The Thursday Report 4.17.2014 – Ohio,

Monday’s Ohio U.S. Constitutional Federal Court Decision – Will States Have to Respect Same Gender Marriages?…..Probably!

Non-Residents Can Own Florida Real Estate as Tenants by the Entireties

Calculating IRA Minimum Distributions

Bruce Stone’s Reminiscences of Kiev – A Very Interesting Story – Part 2 of 2

Seminar Announcement – Ohio – Our Second Favorite State – Go There June 4^th To See Some Interesting Presentations

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlaw.com.

Monday’s Ohio U.S. Constitutional Federal Court Decision – Will States Have to Respect Same Gender Marriages?…..Probably!

by India Ingram and Alan Gassman

The state of Ohio was ordered by U.S. District Judge Timothy S. Black on Monday to give full recognition to same-gender marriages legally performed in other states. The court found that the state’s refusal to recognize such marriages violates the Due Process, Equal Protection, and Full Faith and Credit Clauses of the US Constitution, and many legal authorities expect that at least one, if not more, of these doctrines will be upheld eventually by the US Supreme Court.

The judge also found that the state is in violation of the Constitution by denying recognition to out-of-state adoption decrees and by refusing to amend the birth certificates of Ohio-born children.

This ruling does not force Ohio to allow same-sex marriages to be performed within the state, but requires full marital recognition, such as property rights, to couples married outside of the state. The order was a result of a lawsuit brought by four same-sex couples who argued that the state’s current allowance of only one partner from a same-sex marriage on a birth certificate is unconstitutional. The state plans to appeal the ruling, arguing that citizens of the state in 2004 overwhelmingly voted to ban same-sex marriage, giving Ohio a sovereign right to refuse recognition of these unions. Black has temporarily stayed his ruling as applied to everyone except for the four couples named in the lawsuit pending the appeal.

Black found that Ohio’s ban on recognizing out-of-state marriages of same-gender  couples was unconstitutional discrimination, and that the state has no justification for such discrimination. ‘When a state effectively terminates the marriage of a same-sex couple married in another jurisdiction by refusing to recognize the marriage, that state unlawfully intrudes into the realm of private marital, family, and intimate relations specifically protected by the Supreme Court,’ he writes in the opinion.

Black also wrote that: ‘Ohio’s refusal to recognize same-sex marriages performed in other jurisdictions violates the substantive due process rights of the parties to those marriages because it deprives them of their rights to marry, to remain married, and to effectively parent their children, absent a sufficient articulated state interest for doing so.’

The following laws were quoted in this well written opinion:

Due Process and Equal Protection Clause under §1 of the 14^th Amendment in the US Constitution:

No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Article IV, Section 1 of the United States Constitution the “Full Faith and Credit Clause”

Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof.           

The full opinion can be viewed by clicking here.

Non-Residents Can Own Florida Real Estate as Tenants by the Entireties

Everyone knows that the creditor of one spouse cannot reach tenancy by the entireties assets unless a fraudulent transfer, super creditor situation, or other exception applies.

If a couple residing outside of Florida owned Florida real estate, can this real estate qualify as a tenancy by the entireties asset where the state of residency does not recognize tenancy by the entireties.  Most advisors do not realize that the answer to this question is yes, as confirmed in the 2007 case of In re Cauley.

EXCERPT FROM GASSMAN & MARKHAM ON FLORIDA AND FEDERAL ASSET PROTECTION LAW

REAL ESTATE OWNED OUTSIDE OF FLORIDA

Does the state of location recognize tenancy by the entireties?  If not, then the ownership of the real property should be converted to an intangible asset so that Florida law will apply.  Most states, including Georgia, Colorado, and Washington, do not recognize tenancy by the entireties.  Conversion can be done by transferring the property to a separate entity in a tenancy by the entireties protective state, such as a limited liability partnership or an LLC, the interests of which will be held as tenants by the entireties between the spouses.      

Some states recognize tenancy by the entireties, but do not provide “full protection” for those assets.  For example, under Alaska law, the creditor of one spouse can sever tenancy by the entireties assets.  Under Tennessee law, the creditor of one spouse can attach the survivorship right that the debtor spouse owns in the share of the non-debtor spouse in the event of the death of the non-debtor spouse, so creditors routinely receive nominal payments in lieu of nothing from a tenancy by the entireties debtor. 

A non-resident of Florida may be able to exempt non-homestead Florida real property, so long as the property is owned by the debtor and his or her spouse as tenants by the entireties. In the case In re Cauley,^[1] the court extended tenancy by the entireties protection to nonresidents of Florida. In this case, the court ruled that the debtor’s interest in a Florida property was exempt in bankruptcy, even though the debtor did not live in Florida.  Debtor and his wife purchased a home in Florida, which they lived in for approximately four months. In 2006, the debtor filed for Chapter 7 Bankruptcy in Delaware, claiming that the Florida property was exempt because it was held as tenancy by the entireties. AmSouth Bank objected, arguing that tenancy by the entirety protection was only available if the debtor was a Florida resident.  The court applied Florida law because the property was located in Florida, and the sole determinant of whether Section 522(b)(2)(B) of the Bankruptcy Code protects an asset from the claims of the bankruptcy estate is the asset’s situs. The court noted that “tenancy by the entirety is a creature of Florida common law, not an exemption which is given to a resident of Florida by the Florida constitution or the Florida Statutes.” Thus, the court found that there was no requirement to be a resident of Florida in order to exempt the Florida property under tenancy by the entireties.

