Missives

The House of Representatives passed the SECURE ACT in late May, which would eliminate what is called the stretch IRA. A stretch IRA is a popular planning technique because it allows the beneficiary to take distributions from an inherited IRA or qualified plan account over the beneficiary’s life expectancy. Consequently, the recognition of the taxable […]

Take-Away: For individuals who want to fund a Roth IRA, but whose modified adjusted gross income (MAGI) is too high to permit funding a Roth IRA, the backdoor Roth IRA strategy can be used with an after-tax traditional IRA contribution. Backdoor Roth IRAs were of questionable legality until the 2017 Tax Act, which appears to […]

If a client plans to leave Michigan, in order to disconnect any lingering tax exposure to the Michigan Department of Treasury, the following steps should be taken: Overcome any presumptions of continued Michigan residency: Cancel any Michigan Homestead Personal Residence Exemption (PRE) Maintain a log or spreadsheet identify location out of the state, i.e. to […]

Take-Away: If an individual is a resident of one of the 43 states that imposes a state income tax, like Michigan, the state income tax may be imposed on all of the individual’s income, even income that is earned outside his/her state of residence. Nonresidents of these 43 states may only be taxed on income […]

Take-Away: As a wild generalization,  from a recent IRS Notice it appears that the owners of commercial real estate are given favorable treatment in their ability to claim an IRC 199A qualified business income tax deduction. As is often the case, however, the ‘devil is in the details.’ Caveat: I am the first to confess […]

Take-Away: Recent litigation with regard to the Fidelity Donor Advised Fund should prompt donors to any donor advised fund (DAF) to add conditions to the fund. Background: Thirteen years ago, with the Pension Protection Act, Congress required Treasury to examine concerns about possible abuses with regard to the operation of a donor advised fund (DAF.) […]

Take-Away: Prior to the publication of the anti-abuse Final IRC 199A Regulations last summer, one planning idea was for a Specified Services Trades or Businesses (SSTB), i.e. a professional practice,  to ‘break-off’ a feature or aspect of the professional’s business into a separate business entity, e.g. create a separate billing business apart from the professional’s […]

Take-Away: At common law, any person who contributes assets to an irrevocable trust can be treated as a settlor of that trust. A self-settled trust can have its assets taken to satisfy the settlor’s creditor claims. The Michigan Trust Code provides a different definition of trust settlor, which helps to protect trust assets from a […]

Take-Away: The IRS confirms that the failure to cash a distribution check from a qualified plan is still included in the participant’s taxable income for the year, including automatic withholding of income taxes. Background: The Tax Code provides that any amount actually distributed to a distributee by an employees’ trust [IRC 401a], which trust is […]

Take-Away: A testator possesses the right to leave his or her property by Will. However, the rights of the beneficiaries to the testator’s property are subject to the restrictions and limitations of EPIC which are intended to facilitate the prompt settlement of the decedent’s estate and its administration, including the payment of the decedent’s debts. […]