Estate Planning and Circular 230
“Circular 230” is the body of federal government regulations which regulate individuals that “practice before” the Internal Revenue Service on tax matters. By now, many professionals have either adopted firm procedures for dealing with “Circular 230” or have begun to notice Circular 230 “disclaimers” plastered over letters, memos and even…
Many More Taxpayers Will Create Trusts Because of IRS Ruling
In Revenue Ruling 2004-64, the IRS settled a long-standing question about the gift and estate taxation of grantor trusts. As a result of this favorable ruling, many more advisers will recommend that clients place income-producing assets into irrevocable trusts in order to achieve estate tax benefits. A grantor trust is a trust…
What Every Pennsylvania Estate Planner Needs to Know about the New Jersey Estate Tax
In 2002, the Commonwealth of Pennsylvania, like the State of New Jersey, “decoupled” the state estate tax from the federal state death tax credit amount allowed by 2011 of the Internal Revenue Code. This may be where the similarity between the two states ends. After the Economic Growth Tax Relief…
Treatment of Madoff Losses Under GIT Explained
The New Jersey Division of Taxation has revised a previously reported notice clarifying how taxpayers should report losses from the Bernard Madoff Ponzi scheme for purposes of the gross (personal) income tax. In a recent ruling, the IRS stated that the investment losses resulting from the Madoff Ponzi scheme should be written…
Where Is Your State Tax Home?
Where to live has traditionally been a decision based on personal factors such as quality of life and proximity to family and friends. However, as state and local income and death tax rates rise, high income and high net worth individuals are increasingly asking “how do I change my tax…
A Checklist for Changing Your Domicile
Although it is a person’s subjective intent that establishes changing their domicile, taxing authorities and the courts may place substantial weight on objective factors. However, a list of objective factors does not reduce a domicile determination to a mathematical test. A change of domicile to another state may be challenged…
Diagnosing the AMA
The alternative minimum assessment (AMA) was enacted as part of the 2002 Business Tax Reform Act. The AMA requires taxable corporations to pay the greater of their New Jersey corporation business tax (CBT) regular liability or the AMA. For corporations subject to the regular CBT, the AMA rates were reduced to…
Back Pay Withholding
The Appellate Division held that an employer may deduct state and federal withholding taxes from back pay arbitration awards when a union employee is reinstated. The payments made as a direct consequence of the plaintiff’s employment constituted wages subject to federal and state withholding taxes. Amalgamated Transit Union Local 880 v. NJ…
Partnership Filing Fee
The Division has issued Technical Bulletin TB-55R which discusses the partnership filing fee. In general, if a partnership has 3 or more owners and New Jersey source income or loss, it must pay a $150 per owner filing fee (to a maximum of $250,000). Due Date The filing fee must be…
Non-profit Organizations Filing Deadline
The Pension Protection Act of 2006 mandates that all non-profit organizations, other than churches and church related organizations, must file an information form with the IRS. This requirement has been in effect since the beginning of 2007, which made 2009 the third consecutive year under the new law. Any organization…