Proposed regulations on adequate disclosure of gifts
Article Abstract:
Proposed regulations issued by the IRS in Dec 1998 discuss the valuation of previous gifts for the computation of estate and gift tax liability. The regulations also cover the limitations period for the assessment and collection of gift tax. Proposed Regulations 301.6501(c)-1(f)(2) contains a list of required information to be inputted on a gift tax return or on an appended statement. Without these information, the transaction would not be recognized as sufficiently disclosed and the three-year assessment period would not begin. The report should include a description of the transferred property and any consideration received by the transferor, the identity of the transferor and the transferee and their relationship, and a detailed discussion of the approach utilized for computing the fair market value of the transferred property. For properties transferred in trust, the regulations also require the tax identification number of the trust and a short description of the terms of the trust.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Antideferral rules hamper use of offshore corporations
Article Abstract:
There is a misconception that US taxes can be avoided through the creation of offshore corporations. However, unless these offshore firms conduct actual, independent business activities, they are subject to US income taxes. In a number of case studies, US firms attempted to but failed to defer US taxes by using offshore entities. US tax law features six different regimes to prevent this and a number of special rules covering taxation for transfers to, and liquidations of, foreign companies. Offshore entities may meet with the qualifications for taxation under one or more than one of these antideferral regimes. There are, however, situations where the use of foreign firms can be beneficial. For instance, joint business ventures with a foreign person are frequently effectively structured using offshore organizations.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Attorney-accountant-prepared documents not privileged
Article Abstract:
The Court of Appeals for the Seventh Circuit held in one tax case that documents prepared by accountants and attorneys during the representation of a client in the course of an IRS examination are not protected by the attorney-client privilege, work-product doctrine or IRS new section 7525. The taxpayer's representative in this case was both a lawyer, who provided them with legal representation, and an accountant who prepared their returns. He was at the time aware that their previous tax returns were under IRS audit. The court ruled that there is no common law tax preparer or accountant privilege and, therefore, taxpayers cannot avail of the attorney-client privilege by hiring a lawyer to do the work of an accountant or tax preparer.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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