...Estate and Gift Tax Outline Repetti Fall 2013 Boston College Law School Casebook: Federal Wealth Transfer Taxation, 6th Edition Table of Contents Filing Returns 3 Gift Tax: 3 Estate Tax: 3 Generation-Skipping Tax: 3 Statutes of Limitations, Interest, Penalties: 3 Computation of the Estate and Gift Tax 3 General Description of Gift Tax: 4 General Description of the Estate Tax: 4 Role of State Law 4 Scope of the Estate Tax 5 Beneficial Ownership and § 2033: 5 Interests Arising at Death 5 “Property” versus “Expectancy” 6 Bank Deposits, Checks, and Notes 6 Right to Accrued Payments 7 The Scope of the Gift Tax: §§ 2501 and 2511 7 Is There a “Transfer” of “Property?” 7 Interest-Free Loans and Rent-Free Use of Other Assets 8 When is the Transfer “Completed?” 8 Transferred Interest Incapable of Valuation 9 Indirect Transfers 10 What is a “Gift”? 10 Donative Intent and “Adequate and Full Consideration” 10 Transfers of Property in Satisfaction of Marital Rights 11 Dower and Curtesy Interests in the Gross Estate 11 Marital Rights as Consideration 11 Transfers Incident to Separation and Divorce 12 Transfers with Retained Powers and Rights 13 Transfers with Retained Life Estates: § 2036 13 Reciprocal Trusts 14 Retention of Right to Income from Property: § 2036(a)(1) 14 Retention of Possession or Enjoyment of the Property: §§ 2036(a)(1) and 2036(b) 14 Retention of Power to Designate Who Shall Possess or Enjoy the Property:...
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...Estate Planning for Same Sex Couples I. Introduction The benefits of marriage are unavailable to same-sex couples. Moreover, outdated intestacy statutes fail to recognize the close family bond between same-sex partners. Moreover, most intestacy laws discriminate against same-sex couples in that gay or lesbian relationships are generally considered invalid for the purposes of distributing the estate of a deceased partner who dies without a will. Accordingly, in order to reap inheritance and tax benefits that are automatically afforded to traditional married couples, these same-sex couples must rely on extensive and creative legal planning. There are several tools that provide solutions to this issue. Contract based estate planning techniques are the most commonly used tools for distributing a decedent’s property at death. Though the following planning mechanisms provide certain advantages, they are also accompanied by various disadvantages. II. Wills A will is an instrument by which a person directs dispositions of property to take effect upon death. It is the only document that allows a decedent’s probate assets to pass testate to persons of his or her choosing as opposed to passing via the strict laws of intestacy, under which the surviving partner would receive nothing. Even in the presence of strategies used to avoid probate such as intervivos trusts, wills are an essential precautionary measure to demonstrate the intent to pass property outside of probate, to...
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...Form Department of the Treasury Internal Revenue Service A Principal business activity B Principal product or service 1065 U.S. Return of Partnership Income For calendar year 2011, or tax year beginning ▶ OMB No. 1545-0099 , 20 . , 2011, ending See separate instructions. 2011 35-4545454 01-15-2008 Name of partnership D Employer identification number ZLW GP C Business code number Print or type. Number, street, and room or suite no. If a P.O. box, see the instructions. City or town, state, and ZIP code E Date business started Miami, FL 33146 F Total assets (see the instructions) $ 3301467 Amended return G H I J (1) (2) (3) Initial return Final return Name change (4) Address change (6) Technical termination - also check (1) or (2) Other (specify) ▶ Check accounting method: (1) Cash (2) Accrual (3) Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year ▶ 2 Check applicable boxes: Check if Schedules C and M-3 are attached . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information. Merchant card and third-party payments (including amounts 1a reported on Form(s) 1099-K). For 2011, enter -0- . . . . 4173585 b Gross receipts or sales not reported on line 1a (see instructions) 1b 4173585 c Total. Add lines 1a and 1b . . . . ...
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...2007 Workbook Chapter 6: Death of a Taxpayer Federal Tax Forms ................................................... 189 Income in Respect of a Decedent (IRD).................. 194 Deductions in Respect of a Decedent ...................... 201 Inherited Property.................................................... 202 Trusts ......................................................................... 205 Special Issues ............................................................ 210 Corrections were made to this workbook through January of 2008. No subsequent modifications were made. Tax professionals are frequently called on to guide fiduciaries through income tax complications resulting from the death of a taxpayer. While a tax preparer should never try to replace the estate attorney, there are services she can provide. This chapter gives an overview of what might be expected. When a taxpayer dies, the court appoints someone (a fiduciary) to handle the taxpayer’s estate. This fiduciary’s title can be executor, executrix, administrator, administratrix, or personal representative. The fiduciary has a responsibility to the decedent’s estate. Primarily, the fiduciary has the responsibility to follow the guidelines of the will and handle the assets of the estate for the best interests of the beneficiaries. Consequently, it is important for the fiduciary to have a basic understanding of various issues that arise when a taxpayer dies. The fiduciary completes a Form 56, Notice Concerning...
