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Rules

  • Winston: Two rules that cannot be broken, Jonathan. No blood on Continental grounds, and every marker must be honored. Now, while my judgment comes in the form of excommunicado, the High Table demand a more severe outcome if their traditions are refused.
  • John Wick: I have no choice?
  • Winston: You dishonor the marker, you die. You kill the holder of the marker, you die. You run, you die. This is what you agreed to, Jonathan. Do what the man asks. Be free. Then, if you want to go after him, . . .  be my guest. But until then . . .
  • John Wick: Rules.
  • Winston: Exactly. Rules. Without them, we’d live with the animals.[i]

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?
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C Corp
Imagine a closely held and growing start-up business (“Corp”) that was recently incorporated under state law and, so, is treated as a regular C corporation for purposes of the federal income tax.[i]

Thus, Corp will pay income tax on its taxable income,[ii] and the losses generated in Corp’s first few years of operation – not uncommon with a start-up – will be trapped within Corp and cannot be passed out to Corp’s shareholders for their own use.[iii]

Continue Reading Gifting Qualified Small Business Stock – Can You “Stack” the Section 1202 Odds In Your Favor?
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In the tax world, when someone refers to a “charitable” organization, it is likely they are using the term in its generally accepted legal sense to include not-for-profit corporations or charitable trusts that are organized and operated “exclusively”[i] for religious, charitable,[ii] scientific, literary, educational, or other specified purposes.[iii]

Continue Reading The Uncharitable Treatment of Tax-Exempt Charities? Maybe, Maybe Not
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Not Long Ago

In the months preceding the general election in 2024, the owners of many closely held businesses who had not yet given much thought to the disposition of their future estates, including their businesses,[i] decided they should meet with their attorneys and other advisers[ii] to see what steps they should consider taking to protect their wealth, which in many, if not most, cases resided primarily in their business.

What prompted many of these owners to act was a sense of urgency arising from the realization that the federal transfer tax[iii] benefits and other tax benefits made available to them by the 2017 Tax Cuts and Jobs Act[iv] were going to expire after 2025 (perhaps sooner);[v] these included the enhanced unified estate and gift tax basic exclusion amount,[vi] the increased generation-skipping transfer tax exemption amount,[vii] the reduced top marginal income tax rate for ordinary income,[viii] and others.

Continue Reading The Enactment of OBBBA: It’s Time to Plan, Not Relax – “Winter is Coming”
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Conformity

New York’s personal income tax law, like that of other states, conforms with the federal system of income taxation.[i] The reason typically given for such conformity is to simplify tax return preparation, improve compliance and enforcement, and aid in the interpretation of tax law provisions.[ii]

The most significant example of New York’s conformity to the Code[iii] is found in the state’s computation of a resident taxpayer’s state income tax liability, which begins with the taxpayer’s federal adjusted gross income, and is then modified by certain additions and subtractions which reflect New York’s unique tax treatment of certain items.[iv]

A corollary to the conformity principle requires that any changes to the taxpayer’s federal adjusted gross income[v] be accounted for in re-determining the taxpayer’s New York income tax liability.

Continue Reading Drop & Swap Like-Kind Exchange Passes Muster in New York
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The “One Big Beautiful Bill Act” (the “Act”)[i] was signed into law last week, on July 4. As promised by the White House, the Act extends – i.e., purports to make “permanent” – many of the otherwise expiring provisions that were introduced by the Tax Cuts and Jobs Act (P.L. 115-97) in 2017.[ii] The legislation also adds some new provisions to the Code, while “updating” others.

Continue Reading Closely Held Businesses and Their Owners Ask: What’s Big and Beautiful in the Recent Tax Law?
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Independence & Taxes

Last week the United States celebrated the 249th anniversary of its declaration of independence from Great Britain.[i] In celebration of the occasion, President Trump signed into law the One Big Beautiful Act which, among other things, extended the tax cuts enacted during the first year of his first term in the White House.[ii]

As most of us are aware, the debates preceding the enactment of this legislation – whether they occurred in a House or Senate committee, on the floor of either Chamber, in public assemblies, with members of the media, or on city streets – often devolved into what may fairly be described as exercises in divining economic collapse, promoting class warfare, accusing others of demagoguery, etc.[iii]

Continue Reading Taxes: An American Obsession?
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Related Party Loans

If you’ve been around closely held businesses long enough, you know that a transfer of money between a business and its owner, or between two related businesses, is sometimes characterized by the parties as a loan (“related party loans”).

However, in order for such a transaction to be respected as a bona fide loan for purposes of the income tax, it will not suffice for the related putative borrower and lender to merely label the transfer of value between them as an obligation to be repaid.[i]

Continue Reading Writing Off A Loan – Simultaneous COD Income and Bad Debt Deduction? Not Necessarily
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An Agency Under Siege

The mission statement of the IRS reminds taxpayers that it is their responsibility to understand and meet their tax obligations, while it is the role of the IRS to “enforce the [tax] law with integrity and fairness to all” to ensure that those obligations are satisfied.

The IRA

In 2023, following the $80 billion of funding authorized for the agency by the Inflation Reduction Act (the “IRA”),[i] the IRS announced it was going to increase its enforcement efforts with regard to wealthy and high-earning taxpayers, and the complex partnerships they employ,[ii] to ensure these taxpayers were held accountable for the full amount of taxes they owed.

Continue Reading The Limited Partner Exclusion From Self-Employment Tax – But Who Is A Limited Partner?
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Remember Taxes

Every conveyance of property or of an interest in property from one person to another is prompted, or at least influenced, by economic considerations. The parties to the transaction may swap properties, or one party may transfer a property to another in exchange for money[i] or for the services of the other party. In these instances, there has been a conscious or deliberate exchange of value between the parties – each party has determined that the exchange will improve their own position.[ii]

Continue Reading Terminating a Trust? Don’t Forget to Consider This Tax Issue