Lawyers And Business Appraisal Services

Lawyers involved in estate planning, businesses litigation, asset protection, and family law often find themselves in need of expert advice and expert testimony regarding the value of various types of property and business ownership interests. In the Atlanta area, one such firm is CapVal, LLC. I have had the occasion to meet with two senior members of CapVal, Mr. Bruce C. Wood, CPA, MTx, and CVA and Mr. Mark A. Dayman, CPA/ABV, CVA. Both men are highly experienced CPA/Valuation experts who have specialized for many years in helping lawyers and trust and estate planners with their valuation needs. Often businesses or ownership interests in a business need to be valued for purposes of divorce, estate planning and asset protection, transfers to family limited partnerships or family LLCs, S Corporation conversions, 409A stock option tax planning, and business succession-continuation planning. Litigation lawyers may need expert valuation advice for the calculation of damages or as part of a structure to settle a business dispute or buy-sell agreement dispute between business owners. Sometimes litigation and negotiations for business loan workouts and similar problems is an issue requiring valuation experts.

CapVal, LLC is a company I use and recommend for these and related matters.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Even The Undead Vampires Of Twilight, Vampire Diaries, And True Blood Need Estate Planning

With Twilight New Moon and all the other vampire movies and TV shows like Vampire Diaries and True Blood so popular these days a question naturally arises:

Do vampires need to do estate planning (assuming they are undead in the USA)??

One could argue no they don't need estate planning because they are already dead or can't be killed. However, there is the possibility of running into a stake through the heart or having their head chopped off or getting trapped out in the sunshine.

So I say the better view is that yes even vampires need to have a good estate plan complete with wills and various types of trusts and all the other goodies. OK maybe they don't need an Advanced Health Care Directive - Medical Power Of Attorney, but they need everything else including proper life (or should it be undead) insurance to provide liquidity should they suddenly burst into flames.

Vampires need to be able to make sure they can pass their property on to themselves (preserve a good chain of title in the deed records, etc.) for each new identity they assume over the centuries, and they need to make sure that their little undead Dracula Jr. is taken care of should they meet up with Buffy The Vampire Slayer or something.

So what are you waiting for all you non-immortal undead? If even supposed immortal undead vampires need a good estate plan with current wills, trusts, and life insurance, etc., obviously all the rest of us need one even more. After all Obama, Pelosi, and Reid will be coming for your assets well beyond our graves.

Happy Holidays to everyone.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Valuation Discounts For Estate And Gift Taxes

Recent court decisions offer guidance on interests in closely held businesses.

One purpose of fixing a value on an interest in a closely held business is to determine gift and estate tax liability. CPAs called upon to provide such valuations know that this can be a painstaking task. It is not an exact science but an educated estimate when, as often is the case, there is no identifiable market for the interest. This uncertainty can cause unintended gift or estate tax consequences for transfers between related parties during the transferor’s life and at death.

The difference between what a person transferring an interest in a business believes is its fair market value and any higher amount the IRS determines is its fair market value can result in a greater gift tax liability. Likewise, a redetermination by the IRS of the fair market value of such interests held in an estate can spell an underpayment of estate tax. Fortunately for CPA valuation analysts, there are methods that, while not always yielding uniformly accepted results, are recognized by taxing authorities and courts as providing a valid basis for those estimates. In applying those methods, however, CPAs must take stock of recent court decisions for guidance. This article gives an overview of valuation principles for gift and estate tax purposes, reviews some current trends in determining fair market value for such purposes, and makes suggestions for seeking a qualified appraiser.

EXECUTIVE SUMMARY

Unintended estate and gift tax consequences can arise from valuations of interests in closely held entities. Because these interests often lack any readily available market value, their values at transfer are usually determined under any of three methods: the market or comparable sales method; the income or discounted cash flow method; or the net asset value or balance sheet method.

The market or income method is most suitable for entities carrying on an active trade or business, while interests in entities that primarily hold investment assets such as real estate or securities most often are valued by the net asset value method.

