Few would argue that soldiers and military personnel, especially veterans, should be afforded certain privileges. In American society as of late these benefits have included free or reduced cost education, health benefits, and in some cases, retirement benefits. Yet, the courts, and ultimately Congress, have been less giving with regard to the tax treatment of… Continue reading Tax on Military Benefits for Disabled Soldiers
Category: Tax
Tax Treatment of Settlement Agreements (Again)
The classification of settlement payments for purposes of federal income taxes continues to be a problem for taxpayers and for their legal advisers. The Ninth Circuit, in Rivera v. Baker West, Inc., recently upheld a lower court’s determination that an employer correctly withheld federal taxes from a settlement agreement paid to a former employee. FACTS… Continue reading Tax Treatment of Settlement Agreements (Again)
Estate Plans in Uncertain Times
With 2006 fast approaching 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… Continue reading Estate Plans in Uncertain Times
Entrepreneur Rollover Stock Purchase Plans
Financing a business start-up can be a challenge. Most traditional lenders require that a business be operational for at least a year before they will provide small business loans. Moreover, venture capitalists are quick to reject most start-up proposals and if the venture capitalist is willing to fund the start-up they typically demand a significant… Continue reading Entrepreneur Rollover Stock Purchase Plans
Basic Estate Administration and Taxes: Elections & Timing
This post is written to remind non-tax attorneys who administer estates of a few basic tax issues that must be considered in administering estates. From a tax perspective, estate administration is all about making elections and timing distributions, income and expenses. IRC 441 The first group of elections involves selecting tax years. IRC § 441… Continue reading Basic Estate Administration and Taxes: Elections & Timing
Sometimes It is Best Not to NIMCRUT
The best laid tax plans often go awry as tax laws and life circumstances change. In other cases tax plans go awry because they were improperly conceived. I have been encountering a number of NIMCRUTs that should not have been undertaken. The NIMCRUT, otherwise known as the net income with makeup charitable remainder unitrust, is… Continue reading Sometimes It is Best Not to NIMCRUT
Taxes & Gay and Lesbian Marital Rights
Various states have enacted laws to stop recent attempts by gay and lesbian groups to achieve full marital equality. While these laws address marital rights, they do not address rights when it comes to fair treatment for Federal income tax purposes. The Dispute: Filing Status What would a challenge to fair treatment for Federal income… Continue reading Taxes & Gay and Lesbian Marital Rights
Trust as the IRA Beneficiary
I continue to hear a number of financial planners, accountants and even attorneys say, “Don’t name a trust as the beneficiary of an IRA. ” The rationale is that naming individuals as the IRA beneficiary is preferable because the individual can take the IRA distributions over the course of the beneficiaries lifetime; whereas, a trust… Continue reading Trust as the IRA Beneficiary
The (D)Evolution of our Tax Law
Our tax laws seem to evolve (devolve?) over time. This evolution seems to follow a pretty predictable pattern. I will use Action on Decision 2005-001, which is an interesting decision in and of itself, to describe this process. In this AOD the IRS announces that it will not follow the Ninth Circuit Court of Appeal… Continue reading The (D)Evolution of our Tax Law
Taxation of Settlement Agreements for Plaintiffs Attorneys
Settlement awards can be structured in a number of different ways. This presents a number of tax planning opportunities. But for the typical settlement award, the tax consequences are somewhat standard. Including the Settlement in Income One of the tax issues for settlement awards is whether the award can be excluded from the clients income. … Continue reading Taxation of Settlement Agreements for Plaintiffs Attorneys