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Most Recent Posts

F. Lee Bailey Bankruptcy Rooted In Poor Record Keeping

F. Lee Bailey Bankruptcy Rooted In Poor Record Keeping

From the Tax Court decision, I think that might be both true and untrue.  The DuBoc debacle is probably why Bailey faced such a big audit covering the years 1993 through 2001.  If Bailey had had good accounting done, there would not have been all that much to find, though.  There were a host of problems with omitted income and unsubstantiated deductions that have more of the hallmarks of inattention rather than trying to get away with anything.

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Tax Court Denies Amway Losses Due To Lack Of Profit Motive

Tax Court Denies Amway Losses Due To Lack Of Profit Motive

The Tax Court denied the losses because Mr. Hess did not have any sort of a business plan.  What he received from Worldwide Group “did not contain information that is generally found in a formal business plan”.  It was more of a description of how revenue could grow.

It is interesting to note that the Tax Court has become a little more relaxed in calling for formal business plans in Section 183 cases recognizing that people in essentially crap shoot businesses like art and horse breeding don’t need accountants to tell them how to make money.  Yet it seems to be holding the line when it comes to Amway.

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Donor-Advised Funds: The Good, The Bad And The Ugly

When I spoke with Professor Madoff, she did not dispute that there were positive aspects to donor advised funds, but the focus of the article is on the downside.  It is something that would never have occurred to me.  Private foundations are required to make distributions every year, but there is no such requirement for donor advised funds.  So apparently a lot of people are, in effect, advising the sponsors to just sit on their assets.

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Deep Discount From Asset Values In Family Limited Partnership Valuation

Deep Discount From Asset Values In Family Limited Partnership Valuation

The Ninth Circuit has directed us to revise our valuation of the 41% limited-partner interest. The first revision we make is to change the weight we accorded the value of the partnership’s assets. In our first opinion, we assigned a 25% weight to this value and a 75% weight to the present value of the cashflows from the continued operation of the partnership. The Ninth Circuit has instructed us to “recalculate the value of the Estate based on the partnership’s value as a going concern.” In our view, the going-concern value is the present value of the cashflows the partnership would receive if it were to continue its operations. Therefore, we implement the Ninth Circuit’s instruction by changing the weight we accord the present value of cashflows from 75% to 100%. This causes our adjusted valuation of the 41% limited-partner interest to be entirely based on the partnership’s value as a “going concern”.

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Form 1099-R From Insurance Company Can Be Bad Tax News

Form 1099-R From Insurance Company Can Be Bad Tax News

For the next decade, everything seemed fine, but a grim mathematical truth was grinding away.  Both the cash surrender value of the policy and the loan balance were increasing.  And, since Monarch is presumably in business to make money, the rate on that the loan balance was higher than the rate by which the cash value was going up.  Eventually the loan balance is bound to catch up.  So in 2011, Mr. Mallory needed to make a payment of $26,061.67 in order to keep the policy in force.  He didn’t make the payment. So that was the end of the of policy which was eaten by the loan.

Now if all that meant was that Mr. Mallory finally paid tax on the $46,300 that he had drawn out over and above his premium, that would have been painful, but really not so bad.   That is not the way it works though.  The policy loan which liquidated the policy includes all the accumulated interest giving Mr. Mallory  proceeds of $237,897.25 which works out to a taxable amount of $150,397.25 yielding a tax of $40,846.  That would be 88% of the the $46,300.  Even Bernie Sanders doesn’t want people to be paying that much.

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Taxes Ogres And Onions In Gramercy Herald Square Transfer Tax Case

The issue in the present case does not involve an understanding of the physical or social sciences, obscure regulatory practices, complex markets or industries, expert analysis of voluminous factual data, or subtle policy determinations outside the competence of ordinary persons. Indeed, the issues are so purely legal in nature that the parties stipulated the facts and submitted the case without a hearing. The Division’s interpretation herein is inconsistent with the plain language of the statute, regulations, and its own publication and as such is not entitled to deference.

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Kermit Washington Story Has Lessons For Donors Founders And Boards

Kermit Washington Story Has Lessons For Donors Founders And Boards

According to the indictment, Kermit Washington was indicating to potential donors that his organization had no administrative costs at all. In reality, that would be an indication of a charity with inadequate controls.  The zeal to maximize the percentage of donations that go to the mission is laudable, but you do need a greater or lesser degree of management.  Regardless, the 2012 Form 990-EZ for the 6th Man Foundation shows about $90,000 in contributions of which nearly $65,000 went to clinic supplies.  The balance went to overhead type expenses like rent and telephone.  No salaries.  So Mr. Washington  may have been engageing in what Donald Trump calls “truthful hyperbole”.  On the other hand, it may well be that any additional money he raised to the extent it was actually deposited in 6th Man would mean more clinic supplies.

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NJ Domestic Partners Denied Estate Break Of Married Couples

NJ Domestic Partners Denied Estate Break Of Married Couples

For whatever reason Jiwungkul and Connolly did not rush to get in line when same-sex marriage was legalized in New Jersey.  They did, however, decide to take the plunge.  Same-sex marriage became available in New Jersey effective October 21, 2013.  The couple completed an application for a marriage license on May 27, 2014 with a June 8, 2014 marriage date.  Less than a week before the intended wedding day Mr. Connolly unexpectedly died.

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Snow Day Extends Tax Court Filing Deadline

Snow Day Extends Tax Court Filing Deadline

There was also an argument that the 30 day time period was not “jurisdictional”.  If the time limit is not jurisdictional, then the Tax Court could have applied “equitable tolling”, which in a common sense sort of way would say “Yeah.  It says 30 days, but if you miss it because of an alien invasion or something like that, we can cut you a break”. If the time limit is jurisdictional though they don’t even get to look at it.

So the answer was that the 30 days was not really up until you get to a day when the Court was open for business.

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