Values of interests in closely held entities may also be discounted for lack of marketability where they are subject to restrictions, and lack of control where they constitute minority ownership interests. Discounts for a lack of marketability are usually based on studies of public companies’ restricted stock or a comparison of share prices before and after an initial public offering. Discounts for lack of control for shares of a privately held business are usually based on comparisons of share prices to net asset value per share of publicly traded closed-end investment funds or, for real estate assets, real estate limited partnerships or investment trusts.

Another type of discount that has been increasingly recognized by courts in recent years is for projected built-in gains (BIG) tax liability upon liquidation of appreciated assets. Two appeals court decisions have allowed discounts for the full amount of estimated BIG tax when using the net asset valuation method.

With underpayment of gift or estate tax potentially at stake, such valuations will need to be competently performed by wellqualified experts. Sources of generally accepted appraisal standards include the Uniform Standards of Professional Appraisal Practice of The Appraisal Foundation and the AICPA’s Statement on Standards for Valuation Services no. 1.

By Justin P. Ransome and Vinu Satchit, Journal Of Accountancy,

July 2009

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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IRC Section 7520 Rate Adjusted In Revenue Ruling 2009-35

Revenue Ruling 2009-35 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

Rate Under Section 7520 for November 2009

Applicable federal rate for determining the present value of an
annuity, an interest for life or a term of years, or a remainder or
reversionary interest 3.2%

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Ten Tips for Taxpayers Making Charitable Donations

Every year, millions of taxpayers itemize their deductions on their federal tax return. One of the most common itemized deductions is a donation made to a charitable organization.

Here are the top ten things the IRS wants every taxpayer to know before deducting charitable donations.

1. Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov.
2. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Be sure to keep good records of any contribution you make, regardless of the amount. For any contribution made in cash, you must maintain a record of the contribution such as a bank record – including a cancelled check or a bank or credit card statement – a written record from the charity containing the date and amount of the contribution and the donor’s name, or a payroll deduction record.
6. Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, your deduction would be $200.
7. Include credit card charges and payments by check in the year they are given to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. For any contribution of $250 or more, you must have written acknowledgment from the organization to substantiate your donation. This written proof must include the amount of cash and a description of any property you contributed, and whether the organization provided any goods or services in exchange for the gift.
9. To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return.
10. An appraisal generally must be obtained if you claim a deduction for a contribution of noncash property worth more than $5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to your return.

Links:

• Form 8283, Noncash Charitable Contributions
• Publication 526, Charitable Contributions

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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New Final Regulations Issued Regarding Certain Deductions From Gross Estate

TD 9468 contains final regulations relating to the amount deductible from a decedent’s gross estate for claims against the estate under section 2053(a)(3) of the Internal Revenue Code (Code). In addition, the regulations update the provisions relating to the deduction for certain state death taxes to reflect the statutory amendments made in 2001 to sections 2053(d) and 2058. The regulations primarily will affect estates of decedents against which there are claims outstanding at the time of the decedent’s death.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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The Generation-Skipping Transfer Tax: A Quick Guide

Sooner or later, every estate planner comes face to face with the generation-skipping transfer tax (GSTT). Many practitioners do not feel up to the challenge because this particular tax has a reputation for being as treacherous as the sea. But after you boil down all the complications, you’re left with a fairly direct set of circumstances to watch for. This article is meant to help you identify situations that subject clients to the generation-skipping transfer tax and advise them appropriately.

The GSTT is the government’s defense against an end run around estate and gift taxes. It imposes a flat tax on gifts and bequests above the estate/lifetime gift exclusion that avoid gift or estate tax by skipping one or more generations, such as to grandchildren. It is relatively straightforward in its provisions, but financial advisers need to be aware of recent and ongoing changes in exemption amounts, allocations and tax rate and the corresponding implications for estate plans. One important planning element is the optimal use of the lifetime exclusion in tandem with the annual gift exclusion, along with other common estate planning mechanisms.

REINING IN LIFE ESTATES

The GSTT is a simplified version of a tax originally instituted in 1976. Back then, Congress explained that the tax was designed “to remedy the perceived abuse of using a trust to benefit several generations while avoiding Federal Estate Tax during the term of the trust.”

