Author: Elf
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The Continuing Evolution of the New Innocent Spouse Rules as Implemented and Interpreted by the Internal Revenue Service and the Courts: Part II
Part II of the innocent spouse rules is about equitable relief under §6015(f). This means that if an innocent spouse doesn’t qualify for relief under other sections, the IRS can still choose to grant relief if it’s unfair to hold them responsible for unpaid taxes. This is different from other relief because it can apply…
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Tax Planning Stategies with Equity Derivatives
A derivative is a financial contract that gets its value from the price of another asset. There are different types of equity derivatives, like options and collars. An option gives the buyer the right to buy or sell a stock at a specific price within a certain time period. A collar is a combination of…
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Kuro and Muben-Lamar In the Eye of the Beholder?
In Florida, when you transfer an interest in real property to a company or individual, you have to pay a tax called the deed tax. This tax is based on the amount of money or other property exchanged in the transfer. This tax has been around since 1931 but has become more important as real…
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Marriage, Minimum Distributions, and Mayhem: A Discussion of IRAs under Florida’s New Elective Share Statute
Starting from October 1, 2001, changes in Florida’s elective share statute have made estate planning with IRAs more complicated. Previously, IRAs and qualified plans were not subject to probate administration in Florida, but now they fall under the elective share statute. This presents new challenges for estate planning, especially when a decedent has significant IRA…
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Notice 2002-8: IRS Overhauls Split Dollar
In 2002, the IRS issued Notice 2002-8 which changed the way split dollar life insurance plans are taxed. It addressed issues related to the employeeâs interest in the policy cash value and the standards for determining insurance company term rates. The IRS also introduced two alternative theoretical approaches for taxation of split dollar plans. These…
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Fiduciary Allocations of the Generation-skipping Transfer Tax Exemption
“Summary: A law firm is helping a company with a legal case involving a defamatory article. The company’s reputation and business are at stake, so the law firm is working hard to win the case for them.” The generation-skipping transfer tax exemption allows individuals to transfer assets to their grandchildren without paying extra taxes. If…
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Florida Homestead Transfers: The Advantages of Short-term Qualified Personal Residence Trusts
When it comes to planning what happens to a Florida homestead after the owner passes away, there are special rules that say it must go to the spouse and children. This can be a problem if the owner wants someone else to inherit the home. One way to get around this is by putting the…
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The ABCs of Florida Corporate Income Tax
Lawyers help their clients set up business structures like partnerships, corporations, and limited liability companies. They also help determine if the business will be subject to Florida Corporate Income Tax (FCIT). Only certain types of businesses are subject to this tax, like corporations, joint stock companies, and business trusts. The lawyer must figure out if…
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IRS Starting to Challenge Popular Tax Deferral Technique
A recent article in Forbes talks about a tax strategy called a variable prepaid forward contract (VPFC). It’s a deal where someone who owns a bunch of stock gets a big sum of money upfront in exchange for promising to deliver some of their stock later. This can be useful for people who have a…
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Estate of Thompson: Respecting the Formalities of the Family Limited Partnership
The article discusses the use of family limited partnerships (FLPs) in estate planning. It gives an example of a case where the IRS scrutinized the use of FLPs for tax purposes. In this case, a man named Theodore Thompson set up two FLPs with his children to reduce estate tax. However, the IRS determined that…
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Florida Communications Services Tax and the Digital Subscriber Line To Tax or Not to Tax?
