Federal Income Taxation Chapter 3 Compensation for Losses

Size: px
Start display at page:

Download "Federal Income Taxation Chapter 3 Compensation for Losses"

Transcription

1 Presentation: Federal Income Taxation Chapter 3 Compensation for Losses Professors Wells August 26, 2015

2 Clark v. Commissioner p.90 Facts: Clark paid $19, by tax counsel to compensate Clark for consequences of advising to file a joint tax return and not separate returns. IRS Position: What is their argument for income? Court s holding: What is the underlying theory? 2

3 Recoveries for Personal p.92 and Business Injuries Issue: What are the damages a substitute for? Raytheon case: damages in antitrust action ordinary income where damages represent payment for a loss of profits. Damages as a return of capital where destruction of the business and goodwill. Here: destruction of goodwill but no tax basis proved and, therefore, assumed to be zero (and all proceeds as income CG?). 3

4 Windfall Gains Glenshaw Glass p.96 Punitive portion of a treble damage antitrust recovery is includible as gross income under [now] Code 61. Income is to be determined based on accession to wealth, clearly realized. No requirement of source-based taxation (cf., Eisner v. Macomber re stock dividends). Can be recurring or non-recurring receipts. 4

5 Home Run Ball and Treasure Trove p.101 Supp. pp Treas. Reg : Treasure trove, to the extent of its value in United States currency, constitutes gross income for the taxable year in which it is reduced to undisputed possession. IRS press release states that no gift tax if ball given back to McGwire but the tax consequences may be different if the fan retained the ball for sale. Cesarini v. U.S. cash found in a piano. Included in gross income upon discovery because this was income from whatever source derived, citing Treas. Reg (a). What if discovered that the piano was a famous Cristofori piano that was purchased for $15 at a garage sale? What if you discover oil on your land? 5

6 Damages for Personal Injury Prior Law p Solicitor s Opinion 132: [G]ross income does not include everything that comes in The statutory exclusion for personal injury damages, first enacted in 1918, may have merely codified the result reached under prior law, which had been based on the conclusion that damages for personal injury are not income under the early tax acts. Emotional distress type damages, such as for alienation of affection, were apparently not thought to constitute damages for personal injury under the original understanding of the statutory exclusion (page 104); Damages for slander or libel affecting business or professional reputation or property rights was apparently understood early on to constitute income (see limiting interpretation of Sol. Mem. 957, page 104); and Most importantly, receipt of damages for invasion of nontransferrable personal rights ( not assignable and not susceptible of any appraisal in relation to market values ) although a money that comes in involves no derivation of gain or profit, and so is not within the general definition of income. Rev. Rul : amounts received for alienation of familial rights is not gross income to the recipient. 6

7 Damages for Personal Injury p.108 Attn: Tort Lawyers Code 104(a)(2) exclusion for damages received for personal physical injuries. The physical injury requirement cuts back the holdings of cases that involved discrimination claims, loss of familial rights (Rev. Rul ), and scope of Solicitor Opinion 132. The omitted Murphy case upheld the constitutionality of taxing nonphysical injury personal awards. Exclusion whether received as a lump sum payment or in periodic payments. Not including sex/race/age discrimination lawsuit proceeds. Not including payments for emotional distress (unless distress attributable to physical injury). Punitive damages are includible in Gross Income. See p

8 Structured Settlements p.108 Supp. p. 31 What is a structured settlement? Code 104(a)(2) provides for exclusion whether amount received as lump sums or as periodic payments for amounts received for personal physical injuries. 1. What about the interest income component inherent in the delayed payments? 2. How assure that the agreed deferred payments will actually be made? EXAMPLE: Assume court petition/ complaint specifies $1 million compensatory and $9 million punitive. Parties then settle for $2 million: how allocate this amount to excluded and included amounts? Amend the petition prior to effective date of the settlement agreement? EXAMPLE: What is the result result of the NFL s $765 million concussion settlement with former players reached on 8/29/2013? 8

9 Medical Expense Recoveries p.129 Tax Treatment of Insurance for Medical Care Funding Method Premiums Proceeds Employer Provided Coverage Excluded, 106 Excluded, 105(b) Individually Purchased Insurance Limited Deduction, 213(d)(1)(D) Excluded, 104(a)(3) Self-Insurance N/A Limited Deduction, 213(a) (b): Health insurance payments made by an employer provided health plan do not represent income to the employee (a)(3) excludes insurance proceeds received under employee purchased health plan. 3. Premiums paid by employees for their health insurance are nondeductible except in limited long-term care situations (see 213(d)(1)(D) and (d)(6)), but the premiums paid by the employer are deductible for the employer ( 162(a)) and not income to employee (see 106). 4. Tax Expenditure Impact in 2015: billion (p.536). 9

10 Disability Insurance p.146 Gross income if disability payments are made by employer provided health insurance as 105(b) only excludes amounts received to pay medical care and not to supplement wages. But, employer is entitled to deduction for these amounts (see 162(a)). Gross income excludes disability insurance payments for payments on individually purchased insurance under 104(a)(3) as 104(a)does not require amounts be paid for medical care. But, the employee is generally not entitled to a deduction for premium payments for disability policies (see 213(d)(1)(D)). 10

11 Life Insurance - Code 101 GI Exclusion p.147 What is life insurance? A payment for dying ordinarily paid in a lump sum. If paid at death, why not call it death insurance, rather than life insurance? Gross income exclusion ( 101) is available when proceeds are paid at death for both: (i) the pre-death interest buildup, and (ii) the mortality gain (i.e., windfall because of early death). The transfer for consideration limitations may apply. 101(a)(2). Purpose of limits? The gross income exclusion is not applicable to any post-death interest accumulation. continued 11

12 Life Insurance, cont. p.148 No income tax deduction is available for policy premiums paid. 264(a)(1). Policy loans are not treated as distributions. Code 72(e)(5)(A). Policy settlement options after maturity at death: a deferred receipt produces taxable interest income; see Code 101(c) & (d) (concerning the annuity option). continued 12

