Income Tax Issues
Books and Records

Avoiding the Net Investment Income Tax with Significant Participation

Uncle Bill’s Net Investment Income Tax Quandary Suffice it to say that Uncle Bill had a good year in 2021. As you may remember from this article, Bill and Ethel’s daughter Moon (neé Jaime) was one of the initial investors in a small online book retailer based out of Seattle that was founded by her friend Jeff. When the website took off, Moon made a pretty penny (or 304 billion pretty pennies). Bill invested a

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Scott St. Amand March 29, 2022
Income Tax Issues
Aunt Ethel

The Claim of Right Doctrine and Illegally Obtained Funds

The Claim of Right Doctrine and Cousin Jethro After your Uncle Bill’s unfortunate forklift incident, mentioned here and here, you were surprised to hear that Bill’s idiot boy Jethro got a job at the tannery, especially in light of his somewhat checkered past and run-ins with the law. The more you learn about Jethro’s new job, however, the more it makes sense. Unbeknownst to you, the tanneries of New England are run by a group

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Scott St. Amand November 8, 2021
Charitable Contributions

Nonqualified Disclaimers to a Charity as a Planning Technique

After your exceedingly long discussion with Uncle Bill a few weeks ago regarding his FBAR filing requirements, there has been total radio silence between you and Bill—not that you mind it in the least bit. The first day of fall came and went, but apparently no one told Florida. It was 85° outside on September 22nd, and though a discolored oak leaf fell onto the hood of your car, you suspected that it was the

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Scott St. Amand October 3, 2021
Income Tax Issues
Activity Engaged in for Profit

The Test for Profit Motive: Allowance of Deductions under IRC § 183 Test

What factors aid the Tax Court in deciding when an activity is entered into with a “profit motive” (with allowable ordinary and necessary expenses) versus a hobby (where losses may be taken only up to the amount of profit received)? Taxpayers can deduct all ordinary and necessary expenses paid or incurred in carrying on a trade or business,[1] for the production or collection of income,[2] or for the management, conservation, or maintenance of property held

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Scott St. Amand July 15, 2021
Income Tax Issues
Beneficiary

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

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Scott St. Amand July 5, 2021
Income Tax Issues
Beneficiary

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

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Scott St. Amand July 5, 2021
Income Tax Issues
Beneficiary

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

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Scott St. Amand July 5, 2021
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The Claim of Right Doctrine and Illegally Obtained Funds

The Claim of Right Doctrine and Cousin Jethro After your Uncle Bill’s unfortunate forklift incident, mentioned here and here, you were surprised to hear that Bill’s idiot boy Jethro got a job at the tannery, especially in light of his somewhat checkered past and run-ins with the law. The more

Read More »
Scott St. Amand November 8, 2021

Nonqualified Disclaimers to a Charity as a Planning Technique

After your exceedingly long discussion with Uncle Bill a few weeks ago regarding his FBAR filing requirements, there has been total radio silence between you and Bill—not that you mind it in the least bit. The first day of fall came and went, but apparently no one told Florida. It

Read More »
Scott St. Amand October 3, 2021