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,
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Personal financial planning
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
Real Tax Savings in Real Estate
EXECUTIVE SUMMARY While the passive loss limitation rules generally prevent the current deduction of rental real estate net losses, many taxpayers with real estate rental income may meet the standard for a real estate professional conducting a real property trade or business. Such status requires the taxpayer
Automatic Enrollment a Win-Win
A study by Retirement Made Simpler, a coalition formed by the AARP, the Financial Industry Regulatory Authority and the Retirement Security Project (RSP), found strong employee approval of automatic enrollment in employer-sponsored retirement plans. Employees surveyed were nearly unanimous in their support of being automatically enrolled—98% were happy their employer
Women Worse Off in Retirement
FINANCIAL PLANNINGA recent Government Accountability Office report found that while almost 90% of men and women age 65 and older received Social Security benefits, men’s median annual income from the source was almost $3,800 higher than women’s ($12,583 vs. $8,799). Among most of the population age 65 or older, Social
Life Insurance: What’s It Worth? And Who Says?
EXECUTIVE SUMMARY Gifts of life insurance policies to not-for-profit organizations can benefit both the organization and the donor, the latter in the form of an often sizeable income tax deduction. However, under the new requirements of the Pension Protection Act of 2006 (PPA), determining the fair market value
Privilege Claims Under Fire
Despite some legal setbacks, the IRS has signaled it will continue to press for a strict reading of the work product privilege that protects taxpayer documents from discovery. With Action on Decision 2007-004, the IRS said it will not acquiesce in the Sixth Circuit’s holding in U.S. v. Roxworthy that
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From The Tax Adviser
March 31, 2026
Current developments in taxation of individuals: Part 1
March 31, 2026
Current Developments in Taxation of Individuals: Part 1
March 6, 2026