13 Life Insurance, cont. p.148 Defining Life Insurance If not treated as life insurance, then taxed as if a savings account : i.e., inclusion in current income of: (i) increase in cash surrender value of the account, and (ii) value of current insurance coverage. 13

14 Employer Paid Life Insurance p.150 Employer s payment of premiums gross income inclusion (unless employer is the beneficiary). Same as Old Colony? But, 79 exclusion from gross income for first $50,000 of group term insurance provided by employer. What is term life insurance? Employer deduction available? Tax Expenditure impact of this exclusion is $28.9 billion (see p. 17) 14

15 Problems Life Insurance p A purchased a $100,000 life endowment insurance policy. At age 65, after A had paid total premiums of $80,000, the policy matured and the insurance company began to make payments to A under the policy. A will be paid $10,000 a year for as long as she lives; if she dies before age 75, any excess of $100,000 over what has previously been paid to her will be paid to her estate or designated beneficiary. How are periodic payments under this policy taxed? How much, if any, of the lump-sum payment will be taxed if A dies before age 75? 2. B owned a life insurance policy on his own life. In order to remove it from his estate for federal estate tax purposes, B transferred the policy to his daughter in exchange for securities worth $45,000. Shortly thereafter, B died and the policy was paid off at the face amount of $100,000. Is any part of the proceeds taxable as income? 3. C purchased a $100,000 paid-up life insurance policy for $60,000. With the remaining $40,000 she purchased a life annuity, which will pay $5,000 a year. C then transferred the life insurance policy as a gift to her daughter. How will payments under the annuity contract and the life insurance policy be taxed? 4. National Bank lent D $100,000 and required D to purchase credit life insurance in that amount, payable to the bank. D defaulted, and Bank deducted $100,000 as a bad debt loss. Subsequently D died, and Bank collected $100,000 from the insurer. Is that recovery taxable to Bank? McCamant v. Commissioner, 32 T.C (1959).

16 Sanctity of Annual Accounting Period p.151 Burnet v. Sanford & Brooks For the period had reported gross income for receipts and offsetting expenses. The expenses exceeded income during this period. Work abandoned & suit to recover. In 1920 taxpayer received $192,578 (176,272 for return of losses and accrued interest of 16,306). Held: Inclusion in gross income of the amount received in

17 Tax Benefit Rule Limitations: Dobson v. Commissioner p.156 Facts: Taxpayer purchased 300 shares of stock and found the stock was not registered correctly and recovered $45, $23, allocable to 100 shares taxpayer had sold in 1930 (prior tax deductible loss of $41,600.80) $6, allocable to 100 shares sold in 1931 (prior tax deductible loss of $28,163.78) $15,400 related to 100 retained shares. IRS treated $15,400 received for the 100 retained shares as a return of capital but treated the amounts received for sold shares as income. Issue: Must the proceeds of settlement attributable to shares sold in 1930 and 1931 be included in gross income? Held: The recoveries allocable to the shares sold were taxable only to the extent that the earlier year losses produced a tax 17 benefit i.e., a reduction in taxes in the earlier years.

18 The Inconsistent Events Rule (Supp. pp ) Hillsboro and Bliss Dairy cases 1) Repayment to bank shareholders of taxes on shareholders paid by bank corporation. No recognition required of the bank when refunds to shareholders. 3) Distribution of previously expensed assets (cattle feed) in a corporate liquidation. Recovery required to the corporation on the distribution. Dissent: file revised returns 18

19 Alice Phelan Sullivan (Supp. pp ) Charitable Contribution Deduction & Gift Returned 1) Property transferred to charity 2) Charitable deduction claimed for tax 3) Property returned to donor 4) Inclusion in donor s gross income? Yes to extent of lesser of earlier deduction or fair market value of property 19

20 Modifications The Tax Benefit Rule p.165 Transactions treated as closed and completed transaction but the tax treatment of the subsequent transaction will be colored in light of the earlier transaction. Two Prongs: Inclusionary Prong (Alice Phelan/Hillsboro): A recover in later year is included in gross income if the loss in the earlier year provided a tax benefit. Exclusionary Prong ( 111): A recovery of a loss in a later year is excluded from gross income to the extent the earlier deduction produced no tax benefit. 20

THE TOP TEN INSURANCE PLANNING MISTAKES IN AN ESTATE PLANNING CONTEXT

THE TOP TEN INSURANCE PLANNING MISTAKES IN AN ESTATE PLANNING CONTEXT THE TOP TEN INSURANCE PLANNING MISTAKES IN AN ESTATE PLANNING CONTEXT LAWRENCE BRODY BRYAN CAVE LLP Copyright 2011. Lawrence Brody. All Rights Reserved. 3585078.1 THE TOP TEN INSURANCE PLANNING MISTAKES

More information

SETTLEMENTS AND JUDGMENTS YOU MEAN I HAVE TO PAY TAXES?

SETTLEMENTS AND JUDGMENTS YOU MEAN I HAVE TO PAY TAXES? SETTLEMENTS AND JUDGMENTS YOU MEAN I HAVE TO PAY TAXES? By: Geoffrey N. Taylor, Esq. I. INCOME TO PLAINTIFF A. Distinction between settlements and judgments. B. Basic rule is the origin of claims test.

