Category: Florida BAR article
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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 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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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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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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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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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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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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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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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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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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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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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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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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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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The Continuing Evolution of the New Innocent Spouse Rules as Implemented and Interpreted by the Internal Revenue Service and the Courts, Part I
In 1998, new laws were made to help people who were innocent spouses and unfairly being held responsible for joint tax debts. These laws made it easier for innocent spouses to get relief from the IRS. This article will discuss the old rules, the new rules, and how the courts have interpreted them. Part II…
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The Economic Growth and Tax Relief Reconciliation Act of 2001: Estate, Gift, and Generation-skipping Transfer Tax Law Changes
The Economic Growth and Tax Relief Reconciliation Act of 2001 made temporary changes to the federal estate, gift, and generation-skipping transfer taxes. The act gradually increased the exemption amount for estate tax over eight years, eventually repealing the estate tax in 2010. However, the act also includes a sunset provision, which means the estate tax…
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Sunset and the Economic Growth and Tax Relief Reconciliation Act of 2001
In 2001, President Bush signed a tax law that made changes to the Internal Revenue Code. This law included several provisions, such as temporary tax cuts that would expire in 2011 unless new legislation was passed to make them permanent. The law also created a new 10 percent tax bracket and gradually reduced tax rates…
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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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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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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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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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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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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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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…