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IRS Loses in E&G Tax Case

The Tax Court recently denied an IRS motion for summary judgment in an estate and gift tax case where an elderly mother made gifts to her daughters, while requiring them to pay all tax liabilities due if she happened to die within three years of making the gifts.  In the calculation for gift tax purposes, the mother reduced the value of the gifts by the estimated tax liability.  This reduction was denied by ...

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FASB Proposals Simplify Intangible Assets

Recently, the FASB issued exposure drafts of Accounting Standards Updates (ASUs) which propose reductions in the cost and complexity of accounting for intangible assets acquired by private companies, as well as subsequent testing for goodwill impairment.  The proposed changes in the drafts involve alterations to Accounting Standards Codification (ASC) Topic 85, Business Combinations, and Topic 350, Intanbig ...

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IRS Under Pressure for Large Corporate Pre-Filing

In 2011, after a six-year pilot program, the IRS made the Compliance Assurance Process (CAP) a permanent fixture. The intention was to give large corporate taxpayers a pre-filing period where discrepancies or contentious issues could be ironed out to simplify examination after filing. The goal was to provide each side with more confidence in the contents at the time it was officially filed. The problem: CAP ...

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Entertainment Tax Credits and Loan-Out Withholding

A rough ride This article examines recent state legislation in Georgia that requires entertainment production companies and their payroll providers to withhold state income tax on payments made to loan-out companies as a prerequisite to claiming tax credits. Peter Stathopoulos examines the difficult transition involved with this legislation that may spawn similar proposals in other states that host a large ...

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Estate & Gift Tax Update

In the first installment of a two-part series, the AICPA reviews the most important developments affecting estate, gift and generation-skipping transfer (GST) tax and trust income tax over the last 12 months.  In the period from June 2012 through May 2013, the analysis covers legislative developments, rulings, pending cases, the American Taxpayer Relief Act of 2012 and inflation adjustments for 2013.  The s ...

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Corps Prep 2014 Budgets with Eye on Tax Incentives

As corporations and their CFOs prepare to launch their 2014 budgets, Michael R. Press of M. R. Press Consulting, writing for CFO.com, points out ideal opportunities to maximize ROI through tax incentives at the state and local levels.  In a tightly-detailed, three step approach, Press explains that with the right goal criteria, corporations can recoup virtually all of the initial investment capital related ...

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Christie Kills BPO Legislation

New Jersey Governor, Chris Christie recently vetoed legislation that would have given greater authority to the state’s real estate professionals to provide broker price opinion (BPO) and comparative market analysis services.  Citing “consumer confusion” Christie vetoed bill S.2551 that some said would provide additional business opportunities for real estate licensees within the state.  Passed by the New Je ...

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IRC Section 4958 — A Big Hammer in the IRS Toolbox

Not for profit entities must plan and document their executive compensation packages outlined in IRC Section 4958 To ensure that not for profit entities are being good stewards of their donors, or taxpayers' contributions, the IRS wields significant power to impose onerous penalties on over-compensated executives from 25% to 200% through the use of IRC Section 4958. ...

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Minnesota Twins Ownership Tangled in IRS Estate Tax Debate

In early 2009, Carl Pohlad, investor and principle owner of the Minnesota Twins, passed away, leaving controlling ownership of the team to his sons.  In settling the estate, the new owners now find themselves embroiled in a tax tangle with the IRS.  The primary point of contention exists with what Pohlad’s share in the team was actually worth at the time of death.  According to the IRS, Pohlad’s ownership i ...

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Finance Chairman Preps Congress for Tax Reform

According to The Hill, Senate Finance Committee Chairman, Max Baucus (D-Mont) has put the committee on notice to expect a comprehensive tax reform overhaul this fall. While not committing to a specific start date, Baucus has promised a thorough rewrite of the tax code sometime after August. Frenzied lobbying has already begun on which allowances should stay and which should go. The move to draft and debate ...

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Revisiting Subsequent Events for Gift, Estate and Charitable Contributions, and Increased Valuation Penalties Exposure

When are “subsequent events” knowable, and what about IRC Sec. 6662(g)(2) penalties? Trout Ranch, LLC v. Commissioner raises additional causes for concern, including subsequent events in appraisal documentation and failures to include them, which may create more valuation penalties on tax filings. ...

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An Inside Look at Keller v. U.S. :IRC sec. 2036 and Valuation Discounts

Careful Estate Planning Overcomes IRS Objections Even After Sudden Death Keller v. United States resulted in a huge family limited partnership (FLP) win—$125 million—in Fifth Circuit Court.  In this article, learn what the lead attorneys at the Dallas-based law firm of Meadows, Collier, Reed, Cousins, Crouch, and Ungerman have to say about FLP planning and their victory as well as what every financial advis ...

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Appraisers are Gatekeepers to Gift Tax Deadline —Reuters

Today Individual Federal Gift Law Exemption is $5.12M.  In Months it May Drop to $1M.  Result: Surging Demand for Appraisals.    Lou Carlozo at Reuters reports that faced with the possibility of the lifetime gift tax exemption dropping precipitously next year and the estate tax rate rising, wealthy individuals are rushing to transfer their assets to family members. More: ...

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In an Unusual Tax Year, the Wealthy Turn to Partnerships —NY Times

Wealth Managers: Proceed with Caution When Setting Up an FLP Once an esoteric way for families to centralize management of assets, the Family Limited Partnership (FLP) is becoming extremely popular this year, writes the New York Times.  Why?  Because of the scheduled expiration of the $5.12 million gift tax exemption at the end of this year.   Still, setting up an FLP doesn’t make sense for all companies.  ...

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2011 Goodwill Impairment Study —Duff & Phelps

In 2009 Duff & Phelps and the Financial Executives Research Foundation (FERF) first published the results of their comprehensive Goodwill Impairment Study. The 2009 Study examined U.S. publicly-traded companies’ recognition of goodwill impairment at the height of the financial crisis (the end of 2008 and the beginning of 2009), and featured a comparative analysis of the goodwill impairments for over 5,0 ...

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The One Percent Solution

An Introduction for Wealth Managers and Business Owners to the Concept of Managing Pre-Liquid Wealth What is the solution to financing the expenditures necessary to manage the wealth that is tied up in closely held businesses? The solution is so obvious that we overlook it, thinking that such activities either are too expensive, too time-consuming, or worse, not a high priority. For owners of closely held b ...

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Estate Taxes: Where Do We Go From Here?

This is the question addressed by Richard T. Hurt, Jeffrey M. Gad, Drew LaGrande, and Megan Costa Devault  in a paper you'll find posted in PDF form at JD Supra legal intelligence web site. The authors write for Akerman Senterfit, a law firm with expertise and focus in middle market M&A.  Here's the way things stand now: For the past several years, the federal estate tax law has provided elevated exempt ...

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