More information

The Evolution of Taxation of Split Dollar Life Insurance. by Christopher D. Scott. I. Introduction

The Evolution of Taxation of Split Dollar Life Insurance. by Christopher D. Scott. I. Introduction The Evolution of Taxation of Split Dollar Life Insurance by Christopher D. Scott I. Introduction The federal government recently published final regulations and issued a revenue ruling that changes the

More information

W3 Wealth Management, LLC Shelby Morgan 90 N. Miller Road Akron, OH 44313 330-836-3805 Shelby@W3wealth.com. Key Employee Insurance

W3 Wealth Management, LLC Shelby Morgan 90 N. Miller Road Akron, OH 44313 330-836-3805 Shelby@W3wealth.com. Key Employee Insurance W3 Wealth Management, LLC Shelby Morgan 90 N. Miller Road Akron, OH 44313 330-836-3805 Shelby@W3wealth.com Key Employee Insurance W3 Wealth Management, LLC Page 2 of 9 Table of Contents Life Insurance

More information

White Paper Life Insurance Coverage on a Key Employee

White Paper Life Insurance Coverage on a Key Employee White Paper Life Insurance Coverage on a Key Employee www.selectportfolio.com Toll Free 800.445.9822 Tel 949.975.7900 Fax 949.900.8181 Securities offered through Securities Equity Group Member FINRA, SIPC,

More information

Section 72. Annuities; certain proceeds of endowment and life insurance contracts (Also 1001, 1011, 1012, 1221, and 1234A)

Section 72. Annuities; certain proceeds of endowment and life insurance contracts (Also 1001, 1011, 1012, 1221, and 1234A) Part I Section 72. Annuities; certain proceeds of endowment and life insurance contracts (Also 1001, 1011, 1012, 1221, and 1234A) Rev. Rul. 2009-13 ISSUE What is the amount and character of A s income

More information

Understanding the Income Taxation of Life Insurance

Understanding the Income Taxation of Life Insurance A Reference Guide for Individuals and Businesses Understanding the Income Taxation of Life Insurance Answers to Frequently Asked Questions Tax Insights Contents 1 General Questions 4 Non-MEC Policy Questions

More information

Business Uses of Life Insurance

Business Uses of Life Insurance Select Portfolio Management, Inc. David M. Jones, MBA Wealth Advisor 120 Vantis, Suite 430 Aliso Viejo, CA 92656 949-975-7900 dave.jones@selectportfolio.com www.selectportfolio.com Business Uses of Life

More information

Federal Income Taxation Chapter 2 What is Income?

Federal Income Taxation Chapter 2 What is Income? Presentation: Federal Income Taxation Chapter 2 What is Income? Professors Wells August 28, 2013 What is Income? Code Structure & Tax Base Definition p.45 Code 1 the tax imposing provision (for individuals)

More information

CHAPTER 8 TAX CONSIDERATIONS

CHAPTER 8 TAX CONSIDERATIONS CHAPTER 8 TAX CONSIDERATIONS Life insurance traditionally has enjoyed favorable tax treatment. The major advantages are (1) the death benefits of a life policy payable to a beneficiary are not subject

More information

Key Person Coverage. Prepared for: Date: Presented by:

Key Person Coverage. Prepared for: Date: Presented by: Key Person Coverage Prepared for: Date: Presented by: PURPOSE This presentation is for the purpose of helping you understand how life and disability income insurance can be used to overcome the shock to

More information

"This document may not be used or cited as precedent. Section 6110(j)(3) of the Internal Revenue Code."

This document may not be used or cited as precedent. Section 6110(j)(3) of the Internal Revenue Code. PRIVATE RULING 9131023 "This document may not be used or cited as precedent. Section 6110(j)(3) of the Internal Revenue Code." Dear * * * This is in reply to a letter dated October 30, 1990, and subsequent

More information

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Presentation: Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Professors Wells September 21, 2015 Transactions with Borrowed Funds p.437 No income realized upon the receipt of

More information

ANNUITIES: WHAT ARE THEY AND HOW ARE THEY USED

ANNUITIES: WHAT ARE THEY AND HOW ARE THEY USED ANNUITIES: WHAT ARE THEY AND HOW ARE THEY USED (FORC Journal: Vol. 18 Edition 1 - Spring 2007) 1 An annuity is a contract under which the owner of the contract pays money or transfers assets to the obligor

More information

How To Tax An Annuity In The United States

How To Tax An Annuity In The United States Thursday, December 18 2014 WRM# 14-49 The WRMarketplace is created exclusively for AALU Members by the AALU staff and Greenberg Traurig, one of the nation s leading tax and wealth management law firms.

More information

ROLLOVERS FROM QUALIFIED RETIREMENT PLANS AND IRAS: A PRIMER

ROLLOVERS FROM QUALIFIED RETIREMENT PLANS AND IRAS: A PRIMER ROLLOVERS FROM QUALIFIED RETIREMENT PLANS AND IRAS: A PRIMER Louis A. Mezzullo Luce, Forward, Hamilton & Scripps LLP Rancho Santa Fe, CA lmezzullo@luce.com (October 21, 2011) TABLE OF CONTENTS Page I.

More information

Life Insurance Coverage on a Key Employee

Life Insurance Coverage on a Key Employee Raymond James Financial Services Bill Poland, CRPS, CRPC Financial Advisor 108 State Street Suite 200 Greensboro, NC 27408 336-272-7584 800-821-5941 bill.poland@raymondjames.com Life Insurance Coverage

More information

PLANNING RESPECTING LIFE INSURANCE ENDOWMENT AND ANNUITY CONTRACTS

PLANNING RESPECTING LIFE INSURANCE ENDOWMENT AND ANNUITY CONTRACTS PLANNING RESPECTING LIFE INSURANCE ENDOWMENT AND ANNUITY CONTRACTS NORMAN W. COLQUHOUN* If Earl Beaver were to die tomorrow, his beneficiaries would receive $100,000 as life insurance proceeds. These insurance

More information

How To Tax A Life Insurance Policy On A Policy In The United States

How To Tax A Life Insurance Policy On A Policy In The United States Taxation of Life Insurance Policy Loans and Dividends Introduction Policyholders are required to include in income any gains realized upon the disposition of all or a portion of their interest in a life

More information

Chapter 14. Agenda. Individual Annuities. Annuities and Individual Retirement Accounts

Chapter 14. Agenda. Individual Annuities. Annuities and Individual Retirement Accounts Chapter 14 Annuities and Individual Retirement Accounts Agenda 2 Individual Annuities Types of Annuities Taxation of Individual Annuities Individual Retirement Accounts Individual Annuities 3 An annuity

More information

Life Insurance Income Taxation in brief

Life Insurance Income Taxation in brief Life Insurance Income Taxation in brief Income Tax Treatment of Life Insurance Tax deferred growth Tax favored withdrawals Tax free death benefit Tax Deferred Growth Gain due to cash value growth in life

More information

ISSUES. (1) When are attorney s fees paid by an employer as part of a settlement agreement with a former employee subject to employment taxes?

