This article focuses on “related party” transactions under Internal Revenue Code Section 267(a)(1) and Internal Revenue Code Section 1239(a). While there is some overlap, it should be noted that the specific scope of “related parties” for purposes of a “related party” transaction under Internal Revenue Code Section 1239(a) is different than the specific scope of “related parties” under Internal Revenue Code Section 267(a)(1).
Effective estate tax planning often involves two competing objectives. On one hand, there is an objective to remove assets from a person’s taxable estate, so that estate tax liability can be reduced on such person’s death. On the other hand, there is an objective to retain the income and principal from a person’s assets, so that such person’s activities are not disrupted during such person’s lifetime.
President-elect Trump has proposed various new specific exemptions from income tax liability. First, he would exempt tips from income tax liability. Second, he would exempt overtime pay from income tax liability. Third, he would exempt Social Security benefits from income tax liability. There is no guarantee that some or any of President-elect Trump’s tax proposals will be enacted into law.
Charitable activities are favored under the Internal Revenue Code. The income of a charitable entity can be subject to favorable income taxation, and transfers to a charitable entity can realize income tax and estate tax deductions. One type of charitable entity is a private foundation. This letter refers to the “private non-operating foundation.”
“Buy sell” agreements often are funded by life insurance policies. Life insurance proceeds can affect the “estate tax” valuation of a deceased business owner’s ownership interest. And can have material implications for the terms of “buy-sell” agreements, business valuations, and other estate tax liability and estate planning issues.
Relative to its decisions concerning other areas of the law, the United States Supreme Court generally does not issue many decisions concerning tax law. Thus, when the Supreme Court does issue a tax decision, it definitely is noteworthy and deserves attention.