Author: Elf
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Gift-splitting: The Intricacies of §2513 of the Code
The rules for gift-splitting for married couples are complex and can have unintended tax consequences if not done properly. Three requirements must be met for a married couple to elect to split gifts made to third parties. The gifts must also be ascertainable, meaning the portion of the gift to the third party must be…
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The Ins and Outs of the Florida Estate Tax
The Florida estate tax is connected to the federal estate tax, so if no federal estate tax is owed, then no Florida estate tax is owed. The tax law in 2001 changed the responsibilities of personal representatives of estates under federal and Florida law. A resident who passes away in Florida is subject to the…
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Section 412(i) Defined Benefit Plans: Simplicity, Safety, and Power
A 412(i) plan is a type of retirement plan that is fully insured and guaranteed by the government and an insurance company. It is like a private social security plan. Employers may want to qualify their plan under §412(i) because it exempts them from certain funding requirements, making it less complicated and costly to manage.…
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Valuing Interest in Tenancies by the Entirety Under Craft
In the case of United States v. Craft, Mr. and Mrs. Craft owned property together. Mr. Craft didn’t pay his taxes, so the IRS said he owed a lot of money. To avoid the IRS taking their property, Mr. Craft gave his share to Mrs. Craft for just $1. But the IRS said this was…
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The Need for Tax Reform or Tax Replacement
Most lawyers in Florida think the tax system needs to change. A group appointed by the President and Congress is working on a report about it. Congress also wants to change the tax system because it’s too complicated and costs a lot of money for both taxpayers and the government. The federal tax system is…
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Dividends Recieved From Foreign Corporations Recent Developments Change the Landscape
The American Jobs Creation Act of 2004 is a big deal because it has new rules for how foreign income is taxed in the U.S. One part, called §965, lets U.S. companies pay a lower tax rate on money they bring back from their foreign subsidiaries. But individual shareholders can’t get this benefit. Another part…
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Supreme Court Agrees With IRS on Contingent Attorney Fee Cases
Basically, when someone gets a settlement from a lawsuit, the part that goes to their lawyer as a fee is considered income for the person who sued. This means they have to pay taxes on that money. This was decided by the Supreme Court in two cases where people had sued their former employers and…
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Personal Use of Corporate Aircraft Before and After the American Jobs Creation Act of 2004
Business owners are using corporate jets more because commercial air travel is inconvenient. But owning and operating a jet involves complicated laws about taxes, aviation, and liability. One important tax law, Code §274, affects how much of the jet’s expenses can be deducted. The law says that the expenses must be “ordinary, necessary, and reasonable”…
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CrescentDid the Florida Supreme Court Effectively Repeal the Documentary Stamp Tax on Transfers of Real Estate?
The Florida Supreme Court ruled that transfers of real estate from a parent company to its wholly owned subsidiary, without any money changing hands, are not subject to the Florida documentary stamp tax. This means that fewer transfers of Florida real estate will be taxed. According to Florida law, the tax applies to deeds for…
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Family Limited Partnerships: To Qualify or Not to Qualify for the Bona Fide Sale for Full and Adequate Consideration Exception Under §2036
The recent cases have looked at whether certain rules apply to FLPs, and how to avoid those rules. The focus is on a specific exception that allows for a genuine sale of property. This article will analyze those cases and discuss ways to plan to avoid the rules by meeting the exception. This exception is…
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When Good IRAs Go Bad: Common Pre- and Post-mortem IRA Problems with Uncommonly Bad Results
An Individual Retirement Account (IRA) is a savings account for retirement. The rules for IRAs have changed recently, providing new opportunities for planning after the account owner passes away. The new rules allow for the IRA to be passed on to a spouse or other heirs, while still deferring income tax. However, it’s important to…
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Circular 230: Beware the Jabberwock!