Other courts have followed Cauley, allowing non-residents to exempt Florida property held as tenants by the entireties.  In the case of In re Holland,^[2] the court allowed an Illinois debtor who owned property in Florida as tenants by the entireties to exempt such property in her bankruptcy.  Citing Cauley, the court noted that there is no requirement for the property owner to be a resident of Florida. The court specifically stated, “[i]t is therefore clear from Florida case law that, at least with respect to creditors who are not joint creditors of the husband and wife, Florida’s common law concept of tenancy in the entireties fits within the exemption provided by 11 U.S.C. § 522(b)(3)(B) [of the Bankruptcy Code].”

It may be significant, however, that both Delaware and Illinois recognize the doctrine of tenants by the entireties; therefore, the courts may have been more willing to apply Florida law since the outcome would be the same under the law of either state. It is unclear whether debtors who file bankruptcy in a state that does not recognize tenants by the entireties, but own property in a state that does recognize tenants by the entireties, will be able to exempt that property in bankruptcy.

Calculating IRA Minimum Distribution

By: Gregory Seigel, Esq.

 Gregory Seigel is an attorney completing his LL.M. studies in Estate Planning at the University of Miami. He can be contacted at gseigel@law.miami.edu

As April is the season for income taxes, many people have recently made minimum distributions from their IRA or 401(k). Consider this an early review for next tax season.

Calculating required minimum distributions takes more than minimal thought. These calculations are very technical, and the penalties for not meeting these requirements can be onerous. The minimum distribution rules apply to traditional IRA’s, SEP IRA’s, SIMPLE IRA’s, 401(k) plans, 403(b) plans, 457(b) plans, and other defined contribution plans. ROTH IRA’s are not required to make minimum distributions until the death of the ROTH IRA owner.

Under Section 4974(a) of the Internal Revenue Code, a 50% tax is imposed on the amount of required minimum distributions that are not taken in a given year.  However, Section 4974(d) provides relief from this penalty if the taxpayer can show that (1) the shortfall of the required minimum distribution was due to reasonable error and (2) that reasonable steps are made to remedy the shortfall. To obtain this waiver, the IRS requires that the taxpayer file a Form 5329, pay the tax owed, and attach a statement explaining the reasonable error.          

For taxpayers who fail to make minimum distributions for consecutive years, the 50% penalty generally applies only to the failed distribution amount for the particular year. For example, a person who fails to make a $20,000 distribution in 2012 and a $15,000 distribution in 2013 will have a penalty of only $10,000 to be reported on their 2012 tax return. The penalty in 2013 will be $7,500 and there is no further penalty on the failed distribution from 2012.

To begin calculating the required minimum distributions, there must be a starting date. The plan owner or participant’s required beginning date is on April 1st of the year after attaining age 70 ½. For owners of qualified plans that (1) are not retired and (2) own 5% or less of the business sponsoring the plan, the required beginning date will be postponed until the April 1st  following the year the plan owner retires. To ensure this calculation is correct, it is recommended that three dates are calculated: the date plan owner is age 70, the date plan owner is age 70 ½, and the April 1st following age 70 ½.

For the first year’s required minimum distribution, the IRS provides three extra months to make the distribution. All future distributions must be made by December 31st. If the first distribution is made during the three month window between January 1st and April 1st, the plan owner will have to make an additional distribution by the end of that year. To prevent this scenario, the plan owner should make the first distribution by December 31st of the year attaining age 70 ½.

Let’s use an example to illustrate. Arlene and Larry are a married couple that each own an IRA. Larry’s date of birth is 6/30/1944 and Arlene’s date of birth is 7/1/1944. For Larry, he turns age 70 on 6/30/2014 and age 70 ½ on 12/30/2014. Larry’s required beginning date is the April 1st of the following calendar year after attaining age 70 ½, which is April 1, 2015. For Arlene, she turns age 70 on 7/1/2014 and age 70 ½ on 1/1/2015. Arlene’s required beginning date is April 1, 2016, for she does not turn age 70 ½ until January 1st of 2015.

This example illustrates the arbitrary cut-off date drawn for those who receive an extra year to begin taking minimum distributions. Those who are born prior to July 1st will have their required beginning date at age 70, while those born on or after July 1st will have a required beginning date at the age of 71. For persons born on or after July 1st, they will obtain an extra year of tax deferral.