ISSUES. (1) When are attorney s fees paid by an employer as part of a settlement agreement with a former employee subject to employment taxes? Office of Chief Counsel Internal Revenue Service Memorandum Release Number: 20133501F Release Date: 8/30/2013 CC:TEGE:FS:MABAL:MRLenius POSTF-129928-13 Release Number: Release Date: 8/30/2013 date: July

More information

If the owner-annuitant of a deferred annuity contract dies before the annuity

If the owner-annuitant of a deferred annuity contract dies before the annuity Part I Section 691. Recipients of Income in Respect of Decedents 26 CFR 1.691(a)-1: Income in respect of a decedent. (Also 72, 1014.) Rev. Rul. 2005-30 ISSUE If the owner-annuitant of a deferred annuity

More information

Tax Aspects of Settlements and Judgments

Tax Aspects of Settlements and Judgments Tax Aspects of Settlements and Judgments Dominic L. Daher, MAcc, JD, LLM in Taxation Director of Internal Audit and Tax Compliance Adjunct Professor of Law University of San Francisco Dawn G. Mayer, JD,

More information

Life Insurance Coverage on a Key Employee

Life Insurance Coverage on a Key Employee Center for Wealth Management Susan A. Myers, CPA, CFP, CLTC Robert J. Moore Justin M. Williamson 755 W. Big Beaver Rd, Ste 600 Troy, MI 48084 248-680-0490 smyers1@metlife.com www.center4wealthmgmt.com

More information

LIFE INSURANCE PLANNING FOR CLOSELY- HELD BUSINESS

LIFE INSURANCE PLANNING FOR CLOSELY- HELD BUSINESS LIFE INSURANCE PLANNING FOR CLOSELY- HELD BUSINESS BY JOSHUA E. HUSBANDS PORTLAND OFFICE 2300 US BANCORP TOWER 111 SW FIFTH AVENUE PORTLAND, OREGON 97204 503-243-2300 503-241-8014 joshua.husbands@hklaw.com

More information

32 Irrevocable Life Insurance Trusts 2.1

32 Irrevocable Life Insurance Trusts 2.1 2 Income Tax Issues CHAPTER OVERVIEW This chapter discusses selected key income tax issues concerning life insurance and ILITs. 1 Recent changes in the Internal Revenue Code now permit an insured to receive

More information

Part III - Administrative, Procedural, and Miscellaneous

Part III - Administrative, Procedural, and Miscellaneous Part III - Administrative, Procedural, and Miscellaneous TAX TREATMENT OF GRANTS MADE BY THE EMPIRE STATE DEVELOPMENT CORPORATION TO BUSINESSES TO AID RECOVERY FROM THE ATTACK OF SEPTEMBER 11, 2001, ON

More information

Advanced Designs. Pocket Guide. Private Split-Dollar Life Insurance Designs AD-OC-724B

Advanced Designs. Pocket Guide. Private Split-Dollar Life Insurance Designs AD-OC-724B Advanced Designs Pocket Guide Private Split-Dollar Life Insurance Designs AD-OC-724B This material is not intended to be used, nor can it be used by any taxpayer, for the purpose of avoiding U.S. federal,

More information

Advanced Markets Combining Estate Planning Techniques A Powerful Strategy

Advanced Markets Combining Estate Planning Techniques A Powerful Strategy Life insurance can help meet many wealth transfer goals. The death benefit could cover estate taxes, for instance, avoiding liquidation of much of the estate to meet the estate tax bill. Even though a

More information

Giving Today to Guarantee Tomorrow: Charitable Gifts of Life Insurance

Giving Today to Guarantee Tomorrow: Charitable Gifts of Life Insurance Giving Today to Guarantee Tomorrow: Charitable Gifts of Life Insurance A gift of life insurance can represent a substantial future gift to a favorite charity at relatively little cost to you. Table of

More information

Objectives. Discuss S corp fringe benefits.

Objectives. Discuss S corp fringe benefits. S Corporations Objectives Define an S corp. Identify the benefits of being an S corp. Determine how an entity elects to be an S corp. Establish how an S corp is taxed. Describe the S corp shareholder s

More information

1. Whether a shareholder and CEO of a company is subject to tax on the exchange of old

1. Whether a shareholder and CEO of a company is subject to tax on the exchange of old Office of Chief Counsel Internal Revenue Service Memorandum Number: 20131601F Release Date: 4/19/2013 CC:LB&I:HMT:NEW:1:NConnelly POSTF-123943-11 date: February 19, 2012 to: Angela Nyagu Internal Revenue

More information

A Practical Guide to the Final Regs. Governing Split- Dollar Life Insurance

A Practical Guide to the Final Regs. Governing Split- Dollar Life Insurance PERSONAL A Practical Guide to the Final Regs. Governing Split- Dollar Life Insurance Author: By Gary Lee and Deborah Walker GARY LEE is National Director of Insurance Consulting Services for Deloitte &

More information

Employment Tax Considerations for Businesses When Addressing Litigation with Employees or Former Employees

Employment Tax Considerations for Businesses When Addressing Litigation with Employees or Former Employees Employment Tax Considerations for Businesses When Addressing Litigation with Employees or Former Employees William Hays Weissman Littler Mendelson, P.C. San Francisco, California It is a common fact of

More information

Bank Owned Life Insurance. Kirk A. Pelikan 414-223-2529 kapelikan@michaelbest.com

