Tax Articles

Decanting an irrevocable trust explains the concept of decanting, which involves transferring assets from one trust to another with different terms. This process allows trustees to update or adjust the terms of an irrevocable trust under certain conditions, making it a strategic way to modernize an inflexible trust and better serve long-term goals and beneficiaries.

Failing to comply with employment tax obligations can lead to severe consequences, including the Trust Fund Recovery Penalty (TFRP). This penalty imposes personal liability and financial hardship on business owners and responsible parties who willfully fail to collect, account for, and pay over employment taxes.

This article discusses the dilemma of whether to disclose estate planning details to family members, highlighting that the best approach depends on individual goals and family dynamics. It outlines the advantages, such as explaining wishes and streamlining estate administration, as well as the disadvantages, including strained relationships and encouragement of irresponsible behavior. 

Stepped-up basis rules can significantly reduce capital gains tax for heirs by adjusting the tax basis of inherited assets to their fair market value at the time of the original owner's death. This means that only the appreciation in value since the date of death is subject to tax, rather than the entire gain from when the asset was originally acquired.

Incentive trusts are estate planning tools that distribute wealth based on beneficiaries meeting specific conditions, such as pursuing education, maintaining employment, or avoiding harmful behaviors. While they can encourage positive actions, it's important to set realistic guidelines and communicate clearly with trustees to avoid potential conflicts or unintended consequences.

When inheriting a family home, siblings may face challenges due to differing financial needs and opinions on what to do with the property. Options include sharing the home, renting it out, selling it, or arranging a buyout, each with its own considerations and potential tax implications. Open communication and professional advice are crucial to navigate the emotional and legal complexities involved.

The Trump administration's policies could significantly impact U.S. manufacturers, particularly in the areas of tariffs and trade policies, the Tax Cuts and Jobs Act (TCJA), and clean energy tax incentives. Manufacturers need to stay informed about these rapidly changing policies to navigate their impact on business.

The evaluation of an S Corporation for a new business venture highlights several advantages. Shareholders benefit from limited liability for corporate debts, and early losses can be deducted on personal tax returns. Additionally, the Qualified Business Income deduction offers potential tax benefits.

Filing a gift tax return, even when no tax is due, can be beneficial as it starts the clock on the statute of limitations, limiting the IRS to three years to challenge the gift's valuation. Adequate disclosure in the return can prevent future disputes and provide peace of mind.

The Tax Cuts and Jobs Act introduced Section 163(j), limiting business interest expense deductions. Businesses can manage this limit by opting out for certain industries, capitalizing interest expenses, or reducing overall interest expenses.