It is not uncommon when I present a tax deferral or tax elimination plan to a client, that they stop me and with a puzzled look ask, “how is this possible?” Or, “this sounds too good to be true.” These are typical reactions because many taxpayers are not aware that there is much in tax law that can be used to eliminate, reduce or defer taxes. Instead, they only assume that the government is desperate for cash, and looks for every reason to extract from us as many dollars in tax as they can get away with. People can't believe that tax law gives as often as it takes!Read more
People fear the IRS. Even if you file and pay your taxes promptly every year, there is a lingering feeling that the Big Bad Bureaucracy could find some small error you made and hammer you with an audit.
That fear turns into real stress and anxiety, though, if you truly are behind in filing returns and paying taxes you owe. Let’s try to relieve the stress and reduce that anxiety by stripping the ominous packaging away and look at what the IRS is really trying to do.Read more
For years the IRS has been asking Congress to close a number of loopholes in tax law through which savvy estate planners and lawyers have been successfully structuring family estates to minimize estate taxes on inherited business interests.
Congress has not acted, perhaps at the behest of small business-owning constituents in favor of the current rules.
One particular loophole that is under the IRS and Treasury Department microscope is the practice of restructuring a family business just before the majority owner dies so that inheriting family members receive a “minority interest” in the family business. The IRS has proposed new rules to limit this practice.
Why is it advantageous to receive a minority interest?
First, let’s define “minority interest.” It simply means that the holder of the interest (shares in the company, if you will) owns less than 50% of the enterprise. This implies a lack of ability to control the direction of the business. By contrast, an individual owning over 50% has the controlling interest, and can make decisions for the business over the objections of minority partners.
This perceived lack of control devalues the market value of the minority ownership share.Read more