Business Strategies

Some of What You Need to Know to Do 1041 Right Because Nobody Knows Everything

There was a recent IRS memo from an associate chief counsel that should be shocking but actually isn’t. Promoters have for many years been hawking a “copyrighted non-grantor irrevocable complex discretionary spendthrift trust,” which purported to avoid capital gains tax. You could learn about it on TikTok. It “worked” by citing Section 643(a)(3), which excludes capital gains allocable to corpus from distributable net income. You and I both know that DNI is not taxable income, but not everybody who learns the tax law from TikTok has caught onto that subtle point yet.

Although I have never encountered anything as egregious as the “copyrighted, etc, etc, trust” I have seen a lot of problems with trusts over the years (and partnerships and SALT – don’t get me started). Much of it has to do with working under a lot of pressure. Often, the things that are wrong end up not mattering all that much, but I get a little frightened, because maybe one of these days the IRS is going to start getting its act back together. If it does, I think things may be a little shocking to practitioners who have grown up in an environment where enforcement has been progressively gutted.

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CURRENT EDITION

The Wild West of Employee Retention Credits (ERC): Outlaws, Deputies, and Cowboys

Dominique Molina, CPA MST CTS

Gather ’round, pardners! The Employee Retention Credit (ERC) has been the latest gold rush in the tax frontier, drawing business owners, tax deputies, and even a few sly outlaws. But as the dust settles, the IRS—our law keeping sheriff—is on the hunt for any who might’ve bent the rules. In this frontier of finance, knowing who’s who can keep you out of trouble as the IRS rounds up dubious claims.

Selected Techniques to Monetize Tax Attributes

Ted Stotzer

In the prior article “Tax Trends in M&A and What It Means for Your Clients,” we had discussed certain techniques to, e.g., maximize net operating loss (“NOL”) and interest expense deduction utilization in the context of M&A transactions. This article examines certain additional strategies to monetize expiring, latent, or otherwise disallowed tax attributes.

Do Those Tricks Really Work?

Peter J Reilly CPA

On the website for Axium Wealth, Charles Dombek tells us that: “Most CPAs are historians that tell their clients how much they make, how much they owe, when and where to file their taxes, and oftentimes how to write large checks at the last minute when you least expect.” When it comes to Axium, though: “We help clients recover dollars they unnecessarily pay in State and Federal income taxes.” Axium also helps clients diversify capital into off-market passive real estate and alternative investments. Before Axium, there was The Optimal-Financial Group LLC. Of course many of the readers of Think Outside The Tax Box are CPAs, or EAs or others who both help their clients be compliant and advise on ways to minimize their liability. When I was practicing I would call the things I might suggest my “bag of tricks.”