Bank Owned Life Insurance. Kirk A. Pelikan 414-223-2529 kapelikan@michaelbest.com Bank Owned Life Insurance Kirk A. Pelikan 414-223-2529 kapelikan@michaelbest.com BOLI: The Basics BOLI is a life insurance policy purchased by a bank to insure the life of a certain employee. Product has

More information

A New Use for Your. a donor s guide. The Stelter Company

A New Use for Your. a donor s guide. The Stelter Company A New Use for Your R E T I R E M E N T P L A N A S S E T S a donor s guide The Stelter Company APPRECIATED PROPERTY Learn how to uncover the value of your appreciated assets. Like many Americans, you are

More information

TAX TREATMENT OF RECOVERIES IN EMPLOYMENT DISPUTES

TAX TREATMENT OF RECOVERIES IN EMPLOYMENT DISPUTES TAX TREATMENT OF RECOVERIES IN EMPLOYMENT DISPUTES Committee on Labor & Employment Law AUGUST 2009 THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK 42 WEST 44 TH STREET, NEW YORK, NY 10036 TAX TREATMENT

More information

What s News in Tax Analysis That Matters from Washington National Tax

What s News in Tax Analysis That Matters from Washington National Tax What s News in Tax Analysis That Matters from Washington National Tax Stock Option Compensation Warnings for the Unwary Stock options are a popular form of compensation provided to employees of corporations.

More information

Thursday, 3 December 2015 WRM# 15-44

Thursday, 3 December 2015 WRM# 15-44 Thursday, 3 December 2015 WRM# 15-44 The WRMarketplace is created exclusively for AALU Members by the AALU staff and Greenberg Traurig, one of the nation s leading tax and wealth management law firms.

More information

Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities

Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities State of California Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities What you should know before preparing an Offer in Compromise Are you an OIC Candidate? If your business

More information

QUALIFIED SETTLEMENT TRUSTS A Useful Tool in Multi-Party Litigation

QUALIFIED SETTLEMENT TRUSTS A Useful Tool in Multi-Party Litigation 2005, Davis, Malm & D Agostine, P.C. QUALIFIED SETTLEMENT TRUSTS A Useful Tool in Multi-Party Litigation Marjorie Suisman, Esq. Davis Malm & D Agostine P.C. I. Introduction. A Designated Settlement Fund

More information

A guide to buying insurance

A guide to buying insurance A guide to buying insurance What you should know before you buy Is life insurance right for you? Life insurance policies are designed for people who: Want to replace income that is lost due to death Seek

More information

Charitable and Tax-Savings Strategies. a donor s guide. The Stelter Company

Charitable and Tax-Savings Strategies. a donor s guide. The Stelter Company S A V I N G S B O N D S Charitable and Tax-Savings Strategies a donor s guide The Stelter Company SAVINGS BONDS Charitable and Tax-Saving Strategies Many people have accumulated interest on U.S. savings

More information

Prepared for: Prepared by: Robin Weingast President Robin S. Weingast Associates, Inc. 100 Quentin Roosevelt Blvd, Suite 507 Garden City, NY 11530

Prepared for: Prepared by: Robin Weingast President Robin S. Weingast Associates, Inc. 100 Quentin Roosevelt Blvd, Suite 507 Garden City, NY 11530 Prepared for: Prepared by: Robin Weingast President Robin S. Weingast Associates, Inc. 100 Quentin Roosevelt Blvd, Suite 507 Garden City, NY 11530 Phone: 516.794.8146 Fax: 516.794.8146 Email: rsw@rswtpa.com

More information

Internal Revenue Service

Internal Revenue Service Internal Revenue Service Number: 200925003 Release Date: 6/19/2009 Index Number: 2511.00-00, 2042.00-00, 61.09-38 ------------------------- ------------------------- ---------------------------- Department

More information

Key Employee Life Insurance Forward to Counsel and Specimen Documents

Key Employee Life Insurance Forward to Counsel and Specimen Documents Key Employee Life Insurance Forward to Counsel and Specimen Documents Contents 2 I) Introduction 2 II) Strategy/Technique Structure 3 III) Income Tax Implications 3 A. Taxation of the Premiums 3 B. Taxation

More information

Tax Aspects of Buy-Sells

Tax Aspects of Buy-Sells Tax Aspects of Buy-Sells By Charles A. Wry, Jr. mbbp.com Business Technology & IP Employment & Immigration Taxation 781-622-5930 Reservoir Place 1601 Trapelo Road, Suite 205 Waltham, MA 02451 781-622-5930

More information

Self-Realization Fellowship Planned Giving Program

Self-Realization Fellowship Planned Giving Program Gifts of Life Insurance Planned Giving Program Gifts of Life Insurance Life insurance offers you the opportunity to make a generous gift to (SRF) with a relatively modest to no financial outlay. In addition

More information

An Overview Of Premium Financed Life Insurance

An Overview Of Premium Financed Life Insurance An Overview Of Premium Financed Life Insurance Introduction The purpose of this presentation is to assist you in understanding how life insurance can be funded using a bank loan as a means of financing

More information

Estate Planning With Qualified Plans

Estate Planning With Qualified Plans Estate Planning With Qualified Plans Gayle Evans A. Introduction Gayle Evans a member of Chinnery Evans & Nail PC, in Lee s Summit, Missouri, as well as DosterUllom, LLC, in Chesterfield, Missouri, has

More information

IN THIS ISSUE: August, 2011 j Top Income Tax Planning Ideas for 2011 and 2012

IN THIS ISSUE: August, 2011 j Top Income Tax Planning Ideas for 2011 and 2012 IN THIS ISSUE: Income Tax Overview Qualified Dividends Long-Term Capital Gains Ordinary Income Additional Income Tax Planning Ideas Income Shifting to Junior Generations Roth IRA Conversions NUA Planning

More information

Handling the Complexities of Planning With Annuities

Handling the Complexities of Planning With Annuities Handling the Complexities of Planning With Annuities Although commercial annuities are popular investments for seniors, these assets can be complex and are often misunderstood. This article explores planning

More information

Charitable Gifts of Life Insurance 1

Charitable Gifts of Life Insurance 1 Charitable Gifts of Life Insurance The Situation Many wealthy individuals have a history of giving to their favorite charities. They may want to make sure that these gifts continue should they die prematurely.

