2004 Articles

The 70-80 percent tax trap: How to help clients avoid the double taxation of money in their qualified plan or IRA By Roccy DeFrancesco March 2004 The 70-80 percent tax problem revolves around the topic of income in respect to a decedent (IRD). IRD includes any income an individual is entitled to but does not receive over his/her lifetime.

Caution- Is the 412(i) defined benefit plan the right income tax reduction plan for your clients? By Roccy DeFrancesco February 2004 First it was charitable split dollar, then IRC section 419A(f)6 and soon it could be the 412(i) defined benefit plan.

Chairman’s corner By Kelli E. Madigan December 2004 Greetings from the Chairman. As we begin the 2004-2005 year of the Federal Taxation Section Council, we look forward to serving all of the members of the Federal Taxation Section of the ISBA.

Chairman’s corner By James S. Zmuda February 2004 I have had the privilege of membership in the Federal Taxation Section Council for a number of years.

Corporate and partnership tax update By Kelli E. Madigan December 2004 The tax court in Comtek considered, after stipulation of facts by the taxpayer and the Service, whether the taxpayer, a Connecticut corporation, and Crocus International, a Russian corporation, were joint venturers.

Corporate and partnership tax update By James S. Zmuda March 2004 In Alphonse Mourad, 121 T.C. No. 1 (2003), the Tax Court ruled that a Chapter 11 filing does not cause termination of a corporation's S status.

Corporation and partnership tax update By Kelli E. Madigan June 2004 1. Charles Schwab Corp., 122 T.C. 191 (March 9, 2004). The taxpayer successfully showed the value and useful life of discount brokerage customer accounts purchased from a discount stock brokerage and was therefore entitled to amortize them under Internal Revenue Code Section 167.

Employee benefits tax update: Pension plan underfunding issues By Thomas Vasiljevich June 2004 Declining plan asset values caused by negative market returns, low interest rates and poor economic conditions have all contributed to the current defined benefit pension plan "crisis."

Estate and gift tax update By Sarah Delano Pavlik December 2004 Two significant opinions have been released regarding family limited partnerships and Section 2036 of the Internal Revenue Code, one by the Fifth Circuit Court of Appeals and one by the Third Circuit Court of Appeals

Estate and gift tax update By Edward J. Schoen, Jr. June 2004 In TAM 200341002, a father created an irrevocable trust and appointed one of his children as trustee.

Estate and gift tax update By Sarah Delano Pavlik May 2004 1. 2004 Numbers. As of January 1, 2004, the federal and Illinois estate tax exemption amount is $1.5 million, and the unified credit amount is $555,800.

Estate and gift tax update By Kelli E. Madigan February 2004 Decedent's estate was entitled to an estate tax charitable deduction under §2055(a) equal to the present value of the remainder interest in two trusts reformed under local law pursuant to Reg. §20.2055-2(e)(2).

Individual income tax update By James H. Schultz December 2004 The Working Families Tax Relief Act of 2004 and American Jobs Creation Act of 2004 represent an election year gift for the individual taxpayer.

Individual income tax update By James S. Zmuda May 2004 In Montgomery, 122 T.C. No. 1 (2004), the Montgomerys filed a joint return reporting tax due of $196,006. The taxpayers did not remit the payment. The Internal Revenue Service ("IRS") assessed the reported tax, accepted the return as filed and did not audit the return or issue a notice of deficiency.

IRS liaison update By Thomas F. Arends & Richard M. Colombik June 2004 As we have addressed in previous editions of the newsletter, the Federal Taxation Section Council has been active in various liaison conferences with representatives from the Internal Revenue Service. Mr. Thomas Arends and Mr. William Gasa of the Section Council currently serve as liaisons for the Section to the Internal Revenue Service.

Message from the Chair By James S. Zmuda June 2004 The annual trip to Washington, D.C. is one of the highlights of this Section Council's annual work. This year was no exception.

Message from the chair By James S. Zmuda May 2004 With this edition of the newsletter, we again strive to inform you, the Federal Taxation Section Council members, of current federal tax developments.

Minimizing risk in taxable portfolios: Initiating and closing out derivative transactions without unexpected tax consequences By Randall H. Borkus February 2004 Financial derivatives provide insurance and wealth protection for taxable portfolios. Derivative instruments are complex risk management tools that require knowledge of stochastic calculus algorithms and theorems to establish accurate pricing.

New tax rates call for new strategies: Subchapter C corporations face an enigma By Bart A. Basi & Marcus S. Renwick May 2004 Traditionally, C corporations have been subject to "double taxation" and tax planning was simple.

Tax administration and procedure update By Thomas F. Arends & Richard M. Colombik May 2004 The editorial staff of the newsletter would like to inform members of the Federal Taxation Section that Mr. Thomas Arends and Mr. William Gasa of the Section Council currently serve as liaisons for the Section to the Internal Revenue Service.

Tax administration and procedure update By Thomas F. Arends & Richard M. Colombik March 2004 The editorial staff of the newsletter would like to inform members of the Federal Taxation Section that Mr. Thomas Arends and Mr. William Gasa of the Section Council currently serve as liaisons for the Section to the Internal Revenue Service.

Tax administration and procedure update By Thomas F. Arends & Richard M. Colombik February 2004 The editorial staff of the newsletter would like to inform members of the Federal Taxation Section that Mr. Thomas Arends and Mr. William Gasa of the Section Council currently serve as liaisons for the Section to the Internal Revenue Service.

The United States Virgin Islands tax incentive Programs By Donna F. Hartl March 2004 The United States Virgin Islands (USVI) offers incentives to certain qualified businesses. If a qualifying business is established in the U.S. Virgin Islands and hires a minimum number of local employees, it may be eligible for government tax incentives which will eliminate a large percentage of income taxes and local taxes for up to 10 years or more.