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...Form Department of the Treasury Internal Revenue Service A Principal business activity 1065 U.S. Return of Partnership Income For calendar year 2013, or tax year beginning ▶ OMB No. 1545-0099 , 20 . , 2013, ending Information about Form 1065 and its separate instructions is at www.irs.gov/form1065. Name of partnership 2013 12-3456789 D Employer identification number Manufacturing B Principal product or service Walk Upright Company Type or Print Number, street, and room or suite no. If a P.O. box, see the instructions. E Date business started Walking Poles C Business code number 58 Trekkers Point City or town, state or province, country, and ZIP or foreign postal code F Total assets (see the instructions) $ 339900 G H I J Check applicable boxes: Fort Collins, CO 80521 599,999 Amended return (1) (2) (3) Initial return Final return Name change (4) Address change (6) Technical termination - also check (1) or (2) Other (specify) ▶ Check accounting method: (1) Cash (2) Accrual (3) Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year ▶ 2 Check if Schedules C and M-3 are attached . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information. 1a b c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16a b 17 18 19 20 21 22 1a Gross receipts...
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...for the Foreign Investor in U.S. Real Estate— If Planning Comes First by Michael Hirschfeld and Shaul Grossman Appeared in January 2001 edition of RIA’s Journal of Taxation © Copyright 2003 RIA. All rights reserved. WG&L Journals INTERNATIONAL Opportunities for the Foreign Investor in U.S. Real Estate—If Planning Comes First Author: By Michael Hirschfeld and Shaul Grossman MICHAEL HIRSCHFELD is a partner, and Shaul Grossman is an associate, in the New York City office of the international law firm of Dechert. Mr. Hirschfeld is a member of the ABA Tax Section’s committees on Real Estate (of which he is the past Chair), Foreign Activities of US Taxpayers, and US Activities of Foreigners & Tax Treaties, among others, and has written for The Journal on many occasions. Copyright © 2000, Michael Hirschfeld and Shaul Grossman. The complexities of FIRPTA and the even broader withholding scheme that backs it up require that a nonresident acquire a thorough understanding of the rules before making an investment in real estate. The choice of whether to use an entity—and which one—or to hold the investment directly, as well as the type of investment—equity or debt—can have significant and sometimes expensive consequences. Edited By Sanford H. Goldberg, J.D., and Herbert H. Alpert, J.D. The global economy is a fact of life at the start of the new millennium. One consequence is that cross-border investments in real estate will expand significantly. Twenty years ...
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...2)classes of income 3)resident status 4)income from employment 5)tax relief and rebates 6)individual tac computation 7)interest income 8)dividend income 9)rental income 10)witholding tax 11)partnership-tax treatment for investment income 12)estate under administration 13)estates under administration 14)settlements 15)trusts 16)badges of trade 17)business income 18)business expenses 19)interest expenses 20)trading stock 21)capital allowances 22)industrial building allowance 23)controlled sales 24)mining allowance & prospecting expenditure 25)approved donation & zakat 26)group relief for companies 27)restriction on use of loss on change in ownership 28)company taxtion 29)double dedustion 30)research & development 31)exemption for increased exports of goods & commodities 32)exemption for increased exports of manufactured products & agricultural produce 33) exemption for increased exports of qualifying services 34)income tax (deduction for cost of acquisition of proprietary rights) 35)income tax (deduction for cost on acquisition of a foreign owned company) 36)single tier dividend system & section 108(6) 37)professional communication tools-reports,letters.... 38)tax incentives-pioneer statuss,investment tax allowance,renvestment allowance 39)computation of chargeable income-company 40)self assessment for individual & companies 41)tax avoidance & wilful evasion 42)tax audit & tax investigation 43)advanced ruling 44)company liquidition 45)transfer...