More information

GIVE AND YOU SHALL RECEIVE CHARITABLE GIVING, CREATING A PLAN THAT S RIGHT FOR YOU

GIVE AND YOU SHALL RECEIVE CHARITABLE GIVING, CREATING A PLAN THAT S RIGHT FOR YOU GIVE AND YOU SHALL RECEIVE CHARITABLE GIVING, CREATING A PLAN THAT S RIGHT FOR YOU Contents 1 Give and you shall receive 3 Techniques summary 5 Planning for charitable giving NOT FDIC OR NCUA INSURED NOT

More information

'PRIVATE' SPLIT-DOLLAR PROVIDES TRANSFER TAX SAVINGS

'PRIVATE' SPLIT-DOLLAR PROVIDES TRANSFER TAX SAVINGS Checkpoint Contents Federal Library Federal Editorial Materials WG&L Journals Practical Tax Strategies/Taxation for Accountants (WG&L) Taxation for Accountants 1998 Volume 61, Number 4, October 1998 Articles

More information

GIFT ACCEPTANCE POLICIES

GIFT ACCEPTANCE POLICIES GIFT ACCEPTANCE POLICIES I. PURPOSE OF POLICY AND GUIDELINES The purpose of the Gift Acceptance Policy and Guidelines is to guide the efforts of the Board of Directors of the Daughters of the Nile Foundation,

More information

Internal Revenue Service Department of the Treasury CC:TEGE:QP2 - PLR-167048-01. Entity E =

Internal Revenue Service Department of the Treasury CC:TEGE:QP2 - PLR-167048-01. Entity E = Internal Revenue Service Department of the Treasury Number: 200301032 Release Date: 01/03/2003 Index No. 106.00-00 457.01-00 403.04-00 457.10-00 Legend Entity E = CC:TEGE:QP2 - September 30, 2002 Dear

More information

U.S. Income Tax Return for an S Corporation

U.S. Income Tax Return for an S Corporation Form 1120S U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. Information about Form 1120S and

More information

$2,000 (premium) multiplied by 6 months (period remaining), divided by 12 months (number of months premium covers), or

$2,000 (premium) multiplied by 6 months (period remaining), divided by 12 months (number of months premium covers), or client who has a personally owned life insurance policy comes to you. You convince her to either sell or gift the policy to an irrevocable life insurance trust (ILIT). You need to get the value of the

More information

T.C. Memo. 2013-149 UNITED STATES TAX COURT. LORI M. MINGO AND JOHN M. MINGO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

T.C. Memo. 2013-149 UNITED STATES TAX COURT. LORI M. MINGO AND JOHN M. MINGO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent T.C. Memo. 2013-149 UNITED STATES TAX COURT LORI M. MINGO AND JOHN M. MINGO, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket Nos. 17753-07, 21906-10. Filed June 12, 2013. Harold A. Chamberlain,

More information

Nonqualified annuities can be classified in a number of ways:

Nonqualified annuities can be classified in a number of ways: The term annuity refers to any situation where principal and interest are paid out in a series of regular payments. A nonqualified annuity, generally, is an annuity purchased by an individual from a life

More information

S Corporations General Overview

S Corporations General Overview S Corporations General Overview Richard Furlong Jr. Senior Stakeholder Liaison Define an S Corp An "S corporation" is a an entity that qualifies as a small business corporation that has an S election in

More information

The owner is usually the purchaser of the policy. However, the owner may also acquire the policy by gift, sale, exchange, or bequest.

The owner is usually the purchaser of the policy. However, the owner may also acquire the policy by gift, sale, exchange, or bequest. Annuity Ownership Considerations What is an annuity owner? What are the owner's rights? Who should be the owner? What if the owner dies? Is the annuity includable in the owner's estate? What risks does

More information

SECTION 21 - DEFERRED GIVING PROGRAM

SECTION 21 - DEFERRED GIVING PROGRAM SECTION 21 - DEFERRED GIVING PROGRAM Policy Sequence 21-000 1 This page intentionally left blank. 2 Introduction In keeping with the long term objectives of the University, it is the policy of the Board

More information

Date: February 16, 2001

Date: February 16, 2001 ,QWHUQDO5HYHQXH6HUYLFH Number: 200121031 Release Date: 5/25/2001 Index No.: 104.03-00 Department of the Treasury Washington, DC 20224 Person to Contact: Telephone Number: Refer Reply To: CC:ITA:1 PLR-122136-00

More information

Annuity Principles and Concepts Session Five Lesson Two. Annuity (Benefit) Payment Options

Annuity Principles and Concepts Session Five Lesson Two. Annuity (Benefit) Payment Options Annuity Principles and Concepts Session Five Lesson Two Annuity (Benefit) Payment Options Life Contingency Options - How Income Payments Can Be Made To The Annuitant. Pure Life versus Life with Guaranteed

More information

Advanced Sales. White Paper: Valuation of Life Insurance Policies. Introduction. Number 19-1 February 1, 2014. January, 2012

Advanced Sales. White Paper: Valuation of Life Insurance Policies. Introduction. Number 19-1 February 1, 2014. January, 2012 Advanced Sales White Paper: Valuation of Life Insurance Policies January, 2012 Contact Introduction us: AdvancedSales@voya.com Life insurance has become an important tool for advanced techniques used in

More information

DIVORCE AND LIFE INSURANCE, QUALIFIED PLANS AND IRAS 2013-2015

DIVORCE AND LIFE INSURANCE, QUALIFIED PLANS AND IRAS 2013-2015 DIVORCE AND LIFE INSURANCE, QUALIFIED PLANS AND IRAS 2013-2015 I. INTRODUCTION In a divorce, property is generally divided between the spouses. Generally, all assets of the spouses, whether individual,

