The tax code is an intricate and complex framework that governs the collection of taxes in the United States. While numerous provisions have been contested in courts, it is quite rare for a provision to be deemed unconstitutional, particularly for a tax code section that has already undergone substantial litigation. In the landmark case of…
Category: Tax
Tax
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Taxes & Limited Liability Companies
A Limited Liability Company (“LLC”) is a popular business entity choice for entrepreneurs and small business owners. It offers the flexibility of a partnership or sole proprietorship, while also providing limited liability protection for its owners. Once formed, LLC owners have the ability to determine how the entity is taxed for Federal income tax purposes,…
Estate Tax Valuation vs. Income Tax Valuation
Valuation often becomes a point of contention in tax disputes where the taxpayer asserts one value while the IRS puts forth another. The preferred valuation in disputes can vary depending on the circumstances. For instance, a higher valuation for buildings and building structures is advantageous when claiming depreciation deductions, while a lower valuation for real…
IRA Beneficiary Designation Planning Opportunities
Designating a beneficiary for an IRA may not be a top priority for most IRA owners, and even those who do give it some thought may not have planned it correctly due to the complex rules surrounding IRA beneficiary designations. However, as investments held in IRAs grow tax-free, it’s important to structure affairs so that…
Tax on Social Security Paid to Disabled Soldiers
Soldiers and military personnel have long been recognized for their service and sacrifices to their country, and as a result, society has generally agreed that they should be given certain privileges. These privileges often include access to free or reduced-cost education, health benefits, and retirement benefits, among others. For example, the GI Bill provides education…
Tax Withholding on Settlement Awards
There are quite a few court cases that address whether a lawsuit settlement award is taxable. Section 104 excludes some damage payments for income tax purposes. But what about withholding taxes? Assuming that the payment or award is taxable, can the award escape withholding tax? One might think that this turns on whether the award…
Estate Plans in Uncertain Times
As 2006 approaches, I can’t help but pause to think about our estate and gift tax regime. The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 changed the rules of the game. Following the enactment of EGTRRA, estate planners and tax attorneys went to work defining and clarifying how estate plans should be…
ERSOP Plans as a Financing Alternative for Start-ups
Starting a new business can be an exciting and challenging endeavor, but financing the venture can often prove to be a significant obstacle. Traditional lenders typically require a business to be operational for at least a year before they will consider providing small business loans. Meanwhile, venture capitalists often reject the majority of start-up proposals…
Key Tax Considerations for Administering Estates
Administering estates from a tax perspective can be a complex and challenging task, particularly for non-tax attorneys who may not have extensive experience in this area. Estate administration is all about managing finances, including making key elections and timing distributions, income, and expenses. Failure to make the right choices could result in significant tax liabilities…
Charitable Remainder Unitrust and NIMCRUT: Tax-Savvy Giving
Developing a tax strategy that allows for income and current income tax benefits is a key goal for many individuals and families. One potential solution to this challenge is to establish a charitable trust. These trusts can offer donors the ability to make a charitable gift while retaining an income stream from the donated assets,…