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...CHAPTER 20--INCOME TAXATION OF TRUSTS AND ESTATESCHAPTER 20--INCOME TAXATION OF TRUSTS AND ESTATES Student: ___________________________________________________________________________ 1. Tax planning motivations usually are secondary to other objectives in deciding whether to create a trust. True False 2. A trust might be used by one running for a political office. True False 3. Like a corporation, the fiduciary reports and pays its own Federal income tax liability. True False 4. An estate’s income beneficiary generally must wait until the entity is terminated by the executor to receive any distribution of income. True False 5. With respect to a trust, the terms creator, donor, and grantor are synonyms. True False 6. Corpus, principal, and assets of the trust are synonyms. True False 7. If provided for in the controlling agreement, a trust might terminate when the income beneficiary reaches age 35. True False 8. The decedent’s estate must terminate within four years of the date of death. True False 9. Trusts can select any fiscal Federal income tax year. True False 10. A complex trust pays tax on the income that it retains and adds to corpus. True False 11. A complex trust automatically is exempt from the Federal AMT. True False 12. The first step in computing an estate’s taxable income is the determination of its gross income for the year. True False 13. Generally, capital...
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...Subject to constitutional and inherent restrictions, the power of taxation is regarded as comprehensive, unlimited, plenary and supreme. Scope of Legislative Taxing Power 1. Amount or rate of tax 2. Apportionment of the tax 3. Kind of tax 4. Method of collection 5. Purpose/s of its levy, provided it is for public purpose 6. Subject to be taxed, provided it is within its jurisdiction 7. Situs of taxation TAXES – enforced proportional contributions from the persons and property levied by the law-making body of the State by virtue of its sovereignty in support of government and for public needs. Characteristics of Taxes 1. forced charge; 2. pecuniary burden payable in money; 3. levied by the legislature; 4. assessed with some reasonable rule of apportionment; (see theoretical justice) 5. imposed by the State within its jurisdiction; 6. levied for a public purpose. Requisites of A Valid Tax 1. should be for a public purpose 2. the rule of taxation shall be uniform 3. that either the person or property taxed be within the jurisdiction of the taxing authority 4. that the assessment and collection of certain kinds of taxes guarantees against injustice to individuals, especially by way of notice and opportunity for hearing be provided 5. the tax must not impinge on the inherent and Constitutional limitations on the power of taxation Theories and Bases of Taxation 1....
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...University School of Law Herzog Summer Visiting Professor in Taxation University of San Diego School of Law FOUNDATION PRESS © 2013 © 2013 By FOUNDATION PRESS ISBN PREFACE This supplement is designed to update our casebook and accompanying study problems book: Federal Wealth Transfer Taxation: Cases and Materials (6th ed. 2009), and Federal Wealth Transfer Taxation: Study Problems (6th ed. 2010). We hereby grant permission to users of Federal Wealth Transfer Taxation to distribute copies of this supplement to students, either in hard copy or in electronic form. This supplement is current through August 1, 2013 and incorporates The American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240, 126 Stat. 2313 (2013)) and The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Pub. L. No. 111-312, 124 Stat. 3296 (2010)). We want to thank Jack Bogdanski (Lewis & Clark) for his detailed comments on the prior edition of these books. This is the third update to Federal Wealth Transfer Taxation since the July 16, 2010 death of our lead author, mentor, and dear friend, Paul McDaniel. Paul was a co-author of the original edition of this book in 1977, with Hank Gutman, Stanley Surrey, and Bill Warren, and remained as co-author of the five subsequent editions of the book. Being asked to join Paul as a co-author on this book was one of the proudest (and most intimidating) moments of our careers. In working with...
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...NEW TAX INCENTIVE FOR LONG-TERM EQUITY INVESTMENTS There has been a great deal of public discussion about the increased individual and corporate income tax rates and general harsh treatment of upper income taxpayers under the Omnibus Budget Reconciliation Act of 1993. However. there has been scant attention to what may, in fact, prove to be a silver lining in that tax cloud - the newly authorized capital gains exclusion for the stock of certain companies. Under the Act. non-corporate holders of stock in "qualified small businesses" can escape tax on up to one-half of any gain from the sale of that stock which they have held for at least five years. 1. Qualified Small Businesses The new tax benefit is only available if the issuing corporation ("Issuer") is a qualified small business on the date of the stock issuance and during "substantially" all of the period that an investor holds its stock. In order to qualify as a small business. an Issuer must satisfy the following requirements: A. Non-Qualifying Corporations: The corporation cannot be an S corporation; a domestic international sales corporation that has made an IRC section 936 election: a regulated investment company: a real estate investment trust. a real estate mortgage investment conduit or a cooperative. B. Conduct of Active Business: It must use at least 80% (by value) of its assets (including intangible assets) in the actual conduct of a "qualified trade or business...
