Blog

There are several reasons why limited liability companies - or LLCs - continue to grow in popularity, so here are five benefits to forming an LLC.

Although many people are thinking of Valentine’s Day and what to get their significant other, others are still trying to decipher the more than 1000 pages of new tax legislation that the President just signed into law.

Congress extended the IC-DISC benefits, although changes in tax rates beginning January 1, 2013 have somewhat diminished the tax savings.

Recently, the Tax Court held that gifts of limited partnership interests made by a decedent during his life were gifts of present interests that qualified for the annual exclusion, currently $13,000.00 per person per donee. Estate of George H. Wimmer, TC Memo 2012-157. Internal Revenue Code Section 2503(b) provides that the first $13,000.00 of gifts made to any person are free of gift tax if they are not gifts of future interest in property. Under regulations, a present interest is an unrestricted right to immediate use, possession, or enjoyment of property or the income from property. Treas. Reg. § 25.2503-3(b).

A federal District Court in New York recently determined that an executor of an estate was personally liable for an IRS levy when he distributed funds to a beneficiary after being notified of the levy. U.S. v. Michel, (2012 D.C.N.Y.) 110 AFTR 2d 2012-5117. Liability attached even though the executor's attorney advised him that the levy had been satisfied. The court determined that the attorney was not a necessary party in order to determine whether the IRS could prevail against the executor. The court determined that even if the executor had acted in good faith, the absence of intentional or negligent conduct was not relevant to his liability under Internal Revenue Code Section 6332 for failing to satisfy the levy.

A majority of American small businesses use the s-corporation form of doing business (i.e. dentists, opticians, and even retailers). The main reason is that an s-corporation is a pass-through entity, meaning the net earnings of the s-corporation are passed through to the shareholders of the company and reported on their individual income tax returns. This may seem simple enough for accounting principles but the tax ramifications can be substantial.

The Marshes' claims against the mortgagee were based on the theory that, because the property had been sold at a tax sale prior to the mortgagee's foreclosure, the mortgagee had no interest in the property that could have been sold; thus, the Marshes were "flim-flammed" when they paid the mortagee $26,000 for the property.

IC-DISCs are one of the few tax benefits provided by the tax code specifically for exporters. IC-DISC's can be used by any company that 1) directly exports the goods that it manufacturers; 2) provides services that are conducted outside of the U.S.; or 3) manufactures goods that are part of a final product that is exported.