More information

Form CT-706 NT Instructions Connecticut Estate Tax Return (for Nontaxable Estates)

Form CT-706 NT Instructions Connecticut Estate Tax Return (for Nontaxable Estates) (Rev. 06/11) Form CT-706 NT Instructions Connecticut Estate Tax Return (for Nontaxable Estates) General Information For decedents dying on or after January 1, 2011, the Connecticut estate tax exemption

More information

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18,

CHAPTER 19. Accounting for Income Taxes 6, 7, 13 2, 3, 4, 5, 6, 7, 9 14, 16, 17, 18, CHAPTER 19 Accounting for Income Taxes ASSIGNMENT CLASSIFICATION TABLE Topics 1. Reconcile pretax financial income with taxable income. 2. Identify temporary and permanent differences. 3. Determine deferred

More information

INTERNAL REVENUE SERVICE NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM

INTERNAL REVENUE SERVICE NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM INTERNAL REVENUE SERVICE NATIONAL OFFICE TECHNICAL ADVICE MEMORANDUM Number: 200502040 Release Date: 01/14/2005 Index (UIL) No.: 61.53-00, 79.03-00, 83.05-00 CASE-MIS No.: TAM-144621-03 -------------------------------------

More information

New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau

New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau STATE OF NEW YORK COMMISSIONER OF TAXATION AND FINANCE ADVISORY OPINION PETITION NO. I970821A On August

More information

FEDERAL INCOME TAX AND PERSONAL INJURY JUDGMENTS AND SETTLEMENTS By Fred A. Simpson 1

FEDERAL INCOME TAX AND PERSONAL INJURY JUDGMENTS AND SETTLEMENTS By Fred A. Simpson 1 FEDERAL INCOME TA AND PERSONAL INJURY JUDGMENTS AND SETTLEMENTS By Fred A. Simpson 1 For eighty years federal law did not impose income tax on damages or settlements on account of personal injuries. 2

More information

1/5/2016. S Corporations. Objectives. Define an S Corp

1/5/2016. S Corporations. Objectives. Define an S Corp S Corporations Objectives Define an S corp. Identify the benefits of being an S corp. Determine how an entity elects to be an S corp. Establish how an S corp is taxed. Describe the S corp shareholder s

More information

Corporate Tax Segment 5A Dividends

Corporate Tax Segment 5A Dividends Corporate Tax Segment 5A Dividends University of Leiden International Tax Center May 2007 Professor William P. Streng University of Houston Law Center 4/30/2007 (c) William P. Streng 1 Nonliquidating Distributions

More information

A variable annuity is a type of annuity in which the contract owner directs the overall investment strategy for the funds placed in the contract.

A variable annuity is a type of annuity in which the contract owner directs the overall investment strategy for the funds placed in the contract. The term annuity derives from a Latin term meaning annual and generally refers to any circumstance where principal and interest are liquidated through a series of regular payments made over a period of

More information

A variable annuity is a type of annuity in which the contract owner directs the overall investment strategy for the funds placed in the contract.

A variable annuity is a type of annuity in which the contract owner directs the overall investment strategy for the funds placed in the contract. The term annuity derives from a Latin term meaning annual and generally refers to any circumstance where principal and interest are liquidated through a series of regular payments made over a period of

More information

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A.

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Chapter 18 Corporations: Distributions Not in Complete Liquidation Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe Copyright 2004 South-Western/Thomson Learning Taxable Dividends

More information

PRIVATE ANNUITIES A VERSATILE

PRIVATE ANNUITIES A VERSATILE AMERICAN COLLEGE OF TRUST AND ESTATE COUNSEL NOVEMBER 10, 2002 PRIVATE ANNUITIES A VERSATILE ESTATE PLANNING TOOL PRESENTED BY: STEPHEN H. GARIEPY Stephen H. Gariepy Hahn Loeser + Parks, LLP 3300 BP Tower,

More information

CHAPTER 26.1-34 ANNUITIES

CHAPTER 26.1-34 ANNUITIES CHAPTER 26.1-34 ANNUITIES 26.1-34-01. Required annuity contract provisions relating to cessation of payment of considerations by contractholder. In the case of annuity contracts issued after June 30, 1979,

More information

INSTRUCTIONS FOR MISSISSIPPI UNCLAIMED PROPERTY REPORTING

INSTRUCTIONS FOR MISSISSIPPI UNCLAIMED PROPERTY REPORTING 501 North West Street Ste 1101 Jackson, MS 39201 INSTRUCTIONS FOR MISSISSIPPI UNCLAIMED PROPERTY REPORTING TO: Re: Businesses and Organizations Life Insurance Companies Report and Remittance of Unclaimed

More information

How to Realize the Unrealized

How to Realize the Unrealized How to Realize the Unrealized Combining two tax strategies, lump sum stock distributions with charitable planning can be a powerhouse tax savings plan. This article summarizes an underutilized strategy

More information

Annuities Why NOT? 062308 by Monica Haven, E.A.

Annuities Why NOT? 062308 by Monica Haven, E.A. Annuities Why NOT? 062308 by Monica Haven, E.A. Once considered the panacea for the ailing investment portfolio, annuities have been hobbled by the galloping changes of the Tax Code. Fixed, variable, index,

More information

Internal Revenue Service

Internal Revenue Service Internal Revenue Service Number: 200924034 Release Date: 6/12/2009 Index Number: 468B.00-00, 468B.04-01, 468B.07-00, 461.00-00, 162.00-00, 172.00-00, 172.01-00, 172.01-05, 172.06-00 -----------------------

More information

THE GREATER CINCINNATI FOUNDATION POLICY FOR POTENTIAL GIFTS OF LIFE INSURANCE. Adopted March 6, 6 , 2013

THE GREATER CINCINNATI FOUNDATION POLICY FOR POTENTIAL GIFTS OF LIFE INSURANCE. Adopted March 6, 6 , 2013 THE GREATER CINCINNATI FOUNDATION POLICY FOR POTENTIAL GIFTS OF LIFE INSURANCE Adopted March 6, 6, 2013 I. PURPOSE. As a trusted philanthropic partner, The Greater Cincinnati Foundation ( GCF ) inspires

