August, 2011 | The Beliveau Law Group - Attorneys at Law

Charitable transfers of non-voting common stock aren’t split-interest transfers

In PLR 201129033, IRS has privately ruled that transfers of non-voting common stock by a donor or his spouse to charity will be transfers of the entire interest in the property, not a nondeductible split-interest under Code Sec. 2522(c), reasoning that the non-voting common stock was a separate property interest from the other class of stock in the corporation. Additionally, IRS found that the value of the charitable gifts for Code Sec. 2512 purposes equals that

No special use recapture on transfer of farmland to limited liability company or lease of farmland

In four identical private rulings, IRS has concluded that neither trusts’ transfers of farmland to limited liability companies (LLCs) in exchange for interests in the LLCs, nor the LLCs’ lease of the farmland to a partnership, will trigger recapture of special use valuation. PLR 201129016, PLR 201129018, PLR 201129019, PLR 201129020 Beliveau Law Group: Massachusetts | Florida | New Hampshire The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts),

Transfer of debt instruments for nonrecourse “loan” was disguised sale

In Landow, TC Memo 2011-177, the Tax Court has determined that a 90% “loan transaction program” was in fact a taxable sale of the debt instruments that purportedly collateralized the loan. The Court also rejected the taxpayer’s argument that he should qualify for nonrecognition of gain under Code Sec. 1042, noting that the fact that the debt instruments were ultimately sold by the “lender” was irrelevant since the operative sale for Code Sec. 1042 purposes was

Noncompete covenant connected with any stock acquisition is Sec. 197 intangible

The First Court of Appeals in Recovery Group, Inc., (CA 1 7/26/2011) 108 AFTR 2d ¶ 2011-5114, confirmed the Tax Court when it determined that a covenant not to compete, entered into in connection with the acquisition of a portion of the stock of a corporation that is engaged in a trade or business, is considered a “section 197 intangible,” within the meaning of I.R.C. § 197(d)(1)(E), regardless of whether the portion of stock acquired constitutes

Continental Airlines could not recover pension distributions paid to pilots’ ex-spouses, despite “sham” divorces

Continental Airlines in Brown v. Continental Airlines, Inc., (2011, CA5) 2011 WL 2780505 was not entitled to recover pension plan distributions that were paid to the ex-spouses of a group of divorced plan participants, even though the payments were made on account of alleged “sham” divorces, since ERISA does not authorize plan administrators to consider the subjective intentions or good faith underlying a divorce. Beliveau Law Group: Massachusetts | Florida | New Hampshire The attorneys at

Tax Court approves valuation of homes and paintings

The Tax Court in Estate of Mitchell, TC Memo 2011-94, rejected IRS’s deficiency determinations and found that an estate properly determined the fair market value of the decedent’s real property and two paintings he had owned. Beliveau Law Group: Massachusetts | Florida | New Hampshire The attorneys at the Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate

Chief Counsel Notice formally reverses litigation position on two-year window for equitable innocent spouse relief

A new Chief Counsel Notice (CCN), cc-2011-017 “Change in Litigating Position on the Two-Year Deadline to Request Section 6015(f) Equitable Relief”, formally reverses IRS’s litigation stance on the issue of whether an individual may request equitable relief under Code Sec. 6015(f) more than two years after IRS first acted to collect the liability from the individual. The CCN explains why IRS reversed course, and how litigators should apply IRS’s new position, namely that it will consider a

IRS Reminds Taxpayers that the Aug. 31 Deadline Is Fast Approaching for the Second Special Voluntary Disclosure Initiative of Offshore Accounts

IRS has warned U.S. taxpayers hiding income in undisclosed offshore accounts that they are running out of time to take advantage of the soon-to-expire 2011 Offshore Voluntary Disclosure Initiative (OVDI), which will expire on Aug. 31, 2011. The IRS reminded taxpayers that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on Aug. 31, 2011. Taxpayers who come forward voluntarily get a better deal than those who wait for the IRS to find their undisclosed accounts

IRS revises Notice 2011-53

IRS has revised Notice 2011-53 which provides the phased implementation of the Foreign Account Tax Compliance Act (FATCA) rules that expand the information reporting requirements imposed on foreign financial institutions (FFIs) and impose withholding, documentation, and reporting requirements with respect to certain payments made to specified foreign entities. The revised Notice provides that a withholding agent’s Code Sec. 1472(a) withholding obligations for payment to a non-financial foreign entity with respect to amounts described in Code Sec. 1473(1)(A)(i)

IRS reissues guidance on processing tax payment extension requests based on undue hardship

IRS’s Small Business/Self-Employed (SB/SE) Division has reissued interim guidance for directors on the procedures for processing Form 1127, Applications for Extension of Time for Payment of Tax Due to Undue Hardship. Reissuance of Procedures for Processing Form 1127 Applications for Extension of Time for Payment of Tax Due to Undue Hardship The Beliveau Law Group: Massachusetts | Florida | New Hampshire The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and

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August 2011