Here’s the abuse they saw: Wealthy families were going to estate planners who created a life estate in their assets for their kids, followed by a life estate in the assets for their grandkids, followed by a life estate in the assets for their great-grandkids and so on. Since life estates are not subject to the federal estate tax, these plans effectively moved incredible amounts of wealth from generation to generation without any risk of the estate tax. Less wealthy families were paying more in estate tax than more wealthy families, who could afford to engage in sophisticated estate planning. The initial GSTT that Congress created, however, was so widely criticized that the Tax Reform Act of 1986 retroactively repealed the 1976 version and implemented the current version.

The 1986 Act imposed a tax equal to the highest estate tax rate on any generation- skipping transfer, with a $1 million exemption per taxpayer. In 1995, the exemption was indexed for inflation in $10,000 increments. In 2001, the exemption was increased to match the estate tax exemption. This change, along with scheduled increases in the exemption amount culminating in the scheduled repeal of the estate and GST taxes, was included in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

Currently, a taxpayer’s GSTT exemption is $3.5 million, and both the GSTT and the estate tax are scheduled for repeal in 2010. The 2001 EGTRRA changes are then scheduled to sunset on Jan. 1, 2011, and the estate and GSTT exemptions drop back to their 2001 levels, as indexed for inflation. The Obama administration and some in Congress, however, have indicated their desire to avoid repeal of the estate tax and preserve the exemption at its current level. Although they have not specifically addressed the GSTT, it is considered likely to be included in any upcoming estate tax changes (see sidebar, “Forecasting the Estate Tax,” below).

The EGTRRA also introduced another significant GSTT change. Prior to the EGTRRA, a taxpayer’s GSTT exemption was automatically applied only to direct skips. After the EGTRRA, the exemption will also be automatically allocated to indirect skips (defined below) in certain circumstances unless the taxpayer (or the taxpayer’s executor) elects out of the automatic allocation rules. Automatic allocation to indirect skips under the EGTRRA is limited, though: The transfers must be in a GST trust (one that fits the criteria of IRC § 2632(c)(3)(B), which prevents allocation to most charitable trusts as well as trusts in which non–skip persons essentially have more than 25% of the beneficial interest) that’s subject to the gift tax and an estate tax inclusion period that ends after the EGTRRA’s effective date. This automatic allocation is also scheduled to sunset with the other EGTRRA provisions. It is unclear whether it will be retained, but if it is, strategies for electing out under these circumstances, in addition to direct skips, could well be valuable beyond next year

EXECUTIVE SUMMARY

Despite its fearsome reputation, the generation-skipping transfer tax (GSTT) is straightforward in its provisions and worth the attention of CPA planning advisers, especially in the currently unsettled political climate.

The GSTT is imposed on asset transfers that avoid estate or gift tax and skip one or more generations, such as by a grandparent to a grandchild, or if to an unrelated person, to someone more than 37½ years younger than the transferor. It is imposed on direct transfers and transfers via trust. The tax rate and exemption amount are those of the estate tax.

Electing out of an automatic allocation of the GSTT exemption to direct skips and paying any applicable GSTT is advised for preserving the exemption for the trust’s future taxable distributions or termination (“indirect skips”).

Late allocations may be made, but they may adversely affect the amount of the exemption allocated to trust assets for any transfer under a pre-established inclusion ratio, depending on whether assets have appreciated since the allocation date.

For couples, a reverse qualified terminable interest property (QTIP) election may allow allocation of any remaining exemption amount of the first spouse to die if only a portion of it was allocated to a bypass trust.

Allocations may also come into play for irrevocable life insurance trusts and complex trusts..

Full Article At: The Generation-Skipping Transfer Tax: A Quick Guide

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Charitable Remainder Trust Update

IRS Keeping Close Watch On Popular Estate Planning Tool.

ADVANTAGES OF A CHARITABLE REMAINDER TRUST ("CRT")
By setting up a CRT, a donor can avoid currently paying tax on the disposition of appreciated assets and invest the sale proceedsto generate a future income stream. The donor forms a CRT and contributes assets (such as appreciated stock) to it. The donor receives an income tax charitable deduction (as well as a gift or estate charitable deduction) when the CRT is created. The amount of the deduction is measured by the actuarial present value of the charity’s right to receive the corpus on termination of the noncharitable (remainder) interest. The CRT sells the stock but does not pay tax on the gain, because the CRT is generally a tax-exempt entity under IRC § 664(c). The CRT then invests the proceeds of the stock sale and pays the donor an income stream for a fixed term of years (or over the course of a life or lives), based either on the value of the assets at the time the trust is created (annuity trust) or a fixed percentage of asset value each year going forward (unitrust). Any gain is taxable to the income beneficiary only when it is distributed. On completion of the term, the CRT distributes the remaining assets to a charity, which can include a private foundation established by the donor. If the donor retains an interest in the trust for life, the assets remaining in the CRT at death are deductible for estate tax purposes.

