No Estate Taxes for POD Beneficiary

Before James died without a will, and with an estate valued at about $12 million, he had designated his teenage goddaughter, Jessica, as the beneficiary on two payable on death (POD) accounts worth almost $4 million at his death. Jessica and her parents were then sued by James’s estate, which was seeking reimbursement for the federal and state estate taxes that were attributable to the POD accounts. Continue reading

Spouse Tax Relief

For most married couples, filing federal income taxes jointly rather than separately results in a lower tax bill. However, this “all for one, one for all” approach can have a downside if questions arise about the accuracy of the return. The general rule is that both taxpayers will be responsible, individually as well as collectively, for any taxes, interest, and penalties owed, even if only one spouse was earning the income. It may be that in a couple’s division of labor only one spouse is in fact responsible for understating income or erroneously claiming deductions, but, by law, each spouse can be made to answer to the IRS. Continue reading

Tax Credits for Historic Preservation

For over 30 years, the federal government has been using tax incentives to help preserve historic buildings. Originally, federal law allowed accelerated depreciation on rehabilitated buildings, but subsequent changes have made preservation and revitalization efforts even more attractive to taxpayers. Continue reading

Business loans cannot reduce estate taxes

A section of the federal Internal Revenue Code authorizes estate tax deductions for qualifying interests in family‑owned businesses. For the deduction to apply, the value of the interest in the business held by a person at the time of his or her death must exceed 50% of the total value of the person’s adjusted gross estate. This is known as the “50% liquidity test.” Continue reading