Take-Away: Both good news, a clarification, and bad news with regard to effective dates, should the Ways and Means Committee proposals become law as part of the upcoming budget reconciliation process. Good News First: In the first summary, I noted that the effective date for the reduction in the estate and gift tax applicable exemption amount […]

Take-Away: With the looming possibility of a sudden drop in an individual’s applicable exemption amount, coupled with a sudden increase in the federal estate tax rate, wealthy individuals should explore ways to reduce their taxable estates while the current transfer tax exemption exists through lifetime gifts. One easy way to reduce a grandparent’s taxable estate […]

Take-Away: Like one-half of the states, Michigan includes as part of its Estates and Protected Individual’s Code (EPIC) a revocation-on-divorce statute. That statute extends not only to a former spouse, but to the relatives of that former spouse. Some assets, however, are not subject to that statute. Background: As of 2018, 26 states had adopted […]

Take-Away: Overlooked in the recent House Ways and Means Committee’s released legislative text for the budget reconciliation bill is a proposal that would allow an S corporation to convert to partnership status on a tax-free basis for a two-year period that begins on December 31, 2021. Background: There are some advantages to conducting a business […]

Take-Away: The House Ways and Means Committee’s  recent tax proposals should probably be looked at as a worst case scenario when it comes to possible changes in the Tax Code in the near future. Equally surprising, however, are some of the topics that were not covered in the Committee’s tax proposals. Topics Not Covered in the […]

Take-Away: Real estate can be held in an IRA, but navigating  the Tax Code’s self-dealing rules almost make it not worth the effort  to hold real estate in an IRA. Background: Over the weekend I was talking with a fellow who plans to purchase a Traverse City downtown condo using his IRA. Suffice it to […]

Take-Away: While we are all standing around waiting for Congress to act on various revenue enhancing proposals there are a couple of steps that can, or should be taken, while the future remains uncertain. Background: We are all acutely aware that Congress is on the verge of adopting legislation that might radically alter the face […]

Take-Away: With call the peculiar rules in 2020, like COVID related distributions and enhanced unemployment compensation benefits paid to millions, there is some confusion with regard to what is compensation for purposes of an IRA contribution. Sadly, unemployment compensation does not constitute compensation which can be used to fund an IRA. Background:  In order to […]

Take-Away: Each August the IRS identifies the inflation factor for the next year’s transfer tax exemptions. A rough estimate of those 2022 amounts are now able to be calculated using that inflation factor. Background: Every August the IRA identifies the ‘Chained Consumer Price Index’ (C-CPL) which is then used to calculate the federal transfer tax exemptions […]

Take-Away: As many married couples are currently encouraged to adopt spousal lifetime access trusts (SLATs) in order to use their applicable excluion amounts before those exclusions are reduced, either by Congress, or in 2026 when the large exclusion amounts are scheduled to sunset, they need to be warned about the reciprocal trust doctrine, which can destroy […]