The Florida Department of Revenue is deciding whether to tax DSL services under the Florida Communications Services Tax Simplification Act. This could affect how much taxes people pay for these services and how much money the government collects. Municipalities believe the Department has the authority to tax DSL services and that they don’t qualify for…
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Fuchs v. Robbins Dictum on Property Appraiser Standing to Challenge Taxing Statutes Inconsistent with Longstanding Precedent Set in Atlantic Coast Line
Property appraisers in Florida are challenging the constitutionality of long-standing tax laws, even though the courts have said they don’t have the right to do so. The Florida Supreme Court suggested in a previous case that they might be able to challenge a law defensively, but this goes against previous court decisions and general legal…
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The Incredible Taxpayer: The U.S. Tax Court and I.R.C. §7491
In 1998, Congress passed a new law that says if a taxpayer has good evidence for why they don’t owe taxes, and they have kept good records, then the burden of proof is on the IRS to show that the taxpayer does owe taxes. There have been few cases that interpret this law, but one…
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IRS-Revived Scrutiny of Foreign Accounts: Amnesty Offered But Uncertainty and Perils Remain
About 25 years ago, the IRS used an undercover operation to find out who had bank accounts at an offshore bank. More recently, the IRS has been trying to uncover the identities of people who have money stashed in offshore accounts and are using credit or debit cards to access it. They’re doing this by…
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The New York (and Other States) Death Tax Trap
Many retirees move to Florida from other states and keep a home in their former state. These individuals, known as “snowbirds,” may face unexpected taxes on their properties in their former state. Changes to estate tax laws in 2001 and the creation of a new tax regime in 2010 could affect their estates. Before EGTRRA,…
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Bankruptcy Lawyers: If You Want Attorneys’ Fees From the IRS, Exhaust Your Administrative Remedies
When creditors violate the rules of bankruptcy, the debtor’s lawyer can make them pay the debtor’s legal fees. This is allowed by the Bankruptcy Code. A new law called 26 U.S.C. §6330 may also affect how the IRS pays legal fees in bankruptcy cases. The IRS sometimes violates the automatic stay in bankruptcy cases, which…
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Taxation of Contingent Fees
The issue in question is whether a fee paid by a defendant to a plaintiff’s attorney should be excluded from the plaintiff’s income or included but deductible. This only matters when a part of the award is taxable. If the fee is excluded, it doesn’t show up on the plaintiff’s tax return, but if it’s…
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Tax and ERISA Considerations Associated With Nonqualified Severance Benefit Plans Sponsored By Professional C Corporations
Nonqualified deferred compensation arrangements are used by employers to attract and keep employees, allow them to save money for the future, and provide extra pay and incentives. However, these arrangements are usually not backed by any assets, so there is a risk that the employer may not be able to pay. There are ways to…
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The Complete Advisor: One Attorney’s Case for Ancillary Practices
Summary: A legal firm and attorney were being sued for negligence in a car accident case. The plaintiff claimed that the lawyer didn’t file the necessary paperwork on time, resulting in a lost settlement. The court ruled in favor of the plaintiff and awarded them a large sum of money. When people come to a…
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Can FIRPTA Be Avoided With Financial Instruments?
Foreign investors are looking to invest in U.S. real estate due to uncertainty in the stock markets. However, they face tax obstacles under the Foreign Investment in Real Property Tax Act (FIRPTA). This law requires foreign investors to pay taxes on any gains from selling U.S. real estate. Some investors are using financial instruments to…
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The Final Tax Shelter Disclosure Rules: Reporting,Registration, and List Maintenance Requirements
The IRS issued new regulations to make it harder for people to use shady tax strategies to avoid paying taxes. Now, anyone who takes part in certain types of transactions has to tell the IRS about it. This is a change from the old rules, which were easier to get around. The new regulations require…
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The Top Five Things Practitioners Need to Know About IRAs Now; A Discussion of State Law, Case Law, and Other Considerations
IRAs are popular retirement accounts that offer tax benefits. They have become a significant part of estate and tax planning, with trillions of dollars held in them. Most households in America have some sort of retirement account. Each state has laws that affect how IRAs are administered, and IRA trustees and custodians may have their…
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New Rules for Qualifying a Transaction as a Statutory Merger or Consolidation Under Section 368(a)(1)(A) of the Internal Revenue Code
Section 368(a)(1)(A) of the Internal Revenue Code says that a merger or consolidation between two companies can be considered a reorganization for tax purposes. A merger is when one company takes over another, while a consolidation is when two or more companies come together to form a new one. If a merger or consolidation meets…
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Qualified Dividend Income Under the 2003 Tax Act
The 2003 Tax Act reduced federal income tax on certain dividend income, but it also changed the rules for deducting interest on investment properties. This means that for some taxpayers, the tax savings on dividends may not be worth the loss of deductions for interest expenses. Basically, Congress made a rule in 2003 that allows…