Category: Tax Planning & Compliance
Should the new “SECURE Act” changes encourage taxpayers to use a Charitable Remainder Trust (CRT) as recipient of IRA benefits?
In two recent Kulzer & DiPadova newsletters, we addressed a significant change to the law made by the Further Consolidated Appropriations Act, 2020 (H.R. 1865, P.L. 116-94), the yearend funding measure signed by President Trump on December 20, 2019. The first article, dated December 30, 2019, summarized the SECURE Act,…
New Jersey Enacts Salt Work-Around Pass-Through Entity Tax
On January 13, 2020, Governor Murphy signed into law P.L.2019, c.320 (S3246/A4807) the “Pass-Through Business Alternative Income Tax Act.” The new law establishes an elective entity-level alternative income tax (AIT) to be paid by pass-through entities (PTEs). Pass-through income remains taxable to owners, but the new law grants a refundable…
Secure Act: Major Changes for Retirement Planning
On December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act, 2020 (H.R.1865 P.L. 116-94)(“Appropriations Act”). Division O of the Appropriations Act (https://www.congress.gov/bill/116th-congress/house-bill/1865/text) included the Setting Every Community Up for Retirement Enhancement Act of 2019 (“Secure Act”) which provides the most expansive retirement plan legislation since the…
Final Clawback Regulations Released
On November 22, 2019, the IRS issued final regulations under a concept known as “clawback” of estate tax exemption. “Clawback” of estate tax exemption arises due to the manner in which the estate tax is calculated and occurs when an estate tax exemption amount decreases. When the Tax Cut and…
Taxpayer Wins Major Gift Tax Valuation Case
Mr. Jones established three trusts for his daughters in May 2009. He gifted voting and non-voting stock of Seneca Sawmill Co. (“SSC”) and limited partnership interest of Seneca Jones Timber Co. (“SJTC”) to the trusts. Together these entities operated a lumber and timber business. Mr. Jones filed a gift tax…
IRS Releases Inflation-Adjusted Amounts for 2020
The income tax brackets, standard deduction amounts, and many other tax items are adjusted annually for cost-of-living increases. On Tuesday, November 6, 2019, the IRS released the adjustments that will apply for the 2020 tax year. Below is a highlight of some of those adjustments. Ordinary income. For married individuals…
Van Riper v. Director, Division of Taxation: New Jersey Supreme Court Hears Important New Jersey Inheritance Tax Matter
On October 8, 2019, the Supreme Court heard oral arguments in the case of Van Riper v. Director, Division of Taxation, 2018 WL 4761357 (App. Div. October 3, 2018). This case involves an inheritance tax dispute in which the New Jersey State Bar Association (NJSBA) filed an Amicus (Friend of…
Interest Expense No Longer Characterized As Investment Interest
The Tax Court, in the case of William C. Lipnick v. Commissioner, No. 1262-18, 153 T.C. No. 1 (2019), addressed the treatment of interest expense that was initially related to a debt-financed distribution. William Lipnick, the taypayer in the case, received interests in a partnership by gift and bequest from…
Penalty Relief for CBT Taxpayers
The New Jersey Division of Taxation has announced penalty relief for taxpayers who made timely requests for an extended filing date for their 2018 New Jersey Corporation Business Tax Returns. Originally, the extended filing date for a 2018 calendar year corporation was October 15, 2019, the same due date as…
S Corporation Shareholder Denied $8,000,000 Loss Deduction Due to Poor Structure of Loan
An S corporation does not pay federal income taxes. Instead, its income or losses pass through to its shareholders, and they report the income or loss on their federal individual income tax returns. A shareholder can deduct losses, but only up to the adjusted basis of the shareholder’s stock and…