Education-Related Tax Incentives Offer Range of Planning Opportunities |
The high cost of education is no secret to parents and grandparents who have considered the future. College costs continue to rise and taxpayers in all income brackets are seeking strategies to help them save for college costs. The federal tax code offers a wide range of ways to help with this daunting task, as shown by Susan Flax Posner, J.D., LL.M., in the May issue of CCH’s Federal Tax Course Letter. There are tax credits for those already paying tuition and fees for higher education as well as savings plans such as the Coverdell Education Savings Accounts that offer future tax benefits. Other provisions, such as direct payment of tuition expenses, allow relatives to avoid gift taxes. Posner walks tax professionals through the full range of education incentives in a common sense fashion that will allow them to best advise clients on the full range of options and to help them choose the options that will work best in a variety of circumstances.
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With the recent high profile cases on tax shelters and stepped up enforcement by the IRS on a range of fronts, tax professionals must take careful steps to stay within the rules. To help with creation of best practices for tax advisory practices, the IRS has changed the rules under Circular 230 effective in June. These new rules outline the category of “covered opinions” that will affect the advice tax practitioners can give under certain circumstances. But many tax professionals will be unaffected by these rules, notes Harvey Coustan in a recent issue of the Journal of Tax Practice & Procedure. Coustan outlines what is a covered opinion, what steps are necessary for tax practitioners who are issuing such opinions and he also outlines the new requirements for issuing written tax advice that does not fall under covered opinions. Note that the new regulations even specify how the typefaces of disclosures have to be bolder and larger than the rest of the type in written advice. There are penalties attached to these new regulations for firms that do not put adequate procedures in place to ensure compliance, so it’s critical to take a close look now at what your practice is doing and what needs to be done in the future to ensure compliance.
Click here to get a full copy of this article from the Journal of Tax Practice & Procedure.
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A recent decision by the Tenth Circuit Court of Appeals that found a decedent’s buy-sell agreement did not control the date of death value of a closely held business for estate tax purposes requires estate planners to give careful thought to the structure of such agreements. In affirming the Tax Court decision in H.A. True Jr. Est., the court upheld a fair-market value analysis instead of a formula setting forth the purchase price established by David True in a buy-sell agreement before his death. Attorney John W. Porter outlines the impact of the True decision in a recent issue of the Journal of Practical Estate Planning. At issue was whether the buy-sell agreement was created for bona fide business reasons and was not a testamentary substitute intended to pass on the decedent’s interest for full and adequate consideration. The Tax Court found that the latter was the case and the appeals court upheld that decision. There were many factors in the court’s review of the agreement that swayed that decision and Porter outlines these to show estate planners the critical steps necessary to create buy-sell agreements that will meet this new standard.
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Last year’s American Jobs Creation Act made significant revisions to the foreign tax provisions in a way to reduce double taxation and simplify compliance so U.S. businesses can be more competitive in the global marketplace. The changes are extensive and reach into many areas of tax compliance and planning. In a recent special issue of TAXES: The Tax Magazine devoted to practical analysis of AJCA changes, James A. Doering takes apart the foreign tax credit revisions and shows through examples how these new measures will work and what sorts of planning opportunities they represent. In addition to mitigating double taxation, the AJCA also strengthens the overall foreign loss provisions and minimum holding period for foreign tax credits on withholding taxes on income other than from dividends.
Click here to get a full copy of this article from TAXES: The Tax Magazine. |
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