Another type of charitable trust is the charitable lead trust (CLT), which pays an income stream to the charity on the front end, with a remainder interest payable to noncharitable beneficiaries. CLTs are generally used to minimize gift and estate tax.

EXECUTIVE SUMMARY

• Charitable remainder trusts (CRTs) are a favored way for donors to receive a charitable deduction of the present value of a future donation while retaining an annuity or unitrust income.

• CPA tax advisers should be aware of recent guidance on CRTs concerning unrelated business taxable income (UBTI), pro rata division of CRTs and a type of transaction involving a CRT that the Service has designated a “transaction of interest.”

• The IRS issued final regulations modifying the regime for UBTI received by CRTs. For tax years beginning after Dec. 31, 2006, a CRT that receives UBTI in a tax year is liable for a 100% excise tax on UBTI but retains its tax-exempt status.

• In a revenue ruling, the IRS addressed pro rata division of a CRT with two or more income recipients into new trusts. Generally, CRTs may be divided without termination or other penalties and the bases of assets carried over to the new trusts.

• In the “transaction of interest,” a CRT with highly appreciated, low-basis assets sells them and replaces them with new assets. The income and charitable beneficiaries then sell their interests in the CRT to a third party. The income beneficiary recognizes little or no gain on the transaction by claiming an exception to the no-basis rule of IRC § 1001(e).

A CRT “TRANSACTION OF INTEREST”

Certain transactions involving a CRT that the IRS considers as manipulating the uniform basis rules may be deemed to have a potential for abuse and avoidance of tax on gain from the sale of appreciated assets. In Notice 2008-99, 2008-47 IRB 1194, the IRS described such a transaction involving the creation of a CRT and the subsequent sale of the interests in the CRT to a third party. Because of the potential for tax avoidance, the IRS has labeled it and substantially similar transactions “transactions of interest” for purposes of Treas. Reg. § 1.6011-4(b)(6).

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Sale Of A Charitable Remainder Trust Interest Listed As A Transaction Of Interest

In Notice 2008-99, 2008-47 IRB (Nov. 24, 2008), the IRS listed as a “transaction of interest” a transaction involving the sale of interests in a charitable remainder trust used to avoid capital gains taxes on the appreciation in assets transferred to the trust. In the transaction, a donor reserves an annuity or unitrust interest in a charitable remainder trust and funds the trust with highly-appreciated assets. The trust sells the assets and reinvests the proceeds in other assets. The grantor and remainder beneficiary then sell their interests in the trust, and the grantor claims that no gain is recognized on the sale because the grantor's basis in his or her interest in the trust is a share of the trust's purchase-derived basis in the newly acquired assets, rather than a share of the basis in the assets originally transferred to the trust. Persons entering into these transactions on or after November 2, 2006, must disclose the transaction as described in Reg. § 1.6011-4 . Material advisors who make a tax statement on or after November 2, 2006, with respect to transactions entered into on or after that date, have disclosure and list maintenance obligations under Code Sec. 6111 and Code Sec. 6112 .

For more on the uniform basis rules for interests in trusts, see

Zaritsky & Lane & Danforth: Federal Income Tax Estates & Trusts ¶ 2.19

For more on the significance of a “transaction of interest,” see

Langbein: Bank Income Tax Return Manual ¶ 19.01[3][b][ii]

Saltzman: IRS Practice & Procedure ¶ 7B.16[3][b1][i]

Zaritsky & Lane & Danforth: Federal Income Tax Estates & Trusts ¶ 7.11[3]

Lipton & Walton, “Final Regulations for the Tax Shelter Disclosure Regime-Making the Rules More User Friendly,” 107 J. Tax'n 196 (Oct. 2007)

