No bad debt deduction for intercompany transfer

Article Abstract:

The Tax Court ruled that subsidiary corporation was not eligible for a bad debt deduction for funds that a parent firm withdrew from the intercompany bank account. The Tax Court cited Reg 1.66-1(c) that contains provisions limiting bad debt deductions to loans resulting from genuine debtor-creditor relationships. The provisions were based on valid and enforceable obligations associated with the payment of fixed sums of money. The court also found no evidence of any promissory notes or securities transactions between the parties. There were even no maturity dates and no repayments or terms of repayments. Meanwhile, the IRS argued that the debt would have been a loan receivable on the books of the subsidiary even if the subsidiary had been permitted to deduct the amount as bad debt.

Cases, Taxation

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Adapt gift-giving strategies to fit certain circumstances

Article Abstract:

Family wealth transfers structured as gifts can become complicated because of special issues involving transferor and/or transferee. These include transfers being made by transferors or gift givers who either are incompetent due to accident, disease or senility, lack adequate liquid assets to pay the attendant transfer costs, are undergoing marital problems, or have existing problems with creditors. For transferors with special problems, family wealth transfers may be structured to preserve the givers' cash flow, minimize estate administration tax costs and better conserve assets to be passed to younger generations. Lifetime gift giving is, therefore, an important factor in family estate planning arrangements.

Estate Planning, Methods, Management, Planning, Laws, regulations and rules, Gifts, Gift tax, Charitable contributions, Charitable donations, Estates (Law)

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