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 […]

Take-Away: The dividends an employee-shareholder receives from a C corporation will be subject to the net investment income tax. IRS Chief Counsel Advisory: Earlier this year the IRS published Chief Counsel Advisory 2021009 (dated January 4, 2021, and released on May 7, 2021) that determined that dividend income that is received by an individual shareholder […]

Take-Away: The Michigan Court of Appeals recently held that the terms of the spouses’ divorce Property Settlement Agreement will override the terms of the Michigan Trust Code. Reported Decision: Johnson v. Shaffer, (In re Gerald F. Johnson Revocable Trust), No. 351134, Unpublished, 2021 Mich App. LEXIS 3732 (June 17, 2021) Facts: In 2008 Gerald and […]

Take-Away: A recent Bankruptcy Court decision added more confusion to whether an inherited 401(k) account is protected if the inheritor files for bankruptcy Background: I have regularly complained (probably to anyone who will listen to me) that the current tax code and its Regulations with regard to contributions to and distributions from the various types […]