled Taxpayers – What if the Payment is Prohibited?
Abusive Arrangements
As part of its enforcement efforts, the IRS annually identifies what it describes as potentially abusive transactions that taxpayers should avoid.[i] According to the agency, some of these transactions are focused on more complex arrangements that promoters market to higher-income individuals. The IRS has stated that such arrangements will likely attract additional agency compliance efforts in the future; in other words, they are on the IRS’s “enforcement radar screen.”
Among these suspect tax-motivated transactions, the IRS has included so-called “monetized installment sales” (“MIS”),[ii] which the agency claims involve the inappropriate use of the installment sale rules[iii] by a seller who, in the year of a sale of property, effectively receives the sales proceeds through purported loans.Continue Reading Another Setback for Monetized Installment Sales?
Determining Tax Deficiencies
As we discussed a few weeks ago,[i] the IRS is charged with enforcing the U.S. federal tax laws; i.e., it is responsible for processing tax returns and for collecting taxes. As part of its collection function, the agency may examine a taxpayer’s books, accounts, financial and other records to ensure that the information included on the taxpayer’s return for a tax year was reported correctly, and to verify that the reported amount of tax was correct.Continue Reading Visiting the Sins of the Tax Preparer Upon the Taxpayer? The Fraud Exception to the Limitations Period on Assessment
The Latest
Last week, an amicus brief was filed with the First Circuit Court of Appeals in support of a taxpayer’s[i] challenge to the U.S. Tax Court’s dismissal of the taxpayer’s petition[ii] for lack of jurisdiction. The Tax Court determined that the taxpayer failed to satisfy the statutory requirement that a petition be filed with the Court within 90 days after the IRS mails a Notice of Deficiency to the taxpayer if the taxpayer wants to challenge the asserted deficiency in the Tax Court.[iii]Continue Reading Will Congress Extend the Statutory Period For Filing a Petition With the U.S. Tax Court?
“State” of the Law
A quick review of the cannabis landscape[i] reveals that most of the tax-related activity remains at the state level. At present, most states have decriminalized the use of cannabis products; it remains illegal in only a handful. Approximately half the states permit the recreational use of such products, and almost all allow some form of medicinal use.
The taxes imposed by States in which recreational use is legal vary; for example, some tax on the basis of weight, others on the basis of THC content. Regardless of the method used, the goal is almost always to raise funds to combat addiction.Continue Reading Cannabis Business and the QBI Deduction
Rules
In the fictional world of John Wicks, the High Table enforces a strict code of conduct[ii] without which the lives of its inhabitants would mimic life in a Hobbesian state of nature.[iii]
However, as dangerous and as rule-bound as life “under the Table” appears to be, it pales in comparison, both in terms of numbers and complexity, to the rules that have been promulgated for the administration of the U.S. federal system.Continue Reading Responding Timely to A “90-Day Letter” – Is It Jurisdictional?