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Boehner, Obama Continue Fiscal Cliff Negotiations

On Thursday, President Obama and House Speaker Boehner met for almost an hour at the White House about the fiscal cliff, but there were no obvious signs of progress, with both sides holding to their views on taxes and spending. The two sides released no information after the 50-minute session, the second face-to-face meeting they have held in the past week on a deal to extend expiring tax cuts and replace scheduled across-the-board spending cuts. The maneuvering spilled onto the House floor where House Majority Leader Eric Cantor rejected requests by Democrats floor votes on competing tax rate extensions.


When Should You Look a Gift Horse in the Mouth?

Contrary to the old saying, on occasion it does pay to look a gift horse in the mouth. That is the lesson learned by the donees in United States v. MacIntyre, 109 AFTR 2d 2012-XXXX, (6/7/2012), one of a number of cases brought by the government involving a 1995 sale by J. Howard Marshall II of stock in Marshall Petroleum, Inc. back to the company shortly before his death. The issue in this case is not about who is liable for the unpaid gift tax as that issue was decided in other cases discussed below and referred to as MacIntyre I and MacIntyre II. Since this case seemed to be the third strike against the donees of this indirect gift, this case is referred to as “MacIntyre III”.

The initial gift tax

Geithner Enters Fiscal Cliff Talks

Geithner Enters Fiscal Cliff Talks

November 30, 2012

Authored by: Matthew C. Jessee

On Thursday, Treasury Secretary Timothy Geithner met with Republican Congressional leaders and proposed a two-step process to raise $1.6 trillion in new revenue. The first step would net $960 billion immediately by allowing the Bush-era tax cuts to expire on top earners along with raising rates on dividends and capital gains. Another $600 billion would come from overhauling the tax code next year to reach the $1.6 trillion goal. Geithner also pressed for a patch of the alternative minimum tax and the extension of targeted business tax breaks at a cost of $236 billion.

Under Geithner’s proposal, the estate tax would return to its 2009 levels, when a 45 percent rate was imposed on inheritances worth more than $3.5 million.

Geithner also proposed deferring the scheduled $109 billion sequestration cuts. He proposed appropriating an additional $25 billion in stimulus spending, above the current baseline, for six years, with $50

Bryan Cave Named to Top Tier in Trusts & Estates Law

Bryan Cave received numerous national and metropolitan rankings in the third edition of U.S. News Media Group and Best Lawyers® 2013 “Best Law Firms” rankings.

Bryan Cave’s National Trusts and Estates Law practice and its Atlanta, St. Louis, and Washington D.C. Trusts and Estates Law practices were all named to the First-Tier rankings.

The analysis of more than 10,000 law firms by practice area are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations and review of additional information provided by law firms as part of the formal submission process. All data was combined into an overall “Best Law Firms” score for each firm.

The national first-tier rankings are featured in the November 20 issue of U.S.News & World Report’s “Money” issue. The rankings can be viewed in their entirety here and Bryan Cave’s rankings can be viewed here.

Fiscal Cliff Negotiations Continue

Fiscal Cliff Negotiations Continue

November 26, 2012

Authored by: Matthew C. Jessee

On Monday and Tuesday last week, while President Obama was traveling in Asia, congressional and White House staff met regarding the latest fiscal cliff negotiations. The major “fiscal cliff” issues which must be dealt with before January 1 are income tax rates and automatic spending cuts. In addition to the fiscal cliff negotiations, other issues with a January 1 deadline which remain unresolved include the alternative minimum tax, unemployment benefits, payroll taxes, Medicare reimbursement rate, as well as the debt ceiling, which the Treasury Department says Congress must raise in the first quarter of 2013. President Obama is expected to reconvene congressional leaders next week to continue the negotiations.

For more information on the Fiscal Cliff, see our prior posts here and here.

Recognition of Income on Roll Out of Split-Dollar Arrangement

The Tax Court in Neff v. Commissioner, TC Memo 2012-244 (8/27/2012) recently ruled on the income tax consequences of the termination of a split dollar life insurance arrangement (“SDLIA”), in ruling that the payment of a discounted amount by the employees on the termination of the SDLIA resulted in the recognition of income to the employees to the extent of the difference between the amount owed to the corporation under the SDLIA and the amount the employees paid. The Tax Court did not address the issue of the extent the equity portion of a SDLIA may be subject to income taxation on the termination of the SDLIA as that issue was not raised by the Service nor addressed by the Tax Court.

This case involves a pre-final regulation SDLIA to which the final regulations do not apply. Rather Rev. Ruls. 64-328 and 66-110 and Notice 2002-8 apply to determine the

Claim for Payment of Estate Taxes in Wrongful Death Case

Estate planning practitioners have long focused on the estate tax cost of a premature death in terms of the potential increase in estate tax. Now, litigation practitioners are focusing on it, as well.

In Beim v. Hulfish, Docket #A-5947-10T4 (Superior Ct. NJ, 5/29/2012), the plaintiffs succeeded in being able to assert this additional estate tax cost as an additional measure of damages in their wrongful death claim.

John Kellogg was age 97 in January of 2008 when he was involved as a passenger in an auto accident that resulted in his death, and led to the filing of this wrongful death action. As a result of his death in 2008 (when the estate tax exemption was $2 million), the Kellogg estate was required to pay almost

Fiscal Cliff Looms as Congress Returns Next Week

Following last Tuesday’s election, Congress returns next week for its “Lame Duck” session and new member orientation. The combination of automatic spending cuts and tax increases (including the estate, gift, and generation-skipping transfer taxes) set to occur at year end known as the “Fiscal Cliff” will dominate the session’s debate. On Wednesday, Senate Finance Committee Chairman Max Baucus (D-MT) and House Speaker John Boehner (R-OH) both called for a short term bill that would delay the Fiscal Cliff until late 2013 so negotiators have time to craft a broader package. On Thursday, the Congressional Budget issued a report saying that the Fiscal Cliff’s tax increases and spending cuts would cause the unemployment rate to rise to 9.1 percent by the fourth quarter of 2013, compared to a jobless rate of 7.9 percent in October 2012. On Friday, President Barack Obama invited congressional leaders of both parties to the White House

What’s Yours is Ours?

What’s Yours is Ours?

November 5, 2012

Authored by: Kathy Sherby and Stephanie Moll

Estate of Alfred J. Richard v. Commissioner, T.C. Memo 2012-173 (6/20/2012), is an unusual case in which the government sought to include 140 shares of preferred stock in A.J. Richard & Sons, Inc. (the “Company”) in the gross estate of the decedent, Alfred Richard (“Alfred”).  The shares were initially reported on the estate tax return, but it was later determined that Alfred did not own the shares that passed through his predeceased wife’s will.  The government’s arguments in opposition to the estate’s amended Tax Court petition reducing the number of shares of preferred stock from the 740 shares reported on the estate tax return by the 140 shares in Mrs. Richard’s name at the time of Alfred’s death, were each resoundingly overruled by Judge Goeke.

Mrs. Richard had died in 1997 at a time when she owned 140 shares of preferred stock in the Company and Alfred owned 600 shares