Lipton & Walton, “Treasury Improves the Disclosure Regime by Issuing New Temporary and Proposed Regulations,” 106 J. Tax'n 4 (Jan. 2007)

Allison & Carman, “Questions Unanswered in Prohibited Tax Shelter Provisions,” 19 Tax'n of Exempts 21 (Jan/Feb. 2008)

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Spouse Did Not Have Power of Appointment Over Property Held in Trust, Despite Her Trusteeship

In PLR 200847015 (TAM, Nov. 21, 2008), the IRS stated in technical advice, that a surviving spouse who was named trustee of a trust did not hold a general power of appointment, when she was authorized to distribute to herself income and principal as she deemed necessary for her health, support, and maintenance. The IRS relied on Rev Rul 78-398, 1978-2 CB 237 , in which the power of a decedent who was the income beneficiary and sole trustee of a trust to apply as much of the trust principal as necessary for such trustee-beneficiary's maintenance and medical care, which power was limited by an ascertainable standard under local law, was limited by an ascertainable standard relating to maintenance and health within the meaning of Code Sec. 2041(b)(1)(A) , and was not a general power of appointment.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Reformation of Irrevocable Trust Creates a Grantor Trust

In PLR 200848017 (Nov. 28, 2008), the IRS ruled that a nonjudicial reformation of a trust to give the grantor the nonfiduciary power to reacquire trust assets by substituting assets of equivalent value could create a grantor trust for income tax purposes. The IRS did state that all relevant facts and circumstances would need to be considered to determine whether the gran Rev Rul 2004-64 tor really held the power in a nonfiduciary capacity.

Note. This is an extremely useful way to turn any trust into a grantor trust, which may be desirable for several reasons. Generally, the modification should usually include a direction that all the income taxes on the trust will be paid by the grantor, without reimbursement or payment by the trustee, to avoid having the payment of these taxes constitute a taxable gift to the beneficiaries. See Rev Rul 2004-64, 2004-1 CB 7 .

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Funding of Pecuniary GST Exemption Share Result in Recognition of Gain or Loss, Despite Court Order to Fund with Fractional Shares

In PLR 200848009 (Nov. 28, 2008), the IRS ruled that a revocable trust must recognize gain or loss on funding a GST trust that was to receive "an amount" equal to the decedent's GST exemption, even though a local probate court ordered that the trustees fund the exemption share as a fractional share. The trustees had to delay funding for several years, because the trust assets were illiquid, and the court had ordered that the GST exemption trust receive a fractional share, so that it would share in the appreciation during the trust administration. The IRS also stated that, if the GST exemption trust received as a fractional share more than it would have received as a pecuniary gift, it would not be entirely exempt from GST tax.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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IRS Issues Its 2009 “Dirty Dozen” List Of Tax Scams

IR-2009-41, April 13, 2009

The Internal Revenue Service today issued its 2009 “dirty dozen” list of tax scams, including schemes involving phishing, hiding income offshore and false claims for refunds.

“Taxpayers should be wary of scams to avoid paying taxes that seem too good to be true, especially during these challenging economic times,” IRS Commissioner Doug Shulman said. “There is no secret trick that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”

Tax schemes are illegal and can lead to problems for both scam artists and taxpayers who risk significant penalties, interest and possible criminal prosecution.

The IRS urges taxpayers to avoid these common schemes:

Phishing

Phishing is a tactic used by Internet-based scam artists to trick unsuspecting victims into revealing personal or financial information. The criminals use the information to steal the victim’s identity, access bank accounts, run up credit card charges or apply for loans in the victim’s name.

Phishing scams often take the form of an e-mail that appears to come from a legitimate source, including the IRS. The IRS never initiates unsolicited e-mail contact with taxpayers about their tax issues. Taxpayers who receive unsolicited e-mails that claim to be from the IRS can forward the message to phishing@irs.gov. Further instructions are available at IRS.gov. To date, taxpayers have forwarded scam e-mails reflecting thousands of confirmed IRS phishing sites. If you believe you have been the target of an identity thief, information is available at IRS.gov.

