Corporate tax break back in Senate package

by James F. McDonough, Jr. on April 18, 2014


The Senate tax committee approved a package of so-called tax extenders April 3, according to The Columbus Dispatch. The tax extenders are a collection of special-interest tax breaks that regularly expire and are extended, including breaks for wind energy, Hollywood, teachers, college tuition and more. About 50 temporary tax breaks were extended for two years […]


Tax avoidance subcommittee blasts Caterpillar, Inc.

by Frank L. Brunetti on April 16, 2014

Family Loans

Senator Car Levin opened an April 1 subcommittee hearing by denouncing Caterpillar, Inc. for reducing its tax liabilities by shifting profits to a Swiss subsidiary, The Wall Street Journal reported. Caterpillar held about $17 billion in offshore profits as of the end of 2013, which are shielded from U.S. taxes as long as they aren’t […]


Imputed Interest, Gifts and Family Loans

by James F. McDonough, Jr. on April 15, 2014

famly loan

Family Loans are an integral part of life, as well as estate and gift tax planning.  Until the IRS victory in Dickman in 1980, interest-free loans were a staple of tax planning. Today, however, the rules that apply are designed to force interest income to be reported, even if not paid.  Certified Public Accountants (CPAs) […]


New bill makes it less taxing to die in Maryland

by Frank L. Brunetti on April 14, 2014


Maryland became the latest state to reduce its tax burden on high net-worth citizens in the form of a higher exemption for its estate tax, according to Forbes. The Maryland Senate passed a measure March 20 that will gradually raise the state exemption from $1 million to the projected $5.9 million federal exemption by 2019. […]


New York doubles estate tax exemption

by James F. McDonough, Jr. on April 11, 2014


New York Gov. Andrew Cuomo has led a well-publicized push to simplify the Empire State’s tax code. As of the stroke of midnight on April 1, the estate tax exemption doubled to more than $2 million, according to Crain’s New York Business. As per the budget agreement reached over the weekend, the state’s tax exemption will rise […]


Severance payments must be taxed, Supreme Court rules

by Frank L. Brunetti on April 9, 2014


In the midst of a number of more controversial cases, the Supreme Court ruled on March 25 that severance payments are subject to payroll tax, according to Courthouse News Service. Specialty agricultural retailer Quality Stores brought the challenge as an adversary action in its bankruptcy filing as a result of the IRS refusing to refund […]



One of the hard-fought issues between taxpayers and the Internal Revenue Service (IRS) was whether a trust could qualify for the passive activities exception. Specifically, activities are grouped into one of two categories, either active or passive. The goal of §469 was to prevent losses from a passive activity from offsetting active income. If one […]


Spacey “whips” votes for Maryland tax credit

by Frank L. Brunetti on April 7, 2014


In the hit Netflix show, “House of Cards”, Kevin Spacey plays silver-tongued, Machiavellian U.S. politician Frank Underwood. In the show’s well-received first season, Underwood occupies the seat of whip for the House of Representatives, but on March 21, Spacey was whipping votes all by himself, according to The Washington Post. “House of Cards” filmed its first two […]


Caterpillar Inc faces tax probe

by James F. McDonough, Jr. on April 4, 2014

Caterpillar Inc

A number of companies have coming under scrutiny in recent months, as the U.S. reconsiders its corporate tax policy. The latest of these companies is the Peoria-based construction equipment manufacturer Caterpillar Inc., which is being probed by a U.S. Senate investigative panel to find out whether it avoided taxes by improperly moving profits overseas, according […]


S Corporation and ESOPs

by James F. McDonough, Jr. on April 3, 2014


An Employee Stock Ownership Plan (ESOP) is a permitted shareholder of stock in a corporation with a valid S election in effect (“S Corporation”).  IRC §512(e)(1) provides that the earnings attributable to an ESOP’s stock in an S Corporation shall be taxable as unrelated trade or business income; however, §512(e)(3) further provides that §512(e)(1) shall […]