On February 18, 2015, the United States Tax Court handed down its decision in 436 Ltd. v. Commissioner, in which Robert Heitmeier, the taxpayer, was sunk by the IRS, losing his claimed deductions in a Joe Garza vintage Son-of-BOSS tax shelter. Two takeaways: Son-of-BOSS tax shelters are almost always losers, and, when you think you…
Estate Loses Entire Charitable Income Tax Deduction
On February 19, 2005, the United States Tax Court decided the case of Eileen S. Belmont v. Commissioner. Eileen Belmont’s Will gave the residue of her estate to the Columbus Jewish Foundation. The executor elected to deduct that on the Estate’s income tax return, claiming that $219,580 would go to the Foundation. But litigation ensued…
Taxpayer Unable to Recover Legal Fees from IRS
On February 2, 2015, the United States Tax Court issued an opinion in the case of Estate of Roderigo F. Fenta v. Commissioner. Mr. Fenta, the taxpayer, on the Lakeside Lounge for over 30 years until he sold it in November 2010. He was audited and the IRS proposed a deficiency of $13,180 and an…
Severe Liability Imposed on Agent When Not Using Power of Attorney – Action Needed
Severe Liability Imposed on Agent When Not Using Power of Attorney – Action Needed On January 30, 2015, the Tyler Court of Appeals handed down its decision in Jordan v. Lyles, and held that Cynthia “Cyndi” Lyles, the agent named by her step-father, Bud Jordan, in a power of attorney, was liable to return to…
March Applicable Federal Rates Go Down
The rates went down for March. The 7520 rate, used extensively in estate planning, dropped from 2.0% to 1.8%, down from 2.2% the month before. The mid-term AFR is down to 1.47%, a drop from 1.70% last month.
Rare Case Where Non-Owner Gets to Deduct Home Interest Payments
In most cases, where someone who is not an owner of property pays mortgage payments and property taxes, neither the IRS nor the courts allow that person to take a deduction for the interest paid on the mortgage or the taxes. However, the Tax Court made a rare exception in the case of Qui Van…
Incompetent Attorney Not Enough to Avoid Penalties
In the case of Specht v. United States, executors of a decedent’s estate sued to get a refund of late-filing penalties. The US District Court found that malpractice by the estate’ attorney, who was later declared incompetent, did not provide reasonable cause for the late filing of the federal estate tax return. Basically, the Court…
2015 Gift and Estate Tax Exemptions, and Other Rates
It’s official. On October 30, 2014, the IRS issued Rev.Proc. 2014-61. That document set all of the tax rates for all of the different schedules, such as “Married Individuals Filing Joint Returns and Surviving Spouses.” The ones we tend to focus on are gift, estate and generation-skipping taxes and taxes on trusts. The annual gift…
Beneficiary Can File Later Will After Accepting Earlier Will’s Benefits
Billye died on October 16, 2011. Her 1985 will was admitted to probate, which divided her estate equally between Beverly and Barry. Her home was conveyed to Barry under that will. Later, Barry filed an October 2010 will (which gave almost all of the estate to him) for probate and sought to have the 1985…
529 Plans – Taxation Off the Table
President Obama, as part of a broader tax plan outlined just days before the State of the Union address, included plans to repeal or redirect tax incentives for 529 plans and Coverdell education plans. But there was a significant backlash from both Democrats and Republicans. As a result, the President has decided to leave the…