Hiding Income Offshore

The IRS aggressively pursues taxpayers and promoters involved in abusive offshore transactions. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks, brokerage accounts or through other entities. Recently, the IRS provided guidance to auditors on how to deal with those hiding income offshore in undisclosed accounts. The IRS draws a clear line between taxpayers with offshore accounts who voluntarily come forward and those who fail to come forward.

Taxpayers also evade taxes by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or life insurance plans. The IRS has also identified abusive offshore schemes including those that involve use of electronic funds transfer and payment systems, offshore business merchant accounts and private banking relationships.

Filing False or Misleading Forms

The IRS is seeing scam artists file false or misleading returns to claim refunds that they are not entitled to. Frivolous information returns, such as Form 1099-Original Issue Discount (OID), claiming false withholding credits are used to legitimize erroneous refund claims. The new scam has evolved from an earlier phony argument that a “strawman” bank account has been created for each citizen. Under this scheme, taxpayers fabricate an information return, arguing they used their “strawman” account to pay for goods and services and falsely claim the corresponding amount as withholding as a way to seek a tax refund.

Abuse of Charitable Organizations and Deductions

The IRS continues to observe the misuse of tax-exempt organizations. Abuse includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property. The IRS also continues to investigate various schemes involving the donation of non-cash assets, including easements on property, closely-held corporate stock and real property. Often, the donations are highly overvalued or the organization receiving the donation promises that the donor can purchase the items back at a later date at a price the donor sets. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and new definitions of qualified appraisals and qualified appraisers for taxpayers claiming charitable contributions.

Return Preparer Fraud

Dishonest return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Taxpayers should choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is. No matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others, which are pending in court.

[The law offices of Attorney-Britt strongly recommend that you use the services of a competent CPA to prepare your tax returns. If you do not already have a CPA, the law offices of Attorney-Britt will be happy to recommend one to you.]

Frivolous Arguments

Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. The IRS has a list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of the positions on the list are subject to a $5,000 penalty. More information is available on IRS.gov.

False Claims for Refund and Requests for Abatement

This scam involves a request for abatement of previously assessed tax using Form 843, Claim for Refund and Request for Abatement. Many individuals who try this have not previously filed tax returns. The tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses Form 843 to list reasons for the request. Often, one of the reasons given is "Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service."

Abusive Retirement Plans

The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to IRAs as well as transactions that are not properly reported as early distributions. Taxpayers should be wary of advisers who encourage them to shift appreciated assets into IRAs or companies owned by their IRAs at less than fair market value to circumvent annual contribution limits. Other variations have included the use of limited liability companies to engage in activity which is considered prohibited.

Disguised Corporate Ownership

Some taxpayers form corporations and other entities in certain states for the primary purpose of disguising the ownership of a business or financial activity. Such entities can be used to facilitate underreporting of income, fictitious deductions, non-filing of tax returns, participating in listed transactions, money laundering, financial crimes, and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance.

Zero Wages

Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer also may submit a statement rebutting wages and taxes reported by a payer to the IRS. Sometimes fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme.

Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are many legitimate, valid uses of trusts in tax and estate planning, some promoted transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the promised tax benefits and are being used primarily as a means to avoid income tax liability and hide assets from creditors, including the IRS.

The IRS has recently seen an increase in the improper use of private annuity trusts and foreign trusts to divert income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust arrangement.

[As noted above, Trusts are a valuable and powerful tool in the construction of a proper estate plan. The proper use of trusts as part of a total estate plan can result in significant estate tax savings and asset protection benefits. The above comments are not directed at the long-standing and traditional uses of various trusts in legitimate and legal estate planning and asset protection strategies. The above comments about trusts are directed primarily at abusive tax shelter schemes, often "sold" by promoters. The law offices of Attorney-Britt advise that you should always seek competent trained advice from an estate planning professional whenever considering the creation or alteration of an estate plan, and you should always seek a second opinion from a trusted professional when considering any planning device or structure that is promoted by persons with whom you do not have a long standing relationship of trust.]

Fuel Tax Credit Scams

The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim, potentially subjecting those who improperly claim the credit to a $5,000 penalty.

How to Report Suspected Tax Fraud Activity

Suspected tax fraud can be reported to the IRS using Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential.

