A.L. Clarks Est. and the taxation of contingent fees paid to an attorney

Article Abstract:

The author questions the viability of the U.S. 6th Circuit Court of Appeals case A.L. Clarks Estate which allowed the taxpayer to exclude from income a portion of the interest accruing on a personal injury award because of the court's characterization of the attorney-client contingent fee contract. The case creates a conflict in the circuit courts.

Laws, regulations and rules, Attorneys, Lawyers' fees, Damages, Damages (Law), Tax exclusion, Interest, Interest (Finance)

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TAM 9842003: does a transfer of property in exchange for an FLP interest constitute a gift on formation of the FLP?

Article Abstract:

The IRS in Technical Advice Memorandum (TAM) 9842003 determined that a completed gift was made by the transferor partner to the other partners when a family limited partnership (FLP) interest was exchanged for property at the time of the partnership's formation. The ruling follows other IRS rulings which show the agency's disfavor with the FLP structure. The IRS's conclusion based on the TAM's facts is not supported by IRC section 2512 and law interpreting that section.

Estate Planning, Family-owned business enterprises, Family-owned businesses, Gift tax

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LTR 199907029: IRS disregards check-the-box

Article Abstract:

The author discusses the implications of IRS Letter Ruling 19907029 where the IRS found that owners of commercial property were partners after applying standards established in the 1949 US Supreme Court case of W.O. Culbertson, Sr. The fact that the IRS did not reference its check-the-box business entity classification regulations in the ruling provides some measure of concern and uncertainty for tax and business planning.

Tax Management, Tax accounting, Business enterprises

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