Penalties Under the Code
Memorandum Opinions / Penalties Under the Code / Tax Opinions

Ervin v. Commissioner
T.C. Memo. 2021-75

On June 23, 2021, the Tax Court issued a Memorandum Opinion in the case of Ervin v. Commissioner (T.C. Memo. 2021-75). The primary issue presented in Ervin v. Commissioner was whether the petitioner’s criminal restitution payments satisfied his income tax liability. Background to Ervin v. Commissioner This may be a rather vast generalization, but most folks named Monty are not the most trustworthy.  Monty Ervin is one such Monty.  Monty failed to file Federal income tax returns for 2000-2009 and was convicted of tax crimes for 2004-2006. In June 2012 he was sentenced to imprisonment and ordered to pay restitution of $1,436,508, the amount of the Government's estimated tax loss. Monty, it seems, not only failed to pay taxes, but he tried really, really hard to do so. Monty’s alleged overt acts included purchasing and selling property in the names of nominees and trusts, creating false warranty deeds to facilitate…

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July 12, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

Moving Beyond the Basics of Charitable Contributions

In our previous post, we took a high level look at charitable contributions and deductions, including looking at what made an organization “qualified” to receive charitable contributions, when deductions might be limited, and special rules for valuing and reporting non-cash charitable contributions. In this post, "Beyond the Basics of Charitable Contributions," we will dig a little bit deeper and look at some issues that might affect the deductibility of a contribution. Moving Beyond the Basics of Charitable Contributions The Green Settee As we discussed in the first article, your grandmother Phyllis left a beautiful old green settee to your mother which, unfortunately, does not fit the new Bohemian inspired aesthetic of your mother’s home.  Although she has her eye on a midcentury modern Scandinavian chair for the corner of the living room and could use an infusion of funds to purchase the chair, she would prefer to donate the settee…

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July 5, 2021
Taxing, Briefly
Taxing, Briefly
Taxing, Briefly

Basic Concepts for Charitable Deductions

Your grandmother Phyllis was a remarkable woman. Aside from making it out on the other side of Uncle Bill’s childhood with only moderate shell shock (which, I suppose, is referred to these days as PTSD), Phyllis was an intelligence agent in the United States Army towards the end of World War II, and you could remember her saying that, despite as “intelligent” as she may have been in the Army’s estimation, her good genes weren’t fairly apportioned between and betwixt her children. Granny Phyllis always questioned by what divine providence did your mother get “at least 98% of those good genes,” with only the remaining 2% passing to Uncle Bill…of which original percentage, you estimate, he currently maintains about two-thirds, having effectively culled out the remaining 33% with grain liquor, psychedelics, and tannery fumes.[1] In her will, Phyllis left a beautiful old faded green settee to your mother that you…

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July 5, 2021
Income Tax Issues
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Grantor Trusts – Part IV of IV – Retained Powers and Non-Grantor Owners

In Part I of this series on Grantor Trusts, we look at the nature of trusts in general.  In Part II, we shift to a look at grantor trusts, and a few definitional rules.  In Part III and Part IV, we take a deep dive into the interests that a grantor may retain that will cause a trust to be treated as a grantor trust as well as instances in which a person other than the grantor will be treated as the owner of a trust under the grantor trust rules. Reserved Administrative Powers – IRC § 675 There are four administrative powers, which will cause a trust to be treated as a grantor trust, each of which are contained in IRC § 675. In effect, IRC § 675 provides that the grantor is treated as the owner of any portion of a trust if, under the terms of the…

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July 5, 2021
Income Tax Issues
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Grantor Trusts – Part III of IV – Reversionary Interests and Powers to Control Beneficial Enjoyment

In Part I of this series on Grantor Trusts, we look at the nature of trusts in general.  In Part II, we shift to a look at grantor trusts, and a few definitional rules.  In Part III and Part IV, we take a deep dive into the interests that a grantor may retain that will cause a trust to be treated as a grantor trust as well as instances in which a person other than the grantor will be treated as the owner of a trust under the grantor trust rules. As we discussed briefly in the Second Post in this Series, if Uncle Bill created a trust, it will be treated as a grantor trust under the Code if any of the following apply: Bill holds a reversionary interest in the assets of the trust;[1] Bill controls the beneficial enjoyment of the assets of the trust or its income;[2]…

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July 5, 2021
Income Tax Issues
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Grantor Trusts – Part II of IV – Introduction to Grantor Trusts

In Part I of this series on Grantor Trusts, we look at the nature of trusts in general.  In Part II, we shift to a look at grantor trusts, and a few definitional rules.  In Part III and Part IV, we take a deep dive into the interests that a grantor may retain that will cause a trust to be treated as a grantor trust as well as instances in which a person other than the grantor will be treated as the owner of a trust under the grantor trust rules. There are numerous flavors of grantor trusts that can be created for tax and estate planning purposes, with combinations limited only by the grantor’s imagination, the practicality of the tax planner, and the Code and Treasury Regulations. The simplest and most common grantor trust is the revocable living (inter vivos simply meaning “during life”) trust, which is created by…

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July 5, 2021
Income Tax Issues
All Articles / Income Tax Issues / Tax Articles

Grantor Trusts – Part I of IV – Introduction to Trusts and Taxes

When I told my boss that I was going to write an article on grantor trusts, he responded (without hesitation sensitivity, or thought), “You know, a lot of people have written about grantor trusts.” He’s not wrong. Not helpful—but not wrong Search Google, and you will find numerous websites with cursory discussions on grantor trusts.  Look a little deeper, and you may even find some of the very good scholarly articles that I drew from in writing this article.  The articles go through the Code, sometimes paraphrasing, sometimes not.  If the Treasury Regulations contain an example, they might even give the grantor a name instead of simply a letter, as the Treasury is wont to do. If you have spent any time on Briefly Taxing, you know that our goals for an article are twofold.  First and foremost, we try to make complex tax concepts accessible.  Grantor trusts are complex,…

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July 5, 2021