Whistleblowers also may provide allegations of fraud to the IRS and may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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The Strategic Importance Of A Well Crafted Buy-Sell Agreement

What happens to a client’s interest in his/her closely held company when he dies? What happens to the remaining owners and the viability of the business after one of the owners dies? How do owners of a business reconcile differences with each other over management of the company or when one owner wishes to sell part or all of their ownership interest in the company? Business lawyers and estate planners who are familiar with protecting their clients’ most valuable assets, their families, and their clients’ second most valuable asset, the business interests they own, can help their clients prepare for the ultimate day when one of the owners dies, becomes disabled, seeks to retire from the business, or becomes irretrievably opposed to the other owners on the fundamental direction of the company.

One tool used to handle these situations is a well-crafted buy-sell agreement, strategically designed to protect the owners’ interests and their families. A buy-sell agreement that compliments and ties in to the clients’ overall estate plan and asset protection goals. A well crafted buy-sell agreement provides control over the transfer of ownership under specified circumstances.

The time for business owners to agree upon the material terms of a well crafted buy-sell agreement is long before it is needed. It is important to agree upon the terms of such a fundamental part of any business owners’ business and estate plans while the owners are all getting along and amendable to any needed compromises.

Buy-Sell “Triggers” are the events described in a buy-sell agreement that trigger the applicability of one or more of the agreement’s provisions. Triggers can be one, several, or all of the following: (1) Death of a partner or shareholder; (2) Divorce of an owner; (3) Insolvency of an owner; (4) An owner’s business ownership interest becoming subject to a judgment creditor; (5) The desired retirement of an owner; (6) Permanent disability of an owner; (7) An owner’s desire to sell some or all of his/her ownership interest in the business; and (8) Fundamental disputes between the owners that can only be resolved by one owner buying out the interests of the other owner.

The attorneys and lawyers at the law offices of AttorneyBritt have substantial experience in crafting a well designed buy-sell agreement, which is fully integrated into the asset protection, estate planning, and other client objectives. Whether the buy-sell is to cover a single entity with two owners or multiple entities and multiple owners, Attorney-Britt has the experience, training, and judgment to secure the protection of both your 1st and 2nd most precious assets.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Partners-Members Distributive Shares - New Proposed Regulation

REG-144689-04 contains proposed regulations regarding the determination of partners’ distributive shares of partnership items of income, gain, loss, deduction and credit when a partner’s interests varies during a partnership taxable year. Also, the proposed regulations modify the existing regulations regarding the required taxable year of a partnership. These proposed regulations affect partnerships and their partners.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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Special Charitable Contributions for Certain IRA Owners

As an alternative method for donating to a charity, certain taxpayers may transfer funds from their IRA to an eligible charitable organization. Here are ten things taxpayers who are thinking about making such a donation will need to know.

1. The IRA owner must be age 70 ½ or older.

2. The donor must directly transfer the money tax-free to an eligible organization.

3. The maximum amount that an IRA owner may transfer annually tax-free is $100,000 to an eligible organization.

4. This option, created in 2006 and recently extended through 2009, is available to eligible IRA owners, regardless of whether they itemize their deductions.

5. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension plans – commonly referred to as SEP Plans – are not eligible.

6. To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity.

7. Amounts transferred are not taxable and no deduction is available for the amount given to the charity unless nondeductible contributions are transferred.

8. Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

9. Transferred amounts are counted in determining whether the owner has met the IRA's required minimum distribution rules. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. If nondeductible contributions are transferred to an eligible organization, a charitable contribution deduction may be allowed if itemizing deductions.

10. More information about qualified charitable distributions can be found in Publication 590, Individual Retirement Arrangements.

For More Information Contact The Atlanta, Georgia Law Offices Of AttorneyBritt:

AttorneyBritt
Gary L. Britt, CPA, J.D.
1200 Abernathy Road, Suite 1700
Atlanta, Georgia 30328

404-567-6445

“Lawyer's That Mean Business”

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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AttorneyBritt, Gary L. Britt, CPA, J.D.

