A great post by Phil Hodgen, Why people renounce U.S. citizenship for estate tax reasons. It’s an issue often overlooked in cheap talk of “tax cheats,” but not by those who face a tremendous hit to their family businesses from the U.S. Estate tax:
The senior members of these families are pressuring the younger generation give up U.S. citizenship to protect against these problems. I have heard the ultimatum from the father to the son: “The business or your U.S. passport. You choose.”
I want to emphasize that I do not hear political rants from my clients, or from the other family members who must deal with having a U.S. citizen shareholder thrust upon them. Everyone I talk to is eager to travel to the United States, enjoys meeting Americans, and bears no ill will to anyone.
But faced with the prospect of destroying the family business or giving up the U.S. passport, it is no contest. The passport has to go.
40% of the value of your business, as second-guessed by the IRS, can be a high price for a passport.
Sorry, “Mom.” The Tax Court yesterday found a problem with a claim for a dependent exemption:
Petitioner has failed to show that she is entitled to the dependency exemption deduction for Mr. Salako. Petitioner claimed on her 2008 return that Mr. Salako was her son. Mr. Salako was born on January 12, 1961, and was thus 47 years old at the close of 2008. Petitioner, born in 1959, is only two years older than Mr. Salako. Thus, he cannot be her biological son, and we do not find credible petitioner’s unsubstantiated testimony that Mr. Salako is her adopted son.
Decision for IRS, not surprisingly.
Cite: Golit, T.C. Memo 2013-191.
Scott Hodge, Why Shouldn’t the Tax Foundation Pay Taxes? (Tax Policy Blog):
Just 3 percent (or 6,508) of all non-profits have assets of $50 million or more. However, these organizations took in 73 percent of all non-profit revenues and commanded 81 percent of all assets held by non-profits.
TaxGrrrl, Michael Jackson’s Estate To IRS: Beat It. Prompting a whole generation to ask, “who’s Michael Jackson?”
Cara Griffith, Textbooks with Borders (Tax Analysts Blog):
Most of us have heard of doctors without borders, but has anyone heard of textbooks with borders? It’s a reality for those using Amazon’s textbook rental service. The reason for this is very likely related to Amazon’s recurring sales tax issues.
Taxes often explain seemingly bizarre behavior.
Kay Bell, Maryland Rep. Van Hollen sues IRS over its application of 501(c)(4) political nonprofit rules. Good luck with that.
TaxProf, TIGTA: IRS May Be Violating Copyright Law on 89% of its Software. I don’t suppose copyright violations will invalidate an assessment.
Missouri Tax Guy, DOMAs Death, There Are Questions
Trish McIntire, Rant- Keep Your Return Safe. Certainly never send it as an unencrypted pdf attachment to an email.
TaxProf, The IRS Scandal, Day 105
The Critical Question: WHAT DO HERNIAS AND STATE TAXES HAVE IN COMMON? (Brian Strahle)
Personal advice section: Someone Who Has Never Dated an Accountant Came Up With 15 Reasons to Date an Accountant (Going Concern) Someone who has dated one might come up with fewer.