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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Tax
High Court: No Evasion Without Deficiency
The U.S. Supreme Court vacated a conviction for criminal tax evasion, holding that the taxpayer could argue that distributions he received were a nontaxable return of capital. If they were so characterized, then the taxpayer had no tax deficiency, which is a required element of tax evasion, the court pointed
The Liechtenstein Connection
The IRS warned that some 100 Americans were likely to be caught up in its investigation in cooperation with other countries of tax evasion in Liechtenstein. Any U.S. taxpayer hiding income and gains in the tiny principality in the European Alps would do well to “make a prompt and complete
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
A Healthy Deduction for 2% Shareholders
in Notice 2008-1, the IRS has offered an opportunity for 2% shareholders of an S corporation to receive a deduction for health insurance premiums under IRC § 162(l). A 2% shareholder is defined in section 1372(b) as a person who owns directly or constructively under section 318 on any day of
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
Post-Transaction Adjustments
More and more, global companies are discovering that year-end adjustments to intercompany transfer pricing can improve the accuracy of their transfer pricing tax reporting and, potentially, help prevent overpaying taxes by millions of dollars. However, increasing scrutiny by tax authorities in the United States and other key countries makes it
Tax Software Survey To-Dos
I’d like to make a few suggestions for next year’s tax software survey (“Users Grade Tax Software ,” Oct. 07, page 34). For example: Ask how well the software handles multistate corporate returns. Ask if the alternative minimum tax adjustments and preferences seem to flow. Ask how well the error
All in the Family?
The Tax Court recently held that a note does not constitute a qualified family-owned business interest (QFOBI) for purposes of IRC § 2057, which allows an estate to deduct up to $675,000 from its value for estate tax purposes. To qualify for the deduction, the value of the QFOBI at
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,
Contested Buyout Doesn’t Bar Gain
The Ninth Circuit Court of Appeals affirmed the Tax Court’s decision that a cash-method shareholder’s forced buyout triggers gain recognition in the year that the buyout payment is received, even if the shareholder continues to dispute the buyout in court. Additionally, the shareholder must recognize any interest income from investment
Now’s the Time to Comply With NQDC Regs
In April 2007, the IRS issued final regulations under section 409A pertaining to nonqualified deferred compensation (NQDC) plans. The regulations represent a culmination of efforts to bring uniformity to a field that Congress perceived was too prone to abuse of income timing, especially by executives and other highly compensated individuals.
Safe Harbor for Home Swaps
Revenue Procedure 2008-16 provides a method for section 1031 like-kind exchanges of homes that are rented out or otherwise held as income-producing properties but also used occasionally by taxpayers for personal purposes. Dwellings will be considered held for productive use in a trade or business or for investment if, in
Capone Tax Records Released
TAX NOTES In a rare move, the IRS made records relating to the three-year tax evasion investigation of Al Capone available to the public. Posted on www.irs.gov, the documents include two 1931 letters from Special Agent Frank Wilson, updating Elmer Irey, chief of
Third Circuit Silences National Muffler, Pumps Chevron Deference
The Third Circuit Court of Appeals recently upheld the validity of Treas. Reg. § 1.882-4(a)(3)(i), which disallows deductions by a foreign corporation that fails to file a U.S. tax return within 18 months of the normal due date. When assessing the validity of the regulation, the Third Circuit applied the
All Bundled Up
In the wake of the Supreme Court’s decision in Knight v. Commissioner (101 AFTR2d 2008-380), the IRS permitted full deduction of “bundled” commissions or fees paid to a trustee or executor of a nongrantor trust or estate for tax years 2007 and previously without parsing portions that qualify for “above
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
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From The Tax Adviser
April 30, 2026
Current developments in taxation of individuals: Part 2
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Hedge funds: Tax structuring, planning, and compliance
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Current developments in taxation of individuals: Part 1
March 31, 2026
