HIDE

Other Publications

Insights

Publications

Missed Opportunities – Tax Court Shows No Mercy for Indirect Partner

Missed Opportunities – Tax Court Shows No Mercy for Indirect Partner

In the U.S., there are several options to challenge an I.R.S. adjustment in the courts, including the U.S. District Court, the U.S. Court of Federal Claims, and the U.S. Tax Court.  Of the three options, only a challenge in the Tax Court can be pursued without first paying the tax.  Strict time limits are placed on filing a petition to the Tax Court.  If a taxpayer misses the deadline, it must first pay the tax and then sue for refund in either of the other courts.  The petition deadline is easy to determine when the I.R.S. proposes an adjustment to an individual or corporation, but when the adjustment is made to the income of a partnership – which yields tax exposure for partners – it is not always clear when the time limit has run out.  In a recent memorandum decision, the Tax Court ruled that an indirect partner was not able to challenge the tax liability of a partnership because the petition came too late.  In their review of the decision, Rusudan Shervashidze and Nina Krauthamer explain the strange facts involved and point out that the taxpayer did not have “clean hands.”

Read More

Corporate Matters: Delaware Law Allows L.L.C. Divisions

Corporate Matters: Delaware Law Allows L.L.C. Divisions

Delaware recently amended its company law to enable a limited liability company (“L.L.C.”) to be divided into two or more newly-formed L.L.C.’s, with the original company either continuing or terminating its existence.  The amendment provides L.L.C. members with significant flexibility in separating from each other so that assets, liabilities, rights, and duties of the company can be allocated among the resulting companies.  Simon Prisk explains the change in company law.

Read More

New York State Renews the Three-Year Clawback for Gifts

New York State Renews the Three-Year Clawback for Gifts

Generally, Federal estate and gift taxes are imposed on a person’s right to transfer property to another person during life or upon death.  State rules may differ from the Federal regime, imposing either an estate tax, inheritance tax, or gift tax or some combination of these taxes.  New York State limits its taxation to an estate tax on the transfer of property at the time of death.  There is no gift or inheritance tax.  But, as of April 1, 2014, gifts made by a N.Y. resident between April 1, 2014, and December 31, 2018, were clawed back into the taxable estate if the gifts were made within three years of death.  The clawback has been extended to cover gifts made through December 31, 2025.  Rusudan Shervashidze and Nina Krauthamer explain.

Read More

New York State Says No to Annual Pied-A-Terre Tax, Yes to Increased Real Estate Transfer Taxes

New York State Says No to Annual Pied-A-Terre Tax, Yes to Increased Real Estate Transfer Taxes

As part of New York State’s annual budget process, law makers proposed an annual pied-à-terre tax on homes worth $5 million or more that do not serve as the buyer’s primary residence.  At the last minute, the tax was dropped and replaced by a 0.25 percentage point increase to the real estate transfer tax on sellers and a new graduated mansion tax, a special transfer tax imposed on purchasers.  Nina Krauthamer addresses the ins and outs of both taxes.

Read More

Austria, France, and Italy to Introduce Digital Services Taxes

Austria, France, and Italy to Introduce Digital Services Taxes

A limerick that is popular among members of the U.S. Congressional tax writing committees sheds wisdom on the development of tax policy:  “Don’t tax you.  Don’t tax me.  Tax the person behind the tree.”  Several countries in Europe have taken the rhyme to heart in developing unilateral digital services taxes designed to impose tax on extra-territorial activity of out-of-country companies.  The issue, as Austria, France, and Italy see it, is that these companies make huge profits in Europe but pay no tax there, while payments for digital services are often tax deductible in the countries where the services are used.  According to proponents such as Austria, it is only fair to tax those profits on a destination basis.  Benjamin Twardosz of CHSH Attorneys-at-Law, Vienna, explains the various proposals under consideration.

Read More