More information

A Dangerous Tax Trap in Structured Settlements

A Dangerous Tax Trap in Structured Settlements THE LAW FIRM OF BOVE & LANGA A PROFESSIONAL CORPORATION TEN TREMONT STREET, SUITE 600 BOSTON, MASSACHUSETTS 02108 Telephone: 617.720.6040 Facsimile: 617.720.1919 www.bovelanga.com A Dangerous Tax Trap

More information

This revenue procedure provides guidance on how to determine the fair market

This revenue procedure provides guidance on how to determine the fair market Part III. Administrative, Procedural, and Miscellaneous 26 CFR 601.201: Rulings and determination letters. (Also, Part I, 79, 83, 402; 1.79-1, 1.83-3, 1.402(a)-1.) Rev. Proc. 2005-25 SECTION 1. PURPOSE

More information

White Paper Tax Planning with Life Insurance

White Paper Tax Planning with Life Insurance White Paper www.selectportfolio.com Toll Free 800.445.9822 Tel 949.975.7900 Fax 949.900.8181 Securities offered through Securities Equity Group Member FINRA, SIPC, MSRB Page 2 Table of Contents... 3 What

More information

CHAPTER 11 Life Insurance in Estate Planning

CHAPTER 11 Life Insurance in Estate Planning CHAPTER 11 Life Insurance in Estate Planning DISCUSSION QUESTIONS 1. List the five most common objectives of using life insurance in an estate plan. The five most common objectives of using life insurance

More information

Taxation of Terminations, Settlements and Judges

Taxation of Terminations, Settlements and Judges 2015 YLD Bridge the Gap Seminar Taxation of Terminations, Settlements and Judges 11:30 a.m.-12:00 p.m. Presented by: David Repp Dickinson Mackaman Tyler & Hagen PC 699 Walnut St. Suite 1600 Des Moines,

More information

NORTH CAROLINA GENERAL ASSEMBLY 1981 SESSION CHAPTER 761 SENATE BILL 623

NORTH CAROLINA GENERAL ASSEMBLY 1981 SESSION CHAPTER 761 SENATE BILL 623 NORTH CAROLINA GENERAL ASSEMBLY 1981 SESSION CHAPTER 761 SENATE BILL 623 AN ACT TO AMEND CHAPTER 58, ARTICLE 22, OF THE GENERAL STATUTES RELATING TO NONFORFEITURE BENEFITS OF LIFE INSURANCE POLICIES AND

More information

Annuity and Life Insurance Contracts with a Long-Term Care Insurance Feature. This notice relates to amendments made to 72, 1035, and 7702B of the

Annuity and Life Insurance Contracts with a Long-Term Care Insurance Feature. This notice relates to amendments made to 72, 1035, and 7702B of the Part III - Administrative, Procedural, and Miscellaneous Annuity and Life Insurance Contracts with a Long-Term Care Insurance Feature Notice 2011-68 SECTION 1. PURPOSE This notice relates to amendments

More information

TAXATION OF INSURANCE PRODUCTS

TAXATION OF INSURANCE PRODUCTS TAXATION OF INSURANCE PRODUCTS January 2012 J. Walker Johnson and Alexis MacIvor I. Taxation of Life Insurance Policies A. Types of Life Insurance 1. Term insurance Term life insurance furnishes a specific

More information

Memorandum. Office of Chief Counsel Internal Revenue Service. Number: AM 2007-008 Release Date: 4/20/07 CC:FIP:1:LJMedovoy POSTS-156981-06

Memorandum. Office of Chief Counsel Internal Revenue Service. Number: AM 2007-008 Release Date: 4/20/07 CC:FIP:1:LJMedovoy POSTS-156981-06 Office of Chief Counsel Internal Revenue Service Memorandum Number: AM 2007-008 Release Date: 4/20/07 CC:FIP:1:LJMedovoy POSTS-156981-06 UILC: 1234.00-00 date: April 06, 2007 to: Director, Financial Services

More information

Charitable Contribution Primer. Advantage of Lifetime Giving. Testamentary. Lifetime. Section 170 3/17/2015. Estate Tax Deduction

Charitable Contribution Primer. Advantage of Lifetime Giving. Testamentary. Lifetime. Section 170 3/17/2015. Estate Tax Deduction Charitable Contribution Primer Advantage of Lifetime Giving Testamentary Estate Tax Deduction Lifetime Income Tax Deduction Remove from Estate Section 170 Overview of Basic Rules Individual taxpayer Itemized

More information

Taxation of CVRs in Public M&A Transactions

Taxation of CVRs in Public M&A Transactions Boston Tax Forum Roger M. Ritt May 2, 2011 Taxation of CVRs in Public M&A Transactions I. General Background A. The issuance of CVRs (contingent value/payment rights) to holders of publiclytraded Target

More information

Split Dollar Life Insurance is possible because a permanent Life Insurance policy has two main components to it: a Death Benefit and a Cash Value.

Split Dollar Life Insurance is possible because a permanent Life Insurance policy has two main components to it: a Death Benefit and a Cash Value. Insuring the Future In this Newsletter: Split Dollar Insurance Conventional and Reverse Split Dollar Arrangements Benefits of a Split Dollar Arrangement Types of Split Dollar Arrangements Buy/sell Split

More information

Opportunities and Pitfalls Under Sections 351 and 721

Opportunities and Pitfalls Under Sections 351 and 721 College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 2007 Opportunities and Pitfalls Under Sections

More information

1099R BOX DESCRIPTIONS

1099R BOX DESCRIPTIONS For additional details and instructions refer to IRS 1099R Instructions 1 Gross Distribution Enter the total amount of the distribution before income tax or other deductions were withheld. This can include:

More information