Federal

Here It Comes

According to many, the long-awaited intergenerational transfer of assets from the Baby Boomer generation, and from what remains of the Silent Generation, to younger members of their families[i] – estimated by some to exceed $100 trillion in total, worldwide, over the next two decades – is well under way.

Most of this shift in wealth will occur within families whose members already count themselves among the wealthiest on the planet.[ii] Indeed, according to one source, “[t]he wealthiest 10 percent of households will be giving and receiving a majority of the riches.” Within that group, the top 1 percent holds about as much wealth as the bottom 90 percent, and it “will dictate the broadest share of the money flow.”[iii]

Continue Reading With Tax Increases Lurking Just Over the Horizon, and With Large Dispositions of Wealth Underway, Now’s the Time to Identify and Correct Earlier Missteps

Encourage But Verify

“It is more blessed to give than to receive.”[i]

Undoubtedly, you’re familiar with the foregoing proverb that seeks to encourage “charitable behavior” among the members of society, and to dissuade them from pursuing only their innately selfish proclivities.[ii]

The Code recognizes the conflict that an individual taxpayer may experience in the course of deciding whether to make a charitable contribution of a property, or to retain such property (or the proceeds from its sale) for the individual’s own use.

Continue Reading “For Want of a Nail” – A Poor Reason to Lose a Charitable Contribution Deduction

State of the Economy?

According to statistics released by the Administrative Office of the U.S. Courts for the twelve-month period ending Dec. 31, 2025, bankruptcy filings by businesses rose 7.1 percent and non-business filings increased by 11.2 percent. Total filings have increased each quarter since June 2022, though they remain lower than historical highs.[i]

Do these statistics somehow reflect the state of the U.S. economy, generally?

Continue Reading No Matter How Bad it Gets . . . Pay Your Withholding Taxes?

Perception of Taxes

Since I started practicing almost forty years ago, there have always been a relatively few well-to-do individuals for whom the payment of any taxes – whether personal or business – under any circumstances, seemed to be the most odious and excruciating task they were ever required to perform.

The fact they had…

Reality Check?

A few days ago, Sen. Wyden, the Ranking Member on the Senate Finance Committee, introduced a bill to tax carried interests as ordinary income on a current basis.[i] A day earlier, Sen. Van Hollen introduced a bill to reduce the federal estate tax exemption to $3.5 million and the gift tax exemption to $1.0 million.[ii]

In fact, Democrats in Congress have been introducing a number of tax bills over the last few weeks that convey a consistent theme: it’s time to tax the wealthy.[iii]

Continue Reading Tax Planning and The Political Pendulum

Abusing Partnerships?

I am certain that most of you have encountered at least one unscrupulous “advisor” who tried to convince you or your client to take advantage of what they described as a perfectly legal “loophole” in the Code that could generate significant tax savings.[i]  

Over the years, many of these aggressive tax “planning” strategies have utilized the partnership form of business entity[ii] to claim the “as advertised” tax benefits but without demonstrating any independent business or investment purpose for the partnership.

Continue Reading Determining Whether a “Partnership” Should Be Respected For Tax Purposes

Adequate Interest

The IRS uses the applicable federal rate, or AFR, to determine whether a private debt transaction provides for adequate stated interest for various income or transfer[i] tax purposes.

Typically, private debt includes a direct or indirect loan or other transaction that involves an extension of credit between related persons[ii] outside the public markets.

Continue Reading Bona Fide Debt Between Related Persons – Is it Enough to Charge Interest at the AFR? Maybe Not

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?