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State Tax in Estate Planning; Employment Tax; Blockers; S Corporation Single Class of Stock

Webinar

Drawn from Steve Gorin’s 2nd quarter 2022 newsletter, this course discusses recent developments in state income tax of business sales, state estate tax, and whether (from an estate planning viewpoint) to try to deduct state income tax attributable to pass-through business income.

We will review briefly recent developments in nonresident trusts paying income tax on pass-through business activity and resident estate taxation of QTIP trusts, then we will spend some time on estate planning implications of states’ efforts to work around federal limitations on deducting state taxation of pass-through business income.  The latter includes a precautions against a Code § 2036(a)(2) attack that a partnership might take, as well as touching briefly upon the impact on sales to irrevocable grantor trusts.

Then we will turn to a potpourri of employment tax issues, including the rental exception to self-employment (SE) tax, how using an S corporation blocker can backfire, an advantage limited partnerships have over S corporations in avoiding FICA (in addition to income tax advantages), why giving Form 1099 to an officer can be a bad idea, and how a service recipient got his hand slapped for reporting compensation as a gift.  We will the IRS’ reaction to a Sixth Circuit case regarding S corporation compensation issues and how deferred compensation can wreak havoc in the sale of a business structured as an asset sale.

Finally, we will review the S corporation second-class-of-stock prohibition, which is intertwined in the other topics to some extent.  We will discuss how to respond to practical issues that may cause distributions to be disproportionate temporarily.

CLE:
The live presentation of this webinar was approved for 1.5 hours of general CLE credit in California, Illinois, and Texas as well as 1.8 hours of general CLE credit in Missouri. The webinar was also approved for 1.5 hours of professional-experienced and professional-transitional CLE in New York. If you are interested in receiving credit for watching the recorded presentation, please click here.

Presenter:
Steve Gorin

For technical materials supporting the slides, please see Steve's newsletter

Originally Presented:
July 26, 2022