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Business Law Legal Topics New Legal Developments Practice of Law Tax Law

Just Passing Through: New Deduction for Business Income Expires in 2026

pass through tax benefit dollarsUnder new IRC §199A, business entity owners may be able to deduct 20 percent of passthrough income. This tax boon, which is set to sunset after December 31, 2025, has many lawyers wondering whether they might personally benefit.

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Estate Planning Legal Topics New Legal Developments Tax Law

Cupid’s Arrow Strikes Lover in the Wallet

ThinkstockPhotos-505650276Revenge is a dish best served cold. In a recent case, a disenchanted suitor not only sued to recover gifts he made to his former lover but also reported those gifts to the IRS as income payments! See Diane Blagaich, TC Memo 2016–2.

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Elder Law Estate Planning Tax Law

Give and Get: Act Now for Tax Benefit!

hurry_159269664The American Taxpayer Relief Act of 2012 (ATRA-2012) (Pub L 112-240, 126 Stat 2313) allows IRA owners to make retroactive direct distributions to charity for 2012. It could be a good deal for you or your clients, but you have to act by January 31, 2013—this week!—to take advantage of it.

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Business Law Estate Planning Legal Topics Tax Law

The “Zuckerberg Tax” and the Buffett Rule: More Fiscal Facebook Fallout

Updated May 15, 2012: Eduardo Saverin, the Brazilian-born co-founder of Facebook with a 4 percent stake in the company (worth about $4 billion) reportedly renounced his U.S. citizenship last year to avoid or at least minimize the tax bill from future sales of stock in the company, and other investments. Unlike most countries, the United States imposes income tax on citizens as well as residents, and the capital gains tax on existing investments cannot be avoided entirely just by dropping citizenship, but it can sometimes be reduced. By renouncing his citizenship, Saverin will be taxed on the much smaller estimated gains that likely would have occurred if he had sold his stock last year, well before the initial public offering. For a detailed discussion of the so-called expatriation regime (exit tax), go to CEB’s California Estate Planning §§16.85–16.90A.

Facebook has announced that Mark Zuckerberg will exercise 120 million options to purchase the company’s stock in connection with its planned initial public offering, potentially resulting in a $2 billion tax bill.

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Business Law Estate Planning Legal Topics New Legal Developments Tax Law

Tell It to the Judge: No Right to Jury Trial in State Income Tax Refund Action

In the bad old days, taxes were assessed by individual tax collectors with the power to seize property. The only good part was that jury trials were available at common law in actions against tax collectors to recover illegally collected taxes. But once federal tax collectors started transferring tax receipts to the U.S. treasury, and the common law action was replaced by a statutory action, the right to a jury trial disappeared for federal tax refund actions. The California Supreme Court has just decided to follow the federal lead and has held that there is no constitutional right to a jury trial in state tax refund actions.