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Life insurance death benefit may be subject to income tax

Steve Gorin December 5, 2019
Man jumping from one cliff to another at sunset

If you transfer a life insurance policy in exchange for money or other property, the death benefit may become subject to income tax. This rule applies even to some nontaxable transfers. Furthermore, any policy issued to a business entity after August 17, 2006 may be subject to income tax if certain documentation was not on file when the policy was issued. READ MORE

Basis step-up: Planning for married couples

Steve Gorin August 7, 2019
A collection of old stock certificates

When a married person dies and passes assets outright or in a qualifying trust to the surviving spouse, those assets receive a new basis and are not subject to estate taxes. Under current tax laws, this provides a unique estate planning opportunities through unused exemptions and marital trusts. READ MORE

Highlights from the Simply Tax podcast: How to choose an entity for a family business

Steve Gorin January 18, 2019
Logo for Simply Tax podcast

Steve Gorin joined two episodes of the Simply Tax podcast to provide more insight on the nuances and considerations of structuring a business as a C corporation, an S corporation, or a partnership. READ MORE

Unpacking the new qualified business income deduction for real estate rentals

Steve Gorin October 10, 2018
Commercial buildings

The 2017 tax reform introduced a deduction equal to 20% of qualified business income from pass-through entities, subject to various limitations. Proposed regulations issued on August 16, 2018 clarify the government’s current view of these rules. READ MORE

Converting from an S corporation to a C corporation – Don’t do it the simple but wrong way

Steve Gorin March 12, 2018
examining document iStock_89973131_650x450

Tax Reform on Choice of Business Entity, summarizes considerations in choosing whether to continue being an S corporation or convert to a C corporation. In most cases, exit planning suggests remaining an S corporation. However, in some cases, one may decide to convert to being a C corporation. READ MORE

New partnership audit rules can apply to partnerships, LLCs with only a few partners, members

Steve Gorin August 14, 2017

Effective in 2018, changes in partnership audit rules may apply various consequences to partnerships (including LLCs taxed as such). READ MORE

Developments in FICA and self-employment tax affect partners and S corporations

Steve Gorin July 11, 2017

Taxpayers have won and lost cases seeking to avoid self-employment tax on their income as members of limited liability companies. The IRS has had victories (a) disregarding an attempt to shift self-employment income into an S corporation, and (b) making taxpayers pay tax and then sue for a refund when contesting IRS claims that S corporation distributions were really compensation. To tie together 2017 developments, READ MORE

IRS gets upper hand in S corporation compensation audits

Steve Gorin June 27, 2017

Any compensation the owner receives is subject to FICA tax, which imposes an equivalent burden. And the IRS frequently attacks owners who receive cash distributions from an S corporation, arguing that the distributions were essentially disguised compensation. The IRS often wins those cases, in full or in part, and may collect penalties. READ MORE

Tax court finds self-employment tax for active LLC member

Steve Gorin May 25, 2017
tax forms

A recent Tax Court opinion, Castigliola v. Commissioner, held that an active LLC member was liable for SE tax. This article describes that case, compares and contrasts that case to the Hardy case, and provides planning suggestions. READ MORE

Using an S corporation to avoid self-employment tax

Steve Gorin April 25, 2017
illustration of a hand stopping a punch

Here we examine why the U.S. Tax Court rejected a financial consultant’s efforts to shift income to an S corporation to save self-employment tax, and how another approach may have been more successful in avoiding SE tax. READ MORE

Tax court finds no self-employment tax for passive LLC member

Steve Gorin March 28, 2017

Self-employment (SE) tax is one of the driving forces when a tax advisor recommends what type of entity to use for one’s business. READ MORE

Lawyers: Give your clients a business entity checkup

Steve Gorin February 16, 2017
Medical money

As we prepare for perhaps another round of major tax law changes, you might want to consider the status of your clients’ legal postures. Making a client’s business structure more nimble or setting the stage to obtain outside or inside basis step-up could offer some solutions. READ MORE

Highlights from the 2017 Heckerling Institute on Estate Planning

Steve Gorin January 24, 2017
lightbulb grid

Each January, the University of Miami hosts the Heckerling Institute on Estate Planning, the country’s largest estate planning seminar. Here I provide links to the seminar summary reports sent to my newsletter subscribers, along with parts of my commentaries. READ MORE

CPAs: Top 10 list for fiduciary income tax returns and planning

Steve Gorin January 20, 2017
calculator and pen

As we near tax season, below are some tips for CPAs when planning and preparing tax returns for trusts, along with a link to an upcoming webinar on this very topic. READ MORE

Tax basis: The key to reducing gain on sale or deducting asset purchases

Steve Gorin January 10, 2017
close-up image of a welding machine

This article discusses key ideas used in reducing or eliminating gain subject to tax when you sell an interest in your business or when your business sells part or all its assets. These ideas can also possibly help those who buy or inherit a business obtain better tax write-offs. READ MORE

How to avoid tax traps in life insurance

Steve Gorin January 10, 2017
insurance policy

Beware that an employer-owned life insurance contract might not qualify for the usual exclusion from regular income tax. That trap may also apply to buy-sell life insurance owned by the company, whether or not the person who is insured is an employee. READ MORE