The legal firm and attorney changed their minds about taking the case but still provided some help. Keep pushing for what you need to make your argument strong. Since 2005, new regulations called Circular 230 have caused controversy in the tax community. These regulations aim to prevent abusive tax shelters and close the “tax gap,”…
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Possible Tax Consequences Under Florida Durable Powers of Attorney
The power of attorney (DPOA) allows someone to handle another person’s finances and personal affairs. In Florida, some powers in the DPOA can have unexpected tax consequences, especially the power to give the person’s property as gifts. Different states have different rules about this, but in some states, the DPOA might allow the agent to…
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Using Shared Appreciation Mortgages to Avoid FIRPTA
Foreign investors are putting a lot of money into U.S. real estate because the U.S. dollar is weak and interest rates are low. The main issue for foreign investors is a law called FIRPTA, which makes them pay U.S. taxes when they sell U.S. property. One way to avoid this is by using a shared…
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Achieving Capital Gains Treatment on Predevelopment Real Property Appreciation
Real estate values are going up, so property owners are choosing to develop their own projects instead of selling to someone else. When they sell the units, they have to pay taxes on the profit they make. But if they plan carefully, they can save money on taxes by treating the profit as a capital…
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The Testamentary Charitable Lead Annuity Trust Revisited
A testamentary charitable lead annuity trust is a great way for wealthy clients to give to charity and still provide for their family. It pays money to charity for a certain period of time, and then the remaining assets go to the family. The estate gets a tax deduction for the money given to charity.…
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Relationship Dissolution Planning Part II: Planning for Married Couples
When people are getting a divorce, they can plan ahead by creating a property settlement agreement. This agreement says how their property and debts will be divided after the divorce. They can include details about each asset they own and all the money they owe. This can help make the divorce process smoother and less…
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Family Limited Partnerships: Are They Still Alive and Kicking?
About a year ago, a lawyer wrote an article about family limited partnerships in The Florida Bar Journal. Since then, the IRS has won two cases involving family limited partnerships. The article discusses these recent cases and provides tips on how to avoid making the same mistakes. It also talks about a survey that showed…
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Proposed âTechnical Taxpayerâ Regulations Shut Down Guardian and Reverse Hybrid Structures
Simply put, foreign taxes are usually considered to be paid by the person or people who are legally responsible for paying those taxes under foreign law. The Treasury and IRS proposed some changes to these rules in 2006 to prevent taxpayers from using certain structures to inflate their foreign tax credits. This includes using a…
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Getting Your Fair Share Back: Recovering Money Paid Pursuant to Unconstitutional Taxes and Fees
In short, the legal firm and attorney involved in the case don’t matter. The important thing is that the court sided with the plaintiff and awarded them damages for their injuries. In 1926, the Florida Supreme Court said that if you want to sue a county for something, you have to first follow certain rules…
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Two New Issues in Post-BAPCA 13 Cases
In Ch. 13 bankruptcy, certain tax debts, like trust fund recovery penalties and taxes where no return was filed, cannot be discharged. This means you still have to pay them even after bankruptcy. Other debts, like student loans and debts from fraud or embezzlement, also can’t be wiped out by Ch. 13 bankruptcy. So, bankruptcy…
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Florida Tax Procedure: A Primer
If you get audited by the Florida Department of Revenue, you may need to hire a tax attorney to help you navigate the process. The department has different offices that handle different aspects of the audit, such as auditing, technical assistance, and dispute resolution, as well as general counsel for formal protest or litigation. It’s…
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Tax Increment Financing in Florida: A Tool for Local Government Revitalization, Renewal, and Redevelopment
TIF is a way for Florida cities to bring in more tax money to help improve run-down areas. It works by using the extra taxes collected from improvements to pay for those improvements. Some people argue against TIF because of concerns about using eminent domain to take private property. One county in Florida has come…
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Qualifying Trust Transfers for Split-gift Treatment
Section 2513 of the tax code allows a married couple to split gifts, meaning they can both take advantage of tax exclusions and exemptions for gifts made by one spouse. This can help minimize gift tax liability and maximize the amount that can be gifted to others. It can get complicated when the non-gifting spouse…