EXECUTIVE SUMMARY Life settlement, in which life insurance policies are sold in a secondary market, has become a major financial market and viable opportunity for CPA clients to convert unneeded policies for more than their cash surrender value (CSV), often with favorable tax treatment. As an indicator of interest in
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Personal financial planning
Data Point: $225,000
Savings a 65-year-old couple retiring this year needs to cover medical costs in retirement, a 4.7% increase over the 2007 estimate of $215,000. Source: Fidelity Investments, www.fidelity.com.
UBTI Subject to Excise, Not Income Tax
In new proposed regulations issued March 6, the IRS amended regulations under IRC § 664(c) to provide that charitable remainder trusts with unrelated business taxable income (UBTI) are now exempt from federal income tax but are subject to a 100% excise tax on the UBTI. These changes are necessary to
Check Your Parachute
The IRS provided temporary relief from its new, tougher stance on qualifying performance-based compensation exempt from the general $1 million deductibility limit on executive pay. In Revenue Ruling 2008-13, the Service officially adopted a controversial holding from an earlier private letter ruling but said the treatment will not be applied
A Not-So-Speedy Recovery
The Court of Federal Claims applied rules on theft loss subject to recovery in a holding that recognized a deduction later than it was initially claimed by a taxpayer but, for a portion of the loss, sooner than the IRS had allowed. Casualty and theft losses are deductible under IRC
When “Happily Ever After” Ends – Get It in Writing
After the perfect wedding, the happy couple looks forward to sharing a lifetime of happiness. Life, however, does not always go as planned. Divorce happens. In addition to the emotional aspects, there are tax consequences to deal with as well. If the parties intend to have one spouse receive alimony,
New Split-Interest Return Form
The IRS recently issued a revised Form 5227, Split-Interest Trust Information Return, for use in preparing returns for tax years beginning on or after Jan. 1, 2007. Among its numerous changes, the most significant are: Charitable split-interest trusts are no longer required to file Form 1041-A, Trust Accumulation of Charitable
FLPs That Flop
In several recent cases, the IRS successfully challenged attempts to exclude from taxable estates assets transferred to family limited partnerships (FLPs, or “flips”) in which a decedent had retained the right to enjoy the property or income from it. Besides reducing estate taxes, purposes of FLPs include liability protection and
On Equal Terms
Rep. Rick Boucher, D-Va. (9th District), has been at the forefront of efforts to stop patents on tax planning methods. With a fellow Virginian from across the aisle, Rep. Bob Goodlatte, R-Va., and Rep. Steve Chabot, R-Ohio, Boucher introduced HR 2365, a free-standing bill, to limit damages for infringements on
This Sold House
The Tax Court recently held that a couple could exclude gain from the sale of one of their two residences, since during the five-year period preceding the home’s sale, it was used as the couple’s principal residence for the requisite two-year period. The taxpayers were not allowed to exclude the
Advising Private Foundations
In the arsenal of estate planning, private foundations have traditionally ranked among the big guns. With their relative formality and extensive tax rules, they have been considered the province of the truly wealthy – people with $1 million or more to dispose of charitably. The belief that lesser largesse could
Trust-Owned Life Insurance: The CPA’s Role
Many CPAs recommend that their high-net-worth clients use trust-owned life insurance (TOLI) as the cornerstone of their estate plan. In addition, many CPAs choose to serve as trustees of such trusts. CPAs who are considering accepting a trustee designation should be well aware of the hazards inherent to the task
A 401(k) Tax Break That’s Often No Break
Withdrawing company stock from a 401(k) to take advantage of a tax break called net unrealized appreciation (NUA) sounds like a no-lose proposition, and most advisers tell their eligible clients to go for it. But there’s just one big problem: When you run the numbers, this maneuver
Partnership Incorporation Provides Planning Opportunities
It is common for business owners to conclude that they must change the legal form of the entity through which a business has been conducted. When incorporating a business that has been a partnership, CPAs should pay close attention to the form of the conversion because the method used can
Return Preparer Penalties Guidance Issued
The IRS said it will revise regulations before the end of 2008 to incorporate provisions of the Small Business and Work Opportunity Tax Act of 2007 concerning preparer penalties under section 6694 and related sections. In the meantime, interim guidance issued in the final hours of 2007 offered some clarification
Son of BOSS Adjustment Timely for IRS
A federal court has concluded that a suspected “Son of BOSS” transaction that caused an overstatement of basis in the calculation of gain from a sale of real estate is a gross income omission that allows the IRS six years to assess a deficiency. The ruling, in Salman Ranch Ltd.
Partnerships for Community Development
EXECUTIVE SUMMARY CPAs can use their expertise to structure partnerships between long-term community investors and developers who want to contribute to improving markets without displacing current residents and local businesses. For tax purposes, forming an LLC may be the best approach to a development partnership. The partners
Independent Contractor or Employee?
A recent congressional inquiry into whether Blackwater USA properly classified its security guards in Iraq and Afghanistan as independent contractors rather than employees highlights the often complicated application of provisions for determining this status. In its defense, Blackwater invoked the safe-harbor provisions of section 530 of the
High Court Bars Secondary Liability in Securities Case
The U.S. Supreme Court ruled in a major securities fraud case that secondary parties—essentially aiders and abettors—can’t be held liable when the companies they work with mislead investors. Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc., et al., docket no. 06-43, threatened to expand the reach of investor lawsuits beyond parties
Features
SPONSORED REPORT
Preparing clients for new provisions next tax season
As the 2025 filing season approaches, H.R. 1 introduces significant tax reforms that CPAs must be prepared to navigate. These legislative changes represent some of the most comprehensive tax updates in recent years, affecting both individual and corporate taxpayers. This report provides in-depth analysis and guidance on H.R. 1.
From The Tax Adviser
October 31, 2025
Recent developments in estate planning
October 31, 2025
Current developments in taxation of individuals: Part 2
September 30, 2025
Current developments in taxation of individuals: Part 1
August 30, 2025
