Take-Away: The SECURE Act carved out five categories of designated beneficiaries who continue to be eligible to take required minimum distributions using their own life expectancy. One of the five categories of eligible designated beneficiaries is when the designated beneficiary is less than ten years younger than the deceased IRA owner. That category of eligible […]

Take-Away: A portability election is a powerful tool to avoid federal gift or estate taxes. The timing of the portability election is critical. Whether a decedent’s estate is taxable or not controls whether a ‘late’ portability election can be made. Caution: This missive is technical. Please don’t kill the messenger. Background: A portability election permits […]

Take-Away: While we are only now beginning to work with the SECURE Act’s changes and its new concept of the eligible designated beneficiary, there remains a lot of confusion which hopefully will be addressed in anticipated IRS Regulations. The confusion stems from the fact that under the pre-SECURE Act distribution rules there was never a […]

Take-Away: The Internal Revenue Code provides the exclusion of gains from the sale of a primary home from taxable income. This rule allows married sellers who file joint tax returns to exclude as much as $500,000 and a single filer to exclude up to $250,000 of gains on the sale of a primary residence. While […]

Take-Away: A 2020 Private Letter Ruling from the IRS is a helpful reminder that IRA custodians are treated differently from qualified plan administrators when it comes to their responsibilities to account owners. Private Letter Ruling 2020033008 (May 18, 2020): Facts: An IRA owner wanted to purchase a new home. He planned to use the proceeds […]

Take-Away: With all the discussion these days with regard to the tax benefits of making lifetime gifts, it is important to recognize the role of a restrictive buy-sell or shareholder agreement. However, it is difficult to distinguish between legitimate and artificial restrictions in a closely-held business’ buy-sell agreement to depress values. Legitimate restrictions will reduce […]

Take-Away: Spouses who decide to make large gifts at this time in order to use their large transfer tax exemptions need to think twice about electing gift-splitting. In addition, they need to be careful not to trigger the IRS’ step-transaction doctrine. Background: When filing a gift tax return [Form 709] that reports a completed gift, […]

Take-Away: A couple of recent Michigan Court of Appeals decisions suggest that a prenuptial agreement that seeks to protect one spouse’s separate property might still be a viable estate planning tool, despite some earlier questions raised by the Michigan Supreme Court in its Allard decision to the contrary. While a prenuptial agreement can protect separate […]

Take-Away: If many of President-elect Biden’s proposed tax law changes are implemented in the next few years, they will have a dramatic impact on how individuals engage in philanthropy. Some of the proposed changes will create more challenges to implement philanthropy, while other existing opportunities will still be available and might even be enhanced. Background: […]

Take-Away: Congress surprised us and reversed the IRS’s initial position that while PPP loans used to pay business expenses that are reimbursed under the CARES Act will be forgiven, those business expenses are not tax deductible. That all changed with the recent Consolidated Appropriations Act. Source: Revenue Ruling 2021-2 Background: In IRS Notice 2020-21 (May […]