Tax Blog 2018-08-17T15:58:54+00:00

Tax Matters

529 Plans

  The Tax Cuts and Jobs Act (“TCJA”), made changes to Internal Revenue Code Section 529. Section 529 created so called “529 Plans” or “qualified tuition plans” for taxpayers to shield growth in college savings from further income taxes. However, the old Section 529 did not allow for private elementary or secondary school expenses to be paid from the 529 Plans. Under the TCJA changes, up to $10,000 per year can be withdrawn tax-free from § 529 accounts to pay it. Section 11032 of the TCJA, amended Code § 529(c) by adding § 529(c)(7), which permits tax-free distributions from § [...]

By | January 4th, 2019|Categories: Tax|0 Comments

Qualified Opportunity Zones – Opportunity or Trap for Unwary

Under the Tax Cuts and Jobs Act (“TCJA”), a provision was enacted to spur economic development and job creation in distressed communities. Under Section 1400Z a taxpayer may elect to defer gain from the sale or exchange of any property to or with an unrelated person before December 31, 2026 to the extent such gain is reinvested in a “qualified opportunity fund” within 180 days after the sale or exchange. The new provisions require an electing taxpayer include such deferred gain in income upon the earlier of December 31, 2026 or the sale or exchange of the investment. IRC § [...]

By | October 30th, 2018|Categories: Tax|0 Comments

Profits Interest and Section 1061 – Three Year Holding Period Requirement for Long-Term Capital Gain Treatment

Under the Tax Cuts and Jobs Act (“TCJA”), a taxpayer holding an “applicable partnership interest” is required to recalculate any net long-term capital gain realized “with respect to” the “applicable partnership interest” by applying a three-year holding period (instead of the standard one-year holding period). Internal Revenue Code (“IRC”) § 1061(a). If such calculation results in a lower amount of net long-term capital gain than the amount of net long-term capital gain realized utilizing the standard one-year holding period, the rule recharacterizes such difference as short-term capital gain. IRC § 1061(a) (flush language). Section 1061(a)(2) requires a taxpayer to recalculate [...]

By | October 25th, 2018|Categories: Tax|0 Comments

Tax Court: Real Estate Professional Allowed Losses Under IRC § 469

The United States Tax Court recently issued an opinion which provides a good analysis of the passive activity loss limitations of Internal Revenue Code § 469 and their applicability to those involved in managing rental real estate. In Birdsong v. Commissioner, T.C. Memo 2018-148 (Sept. 10, 2018), the petitioners, husband and wife, were the owners of two rental real estate properties consisting of four and five rental units, respectively. The husband worked full time as an emergency physician.  While the wife was not formally employed, she divided her time between caring for the couples’ children and managing the rental properties. [...]

By | September 25th, 2018|Categories: Tax|0 Comments

1st DCA: Church Failed To Timely Contest Tax Assessment

Florida’s First District Court of Appeal recently held a church’s complaint challenging the denial of an ad valorem tax exemption should be dismissed for lack of subject matter jurisdiction. In doing so, the court provided a good review of the statutory requirements for a taxpayer to maintain an action contesting a tax assessment. In Sowell v. Faith Christian Family Church of Panama City Beach, Inc., Faith Christian filed suit on November 20, 2015, challenging the property appraiser’s denial of an ad valorem tax exemption for the 2015 year for three pieces of property owned by the church. On April 17, [...]

By | August 22nd, 2018|Categories: Tax|0 Comments

Choice of Entity Decisions in Light of the 2017 Tax Cuts and Jobs Act – It Is Not as Easy as it Once Was

The choice as to the appropriate type of entity to use for a business venture has historically been fairly straight forward. With regards to a closely held business, a “pass through” entity avoiding taxes at the entity level was generally the most attractive alternative if the choice was available. While there were exceptions to this general rule, they were fairly limited and specific. As a result, the overwhelming majority of existing business entities are pass through entities. The 2017 Tax Cuts and Jobs Act makes the decision of choice of entity much less apparent. For example, assume that a taxpayer [...]

By | February 1st, 2018|Categories: Tax|0 Comments