The following article was originally published in Lawyers Weekly USA, a sister publication. BOSTON - In a Private Letter Ruling (No. 200603040) issued on Jan. 20, the IRS concluded that the popular technique of making an irrevocable trust intentionally defective for income tax purposes by including a retained power to substitute property of equivalent value will not cause the trust property to be included in the taxpayer's estate.
In a Private Letter Ruling (No. 200603040) issued on Jan. 20, the IRS concluded that the popular technique of making an irrevocable trust intentionally defective for income tax purposes by including a retained power to substitute property of equivalent value will not cause the trust property to be included in the taxpayer's estate. As this issue is one the IRS has not frequently ruled on, the PLR offers interesting insight into its thinking on the matter. However, as practitioners know, PLRs cannot be actually relied upon by any taxpayers other than the ones requesting the ruling.
Acquisition of stock; single-owner entities - IRS Letter Ruling
IRS letter ruling
Because of the current low capital gains rates, many speculative investors are selling large parcels of undeveloped or partially developed real estate. The IRS has sought to tax such sales at the higher ordinary income rates. According to the IRS, if such sales are frequent or substantial, if the property has been improved too much by the seller, or if the seller is merely an "agent" of the buyer, then the IRS will deny capital gains treatment. Investor status benefits all taxpayers. Individual taxpayers are subject to a maximum 15% tax rate on capital gains resulting from the sale of property that has been held for a period of greater than one year. Taxpayers assume a degree of risk in claiming investor status because such related-party transactions receiving capital gains treatment ar...
... continuing in the field of endeavor." This ruling was upheld in Paullus v. Comm'r (TCM 1996-419), wh... investor status (see 1RS Information Letter 2002-0013). In Boyer v. Comm 'r [58 T.C. 316, 318-...
In a private letter ruling, the IRS indicated recently that a withdrawal from one plan that was not deposited into a rollover account within 60 days was not subject to the 60-day rollover requirement since the check was make payable to the transferor plan. The move is yet another example of the IRS's desire to work with the complexities of the rollover provisions and not generate unwanted taxable distributions and potential penalties.
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