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...C:11-58 a. E&P, January 1 $155,000 Current year taxable income before distribution $40,000 Capital gain on distribution of land* 30,000 Minus: Federal income taxes [$7,500 + (0.25 x $20,000)] (12,500) 57,500 E&P before distribution $212,500 Minus: Cash distribution (100,000) Property distribution (100,000) E&P, December 31 $ 12,500 *E&P and tax gains are the same. Both distributions are fully taxable as dividends to Jeff and John in the amount of $100,000 each. John takes a $100,000 FMV basis in the land he receives. b. AAA, January 1 $125,000 Current year ordinary income $40,000 Capital gain on distribution of land 30,000 70,000 AAA before distribution $195,000 Minus: Cash distribution ( 97,500) Noncash distribution ( 97,500) AAA, December 31 $ -0- AE&P, January 1 $ 30,000 Minus: Remainder of cash and property distributions ( 5,000) AE&P, December 31 $ 25,000 Of each distribution, $97,500 is nontaxable assuming the shareholder has sufficient basis in his stock. The remaining $2,500 of each distribution is a dividend included in the shareholder’s gross income. John takes a $100,000 FMV basis in the land he receives. ...
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...Corporations other than S Corps are considered double taxed. The corp is taxed on income and then if the earnings are paid out to shareholders that money is taxable income to the shareholder. If any of it was deductible then perhaps it wouldn’t be double taxation but this is not the case. However, for taxpayers in the 10% tax bracket they are not taxed on the dividend income. 2. What type of taxpayers are considered "eligible" taxpayers with regard to special ordinary loss treatment of IRC Section 1244 stock? (5 pts.) A taxpayer is considered eligible if; the individual sustaining the loss who was issued stock by a small business or corp and, An individual who is a partner in a partnership at the exact time that the stock was acquired from the issuance of a small business. The stock must have been continually held from date of issuance in order to claim a deduction under section 1244. A corporation, any trust or estate is not entitled to such deductions. 3. Please describe how the treatment of capital gains(losses) differ for a C Corporation as compared to an Individual. ( 5 pts.) Professor, A main difference is that for Corps, no special treatment is given for LT Capital Gains. There is also no deduction for capital losses that exceed capital gains for corps. The process is still similar for individuals in that the losses can be netted against the gains(not ordinary income), but anything above that for the corp is just taken as a loss. 4. Please describe...
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...____ 1. Tax planning motivations usually are secondary to other objectives in deciding whether to create a trust. ____ 2. A trust might be used by the parties to an impending divorce. ____ 3. Like a limited liability company, the fiduciary is a tax-reporting, but not a separate tax-paying entity. ____ 4. An estate’s income beneficiary generally must wait until the entity is terminated by the executor to receive any distribution of income. ____ 5. With respect to a trust, the terms creator, donor, and grantor are synonyms. ____ 6. Corpus, principal, and assets of the trust are synonyms. ____ 7. If provided for in the controlling agreement, a trust might terminate when the income beneficiary graduates with a law degree. ____ 8. The decedent’s estate must terminate within four years of the date of death. ____ 9. Trusts usually are required to use a calendar tax year ____ 10. A complex trust pays tax on the income that it retains and adds to corpus. ____ 11. A complex trust may incur a liability for the AMT. ____ 12. The first step in computing an estate’s taxable income is the determination of its gross income for the year. ____ 13. Generally, capital gains are allocated to fiduciary income, because they relate to investment assets. ____ 14. Gain or loss is recognized by a trust when it distributes a non-cash asset. ____ 15. Income in respect of a decedent can be subject to both income and estate tax at the Federal...
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...Edition By Glenn E. Coven Mills E. Godwin Professor of Law College of William and Mary Robert J. Peroni Robert Kramer Research Professor of Law The George Washington University Richard Crawford Pugh Distinguished Professor of Law University of San Diego AMERICAN CASEBOOK SERIES® ® WEST GROUP A THOMSON COMPANY ST. PAUL, MINN., 2002 CHAPTER 1 INTRODUCTION Note to prior users: The order of this chapter has been revised. Users who wish to skip the introductory material and begin with the check-the-box regulations may now begin with paragraph 1075. [¶ 1000] A. HISTORY OF THE CORPORATE INCOME TAX This paragraph briefly summarizes the history of the corporate income tax. Some instructors may want to note here that the top corporate income tax rate reached a zenith in 1951 of 52 percent, before being reduced in 1964 to 48 percent, in 1978 to 46 percent, in 1986 to 34 percent (except for corporations with taxable incomes within a specified range that are subject to a top effective marginal rate of 39 percent). The maximum rate was raised in 1993 to 35 percent but only for a relative handful of generally publicly owned corporations earning over $10 million annually. [¶ 1005] B. COMPUTATION OF C CORPORATION'S TAXABLE INCOME This paragraph discusses the computation of a C corporation's taxable income, with particular emphasis on the differences between the computation of a C corporation's taxable...
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