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The author discusses changes to individual retirement accounts distribution rules in 2001.

The three-year moratorium on the 15% excess distribution excise tax for Jan 1997 through Dec 1999 may provide planning opportunities, but some taxpayers may be better off keeping funds in their retirement plans. A Small Business Job Protection Act provision allows taxpayers to receive unlimited plan distributions, which may also help reduce the risk of being subject to the 15% excess accumulations estate tax. However, taxpayers must pay income tax on all distributions not donated to charity, and funds distributed are no longer earning income that may help pay for increased taxes.

Sole proprietors can treat tax deficiency interest payments as deductible business expenses under Temp Reg 1.163-9T(b)(2)(i)(A). Such a deduction for personal interest was outlawed by the 1986 Tax Reform Act, but the effect of this law on unicorporated businesses was not explicitly stated. The courts, in cases such as Redlark and Miller, have made clear that in certain situations sole proprietors can legally claim this deduction.

Municipal bonds are one of the most popular ways to shelter income from taxes because the interest they pay is tax-exempt on the federal level. (Some states and cities also [...]

Buy-sell agreements can provide an effective means of valuing close corporations for estate tax purposes, but the IRS does examine such agreements to ensure that they are not being used as estate planning vehicles. Under IRC section 2703, buy-sell agreements must have a bona fide business purpose, must not demonstrate testamentary intent and must include valuations comparable to arm's-length transactions. Such agreements should be drafted to be binding on the shareholder and the estate and should compel sale of the interest regardless of IRS approval of the valuation.

Taxpayers wishing to claim worthless loans made to a corporation as business bad debt deductions must show that there was a bona fide debt and that the debt was incurred connected to the taxpayer's trade or business. A written agreement accounting for regular payments and interest will generally show that an advance or loan guarantee resulted in a bona fide debt. To receive ordinary loss treatment, as opposed to short term capital loss treatment, the taxpayer will have to be in the business of buying corporations or show that continued employment with the company was the dominant motivation for making the loan., When a shareholder loans money to a corporation, there is a clear expectation that the loan will be repaid. If the loan becomes worthless, deductibility of the loss for tax [...]

The low-income housing tax credit, which was permanently extended in 1993, provides the owners of housing that includes sufficient percentages of qualifying rental units with tax credits. Owners that meet the requirements will receive tax credits for the housing over a ten-year period if they comply for a fifteen year period beginning at the same time. A reduction in the percentage of housing qualifying as low-income may result in recapture of the tax credits. The tax credit that owners may claim is also limited by credit allocations made by local and state housing credit agencies.

The answer can have a major impact on an alien's tax liability. The IRS issued final regulations that define a resident alien under IRC Sec. 7701(b). Although the final regulations [...]

Divorce-related financial statements may now be validated using the tax returns of either party. The disclosure of assets is an important part of divorce settlements negotiations, and may be subtantially facilitated by a review of a variety of tax returns, depending upon a spouse's sources of income. Both business and individual returns for the previous two years are valuable sources of information on salaries, interest income, dividends, tax refunds, capital gains or losses, pensions and deductions. Copies of returns over a period of several years should be obtained in order to study fluctuations in specific items. Requests for copies of tax returns may be made by filing IRS Form 4506. Joint returns may be obtained even without a spouse's consent as long as the requesting party's signature is on the return. Otherwise, the release of separately filed returns must be authorized by the filer.

IRS statistics show that the number of companies claiming subchapter S status has increased 628% between 1970 and 1992. Companies need to keep constant check on their business activities and changes in shareholders' status, if they are to maintain Subchapter S tax treatment. If S status is terminated, perhaps due to failing the excessive passive investment income test, a company may have to wait five years before it claims S status again, although inadvertent termination relief may be granted.

Congress created income in respect of a decedent in 1934 to equalize year of death taxation between cash and accrual basis taxpayers. This income includes anything received after the taxpayer's death and therefore can substantially affect the taxation of the decedent's estate or successors. Though significant planning is not possible because no one knows the time of death, decision-making can be given to the executor who could decide at the time whether to distribute the income to a beneficiary or allow the estate to be taxed.

The prenuptial agreement, once a legal instrument used by the wealthy widowed to protect their estates in a second marriage, is gaining increased popularity as a device for protecting assets [...]

MANUFACTURERS HAVE TAPPED INTO A FASHION GOLDMINE with licensed character wear and accessories for Holiday '03. Look for trendsetting velour warmups, boho detailings, lots of patchwork, colorful fashion stripes, fabric [...]

When a married couple files a joint tax return, both spouses become jointly and severally liable for the income taxes due, including any additional taxes, interest, and penalties determined at [...]

EXECUTIVE SUMMARY * If a taxpayer and spouse have enjoyed a long, happy marriage and have common objects of affection, a QTIP trust may serve little purpose. * The "qualifying [...]

EXECUTIVE SUMMARY * TAX LAW REQUIRES IRA OWNERS TO BEGIN TAKING minimum distributions from traditional IRAs starting in the year they turn age 70 1/2. Since the balances in these [...]

Undoing a Roth IRA conversion can make a good thing even better. If Roth IRAs are such a good idea, why undo a Roth IRA conversion? For a better bottom [...]

JOAN CALABRESE THE LOOK: Elegant and sophisticated. An expert designer, Calabrese pushes the fashion envelope with beautiful fabrics and clever styling -- from delicately placed three-dimensional flowers to intricate back [...]

I read your article 'Surviving Bataan' from the Summer 2009 issue with enormous interest. My father, M. Sgt. Joseph Lewis Johnson, USAF, ret., died 16 years ago at the age [...]

An essay is presented on the "Women's Window" stained glass window at Christ Church Cranbrook in Bloomfield Hills, Michigan. Particular focus is given to the window's representation of the French actress Sarah Bernhardt. Additional topics discussed include the window's representation of 60 Biblical and historical women, the window's design by the English artist James H. Hogan in 1927 and insights on how the window reflected women's status in the U.S.