AttorneyBritt
Gary L. Britt, CPA, J.D.
Attorney At Law
1200 Abernathy Road
Northpark Center 600
Suite 1700
Atlanta, Georgia 30328

404-567-6445

Gary L. Britt, CPA, J.D., Attorney At Law, and the law firm of AttorneyBritt serves the legal needs of businesses, individuals, professionals, partners, corporations, limited liability companies, partnerships, estates, and trusts throughout Georgia and the Atlanta Metropolitan Area.

The law firm of AttorneyBritt acts as lawyer, trusted advisor and business planner for clients from Fulton, DeKalb, Cobb, Bartow, Cherokee, Gwinnett, Hall, and Tift counties Georgia, with offices located in Atlanta, Georgia, Sandy Springs - Dunwoody, Georgia, Duluth, Georgia, and Tifton, Georgia.
Business Lawyers And Attorneys: Estate Planning, wills, trusts, estate administration, and litigation, including construction disputes and lawsuits, homebuilder and architect disputes, and litigation, contract disputes and litigation, and other lawsuits and litigation; Representation for buying or selling a business, mergers and acquisitions, buy-sell agreements, shareholder and partner agreements, and other contracts, and agreements of all types; Employment contracts, agreements, and disputes.

The law firm of AttorneyBritt in Atlanta, Georgia listens carefully to our clients and provides quality legal representation in the areas of business law, real estate, home defects, construction law, probate, tax law, wills, trusts, estates, probate, and estate litigation. The law firm of AttorneyBritt and Gary L. Britt, CPA, J.D., Attorney At Law, serve clients in the Atlanta metro area, including without limitation Alpharetta, Fairburn, Roswell, Sandy Springs, Buckhead, Decatur, Lithonia, Druid Hills, Dunwoody, Tucker, Marietta, Smyrna, Vinings, Duluth, Acworth, Cartersville, Fayetteville, Marietta, Suwanee, Lawrenceville, Buford, Norcross, Morrow, Riverdale, Canton, Milton, John's Creek and other cities throughout North Georgia and located in:

Fulton County | DeKalb County | Cobb County | Bartow County | Gwinnett County | Hall County | Fayette County | Cherokee County | Douglas County | Clayton County

Integrity, Trust, And Quality Service

Integrity, Trust, And Quality Service

Since 1985, AttorneyBritt, Gary L. Britt, CPA, J.D., Attorney At Law, has stood for all of these things. At the law firm of AttorneyBritt, we build relationships based on integrity, trust, and quality service. We take your customer experience serious. In a hectic world, we are here to help you make informed decisions about your individual and business problems. See what makes AttorneyBritt a better choice for your legal needs. Let us make a difference in your world - a world that just became a little bit easier and more profitable.

AttorneyBritt, Gary L. Britt, is both a lawyer and Certified Public Accountant. AttorneyBritt provides a multidisciplinary and comprehensive approach to solving the multifaceted legal, tax law, and business problems of our individual, professional, and corporate clients.

Gary L. Britt, CPA, J.D., Attorney At Law, has over 25 years of experience helping individuals, businesses, and business owners prosecute and defend lawsuits; manage, structure, and govern their business transactions , contracts, and agreements; protect their assets; and successfully transfer their wealth to future generations.

AttorneyBritt provides service and consultation in several areas:

• Lawsuits: Contract disputes. Partnership, shareholder, buy-sell, and other disputed agreements. Litigation of disputes between businesses, between businesses and individuals, or between two or more individuals. Filing and Defending Lawsuits of all types.

• Business Transactions: Business formation and organization, shareholder and partnership agreements, buy-sell agreements, asset protection, and business succession planning.

• Tax Planning and advice for corporations, partnerships, and individuals.

• Tax Audit and tax assessment-collection problems with the IRS (Internal Revenue Service) or the Georgia Department of Revenue. Offers in compromise and settlement of tax debts .

• Wills, Trusts, and Estates: Will preparation, estate planning, estate administration, asset protection, probate, and will contests.

• More Information About Our Services
  

AttorneyBritt has spent over 23 years serving as either General Counsel or lead outside counsel for various multifaceted business groups involved in: multi-jurisdiction state and federal litigation and arbitration disputes; multi-state commercial real estate development, leasing, and management; hotels; restaurants; manufacturing; franchisees and franchisors; an independent music label; an internet application service provider; and various medical and dental service groups.