New York Court of Appeals adds new wrinkle to international taxation of estates

Article Abstract:

The New York Court of Appeals applied an expansive definition of inheritance tax to the will in question in Matter of Herz to find that the will called for taxes which included the German Erbschaftsteuer to be paid out of the estate. The German tax applied solely because the beneficiary was domiciled in Germany, even though the decedent and the property were in the US. In previous decisions, New York courts had found that this tax was not an inheritance tax. The Court overturned precedent and found that the tax should be paid by the estate and not the German beneficiary.

Germany, Decedents' estates, Inheritance tax, Domicile in taxation, Domicile (Taxation), New York (State)

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Tax Court finds a related-party rule in Section 265(a)(2)

Article Abstract:

The Tax Court's 1995 decision in the H Enterprises (HEI) case relied on IRC section 265(a)(2) to determine the taxpayer should be treated as a single taxpayer, despite the absence of a statutory related-party rule in that section. The Court's reasoning may be flawed, but it may provide the IRS with an argument for single-taxpayer treatment in other situations involving consolidated groups such as HEI. The Court used the legislative history of the section as its justification for finding and applying the section's implicit related-party rule.

Public Finance Activities, Tax Deductions & Exemptions, Interest deductions, Tax deductions, Related party transactions, H Enterprises International Inc.

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International trade legislation modifies taxation of some partnership distributions

Article Abstract:

Legislation implementing the General Agreement on Tariffs and Trade in the US contains a change in the tax treatment of gain from partnership distributions of marketable securities. Generally, partners receiving a distribution of property took the partnership's basis in the property, unless the property was cash. Marketable securities distributions beginning in 1995 will result in gain to the extent fair market value exceeds the partner's basis in the partnership interest. Exceptions exist for investment partnerships.

Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Partnership distributions

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