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Thus Spoke the Governor

Last Friday, New York’s Governor Hochul[i] delivered the following remarks at the annual meeting of the Business Council of New York State:[ii]

“Someone asked me today, are we going to raise income taxes? I said, ‘I’m not raising income taxes.’ I said I’m not. I stopped a huge income tax increase last year. I don’t think it’s a good strategy for economic development to find more reasons for businesses to leave the State of New York. . . . And maybe they didn’t hear that for a long time with Occupy Wall Street and all this other socialism that was going on, but you need to be reassured that the people who are actually in elected office in the highest positions right here don’t support that.”[iii]

Continue Reading New York Tax Continues to Inconvenience Nonresidents Working Remotely
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Raking It In

You may recall that earlier this year the IRS launched an initiative to pursue 125,000 “high-income, high-wealth” taxpayers who have not filed taxes since 2017. These were cases where the IRS received third party information[i] indicating these individuals had received income in excess of $400,000 but had failed to file a tax return. 

Last week, the IRS announced that during the first six months of this initiative, nearly 21,000 of these taxpayers filed returns and paid approximately $172 million in taxes.

Continue Reading Unconstitutionally Excessive FBAR Penalties? It Depends
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August is Like Sunday

As far back as I can remember, the end of August has always elicited a sense of dread comparable to what many schoolchildren, and a fair number of adults, experience every Sunday afternoon.

In retrospect, I cannot say that this feeling of doom was ever fully warranted.[i] Still, its presence has been undeniable, and it is especially palpable this year, and for good reason.  

Continue Reading New York’s Tax Treatment of Compensatory Restricted Stock and Dividends in the Hands of a Nonresident Executive
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Not So Happy Law

If given their druthers, most transactional corporate attorneys would prefer to spend their day practicing “happy law,” by which they typically mean transactions that involve capital formation, mergers and acquisitions, joint ventures, business restructurings, and other collaborative-type projects in which the parties have clearly delineated goals, there are definite beginning and end points to the project, and the project is expected to be completed within a relatively short time frame.

The odds are pretty good, however, that a transactional lawyer in the so-called “middle market” will, over the course of their career, become involved in several disputes among the shareholders of a closely held corporation.

Continue Reading When A Shareholder Loses Control of Their S Corporation
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Match Made in Heaven

There is no denying that many parts of the Code are complex and, in some cases, too obscure for many “laypersons” to comprehend.[ii] Over time, this reality spawned the need for advisers who are both knowledgeable and experienced in the ways of the Code.[iii]

Yet, even within this group of learned individuals,[iv] there are many for whom certain chapters and subchapters of the Code recall the opening of Dante’s Inferno: “I found myself within a forest dark, For the straightforward pathway had been lost.”[v]

Continue Reading Taxing A Foreigner’s Sale of a Partnership Interest – Déjà Vu All Over Again[i]
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Bon Voyage?

Over the last couple of years, several of my friends have become citizens of the country from which their parents emigrated to the U.S.[i]

Also during that period, some acquaintances took advantage of the so-called “golden visa” programs still being offered by a handful of European Union members.[ii]

A few clients gave up their U.S. citizenship, or their status as permanent residents of the U.S. (green card holders), and paid the resulting exit tax.[iii]

Continue Reading Swapping Foreign Real Properties On a Tax Deferred Basis
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Help Us Forget

Having been swept along for nine days “by the force of the hostile winds on the fishy sea,” Odysseus and his crew came to a strange land. After securing their ships, Odysseus sent some of his “companions ahead, telling them to find out what men . . . might live here in this country.” They came upon the Lotus Eaters, a people “who live upon . . . the honey-sweet fruit of the lotus.”[i] Those crew members who ate of the fruit were left in a state of bliss, forgetting all else, including an urgency to return home to Ithaca.[ii]

Continue Reading Tax Considerations and the Reclassification of Marijuana – We’re Not There Yet
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Almost That Time

In less than four months, the citizens of the United States[i] will be electing their next President to a four-year term.[ii] They will also be deciding which of the two major political parties will “control” the Senate, the House, or both, for at least the next two years.[iii]

In other words, the composition of two of the three branches of the federal government – specifically, those responsible for determining the direction of the country, and perhaps the world – will soon be up for grabs.

Continue Reading The Supreme Court’s Non-Opinion On The “Realization” of Income – A Lost Opportunity?
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Anticipation

You may have heard or even read about the U.S. Supreme Court’s recent decision regarding the date of death value[i] of a deceased shareholder’s shares in a closely held corporation that owned a life insurance policy on the decedent’s life, the proceeds of which the corporation used to redeem the decedent’s shares from their estate.[ii]   

The significance of the decision for the shareholders of many closely held corporations is belied by the brevity of the Court’s opinion and the relative absence of any “technical” analysis.[iii]

Continue Reading Funding the Buyout of a Deceased Shareholder With Corporate-Owned Life Insurance – Did the Court Decide Connelly Correctly?
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Mere Change in Form

It is a basic principle of the income tax that the gain or loss realized by a taxpayer from the conversion of property into cash, or from the exchange of property for other property that differs materially in kind from the exchanged property, is treated as realized income or loss.

Moreover, the general rule with respect to such realized gain or loss is that the entire amount thereof is recognized for purposes of determining the taxpayer’s income tax liability,[i] except in cases where the Code specifically provides otherwise.[ii]

Continue Reading Trust Beneficiary Engages In Like Kind Exchange Using Trust Property