Loopholes

The story of Anne Milner Fields is one of the reasons family limited partnership (FLP) opinions appeal to me so much. Born in 1925, she grew up in a small town in Texas and then moved to Dallas where she got a job as a secretary and met prominent oil man Bert Fields Sr. They married, and she lived the life of a socialite until he died in 1963. She consciously turned herself into a businesswoman, going so far as to take accounting courses. Having no children or grandchildren, she took her grandnephew, Bryan Milner, under her wing, paying for his education and mentoring him. In 2010, the year she turned 85, she made him executor of her estate and gave him a general power of attorney. He was also set to inherit the residue of her estate after some specific bequests. I really think we have the elements of a novel or a TV miniseries here, but we are tax people, so we are going to focus on how Anne’s estate tax was handled after she passed. It didn’t go well.

We all know how messy tax returns can get when couples who used to file jointly divorce and there are children (and tax credits) involved. It’s often difficult to explain the rules surrounding Head of Household filing status and the various tax credits available to parent-clients who have separated or divorced. But what happens when the clients misunderstand and decide to fight about it in family or divorce court? The following case study says “nothing good” can be a horrifying and frustrating answer to this question.

CPAs routinely help clients improve tax efficiency, yet one of the most consequential advisory questions is whether the business itself could remain operational after a significant uninsured loss. Tax planning improves after-tax cash flow and strengthens annual performance, but continuity planning determines whether the enterprise can withstand disruption long enough to recover. When an adverse event threatens operations, liquidity and stability often matter more than marginal tax savings. For that reason, the discussion of risk funding deserves to sit alongside traditional tax strategy in any comprehensive advisory relationship.

The IRS has issued a statement about a new settlement offer that is going out for conservation and historic preservation easement disputes. It is similar to previous offers, but there is one big difference. The partnership will not have to make a payment at the time that it accepts the offer. Other than that, it is similar to the deal offered in 2020. Taxpayers get to deduct what they are out-of-pocket as an ordinary deduction and are subject to a 10% penalty. In general, the out-of-pocket donation might be around 20% to 25% of the claimed charitable deduction. The Tax Court, on average, has been allowing 6%, although results vary. There is usually a 40% penalty in the decided cases.

One would think that now, with summer doldrums and vacation days planned, Tax Court operations would slow and we could all go away. Not this month; six full-dress T. C. opinions and some Memos and miscellany fall like a summer cloudburst. Busy times.

Income shifting strategies address taxation at its most fundamental level by directing income to taxpayers in lower brackets or with offsetting deductions. Unlike many tax strategies that merely time recognition or enhance deductions, effective income shifting can permanently reduce the tax burden on a given dollar of income—often creating tax savings that compound year after year. In this article, we'll explore systematic approaches to income shifting that create extraordinary value for clients while maintaining impeccable compliance.

In recognition of the 250th anniversary of the adoption of the Declaration of Independence on July 4, 1776, let’s review 250 years of tax history. Our nation’s tax systems have evolved over two and a half centuries as ways of doing business and living have changed. Also, expectations of services the public wants and needs from the government have grown, resulting in tax changes to generate increasing amounts of tax revenue. Along the way, lawmakers have considered principles of simplification, equity, fairness, economic growth and effective tax administration that have shaped our tax laws. This article offers questions and answers to cover a range of interesting aspects of our federal tax history.

Dealing with deficiency and restitution in a tax evasion case is a minefield, but there's a good example of how it's done this month. There's architecture, both additional research credits for buildings and software in discovery. There are the fine points of the innocent spouse checklist, Rev. Proc. 2013-34. Two common deductions, home office and hobby losses, get reexamined. Cryptocurrency staking is taxed. A brilliant move earns a much-belated refund of an enhanced accuracy penalty. And the scoresheet in the Boechler jurisdiction-vs-claim-processing gets a new entry.