5th Circuit Court Upholds Tax Court's Conclusion in Strangi Case That §2036(a) Was Violated Resulting In A Substantial Estate Tax Deficiency.  The Court concluded that “the purported transfers arguably deprived Mr. Strangi of literally nothing.”

Three years before his death, Mr. Strangi's investment advisor: (1) prepared the Agreement of Limited Partnership (2) prepared and filed Articles of Incorporation of Stranco, Inc. ("Stranco"); (3) transferred 98% of Strangi's assets—valued at $9,932,967—to SFLP in exchange for a 99% limited partner interest; (4) transferred $49,350 of Strangi's assets to Stranco in exchange for 47% of Stranco's common stock; (5) facilitated the purchase of the remaining 53% of Stranco's common stock by the children for $55,650; (6) issued a check from Stranco for a 1% general partner interest in SFLP.

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Internal Revenue Rulings

IRS Issues Revenue Procedure 2005-14 to Provide Guidance on the Application of §§ 121 and 1031 of the Internal Revenue Code to a Single Exchange of Business or a Combined Business and Residential Property

This regulation applies only to taxpayers who satisfy the " held for productive use in a trade or business or for investment " requirement of § 1031(a)(1) with respect to the relinquished business property and the replacement business property.

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Settlement of Multiple Beneficiary's Lawsuit Will Not Affect Trust's GST Tax Exempt Status

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Conflicting Language In Decedent's Trust Regarding the Distribution of Income From the Trust Results in Loss of Estate's Marital Deduction

2056(b)(5) provides that if an interest in property passes from the decedent to his surviving spouse (whether or not in trust) and the spouse is entitled for life to all the income from the entire interest or all the income from a specific portion of the entire interest, with a power in her to appoint the entire interest or the specific portion, the interest which passes to her is a deductible interest, provided it meets a series of tests. In this case decedent's trust did not clearly give the wife an unlimited power of attorney and made no reference to the marital deduction. It did, however, declare that it was decedent's intent that the trust qualify for the estate tax marital deduction. The service concluded that either of these errors was sufficient to bar qualification for the marital deduction.

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Service Allows GST-Exempt Trust to Elect the Unitrust income calculation method without affecting the GST exemption

Trustee proposes to convert a trust into a unitrust in accordance with state law. The trustee determined that converting the trust into a unitrust would enable the trustee to better carry out the intent of decedent, as well as the overall purposes of the trust.

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Creative Post-Mortem Estate Plan Rescue: Service Rules That Spouse Can Qualify for Marital Deduction After Approving Numerous Disclaimers From All Beneficiaries (including wife) of Deceased Husband's Trust

Deceased was a lifetime employee of a state's government. Upon his death he had not attained age 70 ½ and was a beneficiary of the state's SERS (Salaried Employees Retirement System) and Deferred Compensation Plan (DCP). Under the terms of both SERS and DCP, upon a participant's death, the plan proceeds become payable to the participant's designated beneficiary.

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From Holland & Knight Private Wealth Services Publications

The Aftermath of Bankruptcy Reform: Asset Protection for Professionals Revisited

After several years of failed efforts, banks, credit card companies and other advocates for bankruptcy reform got their way. Congress approved the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the BAPCP Act) on April 17, 2005. In many respects, the changes are sweeping and analysts have predicted a run on the bankruptcy courts between now and October 17, 2005, the date most of the BAPCP Act changes go into effect.

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Alert: New IRS Regulations Will Result in Disclaimers on Certain Tax Advice to Clients

In Circular 230, the Treasury Department and the Internal Revenue Service have issued broad new regulations effective June 20, 2005, that impact the form in which attorneys and other tax professionals render written advice to their clients. These regulations were originally intended to curb the practice of taxpayers entering into certain questionable tax shelter transactions, the principal purpose of which is to avoid or evade tax, and obtaining opinion letters from counsel in an effort to insulate themselves from the imposition of penalties. Unfortunately, the regulations were drafted and adopted in such a broad fashion that they arguably encompass many long-standing and well-accepted estate planning techniques.

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