After establishing the plan owner’s required beginning date, there is a fraction used to determine the required minimum distribution. The numerator of the fraction is the value of the plan on December 31st of the previous year. For 2015 minimum distributions, the plan’s value as of 12/31/2014 will serve as the numerator. The denominator of the fraction is based on the Life Expectancy Tables that can be found in Appendix C of IRS Publication 590.

There are three life expectancy tables found in the regulations.  The Uniform Lifetime Table is the table used for all owners of plans requiring minimum distributions. This applies to (1) unmarried owners and (2) married owners with spouses that are not more than 10 years younger than the plan owner. The Uniform Lifetime Table reflects the life expectancy of a plan owner plus an additional beneficiary who is ten years younger.

Let’s go back to the previous example. Larry owns an IRA worth $50,000 on 12/31/2013, and he must begin taking minimum distributions on April 1st, 2015. While Larry has an additional three month window to take his first minimum distribution, his first minimum distribution is for the year 2014. The numerator of the fraction is $50,000, the IRA value on 12/31/2013. The denominator is 27.4, which is the life expectancy for a plan owner age 70 in the Uniform Lifetime Table. Thus, Larry’s first required minimum distribution for year 2014 is $1,824 (50,000 / 27.4). Note that Larry will have until April 1st of 2015 to make this minimum distribution.

For Arlene, her calculations are not identical to those of Larry. If Arlene’s IRA is valued at $50,000 on 12/31/2013, this valuation date is not the pertinent date because her first minimum distributions are taken for year 2015. Thus, the value of the IRA on 12/31/2014 is the pertinent date for Arlene’s 2015 minimum distribution. An additional wrinkle is determining what age to use for Arlene in the Uniform Lifetime Table. Because Arlene is not required to take minimum distributions until age 71, the denominator will use the life expectancy for Arlene at age 71, which is 26.5. Arlene will not use the life expectancy for age 70. Assuming that Arlene’s IRA value remains at $50,000 as of 12/31/2014, her required minimum distribution will be $1,886 (50,000 / 26.5). While Arlene’s minimum distributions are greater than Larry’s, Arlene had the benefit of one additional year to defer the income tax on her distributions.

For plan owners with a spouse that is more than 10 years younger and is the sole beneficiary, the Joint Life Tables are used. The ages of both spouses are necessary to calculate the life expectancy in the Joint Life Table.

If in the previous example Arlene was 15 years younger the Larry, the intersection of age 70 and age 55 on the Joint Life Table would be 31.1 years for their joint life expectancy. The required minimum distribution would be $1,607 (50,000 / 31.1). This joint table provides a more accurate actuarial life expectancy for married plan owners with a spouse more than 10 years younger than the plan owner.

IRS Publication 590 provides a third table for calculating life expectancy, the Single Life Table. This table is used to calculate the life expectancy for beneficiaries of an inherited plan. Beneficiaries can be either a spouse or a non-spouse.

If the beneficiary is a non-spouse, the beneficiary’s life expectancy in the Single Life Table is used. For each subsequent year, the life expectancy decreases by one year. For example, if the non-spouse beneficiary at age 33 has a life expectancy of 50.4 years, then the life expectancy at age 34 will be 49.4 years, and the life expectancy at age 35 will be 48.4 years. When the life expectancy number goes below 1, all remaining assets must be distributed in that final year. These minimum distributions for non-spouse beneficiaries must begin in the year following the plan owner’s death.

For spouses who inherit the IRA, the rule is slightly different. Spouses are allowed to go back to the Single Life Table each year and recalculate his or her life expectancy. This can be beneficial to the spouse because certain ages on the Single Life Table decrease by less than a full year. Additionally, the spouse can wait until the year the plan owner would have attained age 70 ½ to begin taking minimum distributions. The spouse of an inherited plan will not be subject to the 10% early withdrawal penalty if under age 59 ½. A spouse would be advised to use this option if the spouse was older than the plan owner, because the plan owner will have the longer life expectancy, minimizing the required distributions.

Upon the death of a plan owner, the spouse may elect to rollover the qualified plan or IRA into their own account. If the plan owner dies prior to his or her required beginning date, the plan owner will not have any required distributions for that calendar year. Additionally, required minimum distributions are not required until the spouse’s required beginning date. In effect, the spousal rollover postpones the minimum distributions until the spouse attains age 70 ½.  The spousal rollover uses the Uniform Lifetime Table to calculate life expectancy, for all owners of plans utilize this table.

If the plan owner dies on or after the required beginning date, the plan owner will be required to make a minimum distribution in the calendar year of his or her death. However, a spousal rollover will delay subsequent minimum distributions until the spouse attains age 70 ½.

The spousal rollover can be beneficial for younger spouses for multiple reasons. First, a spousal rollover will allow the required minimum date to be deferred until the spouse reaches his or her required beginning date. Second, the spouse can designate beneficiaries, which can elongate the life expectancy for the IRA or other qualified plan. Therefore, three different life expectancies (the original owner, the surviving spouse, and the designated beneficiary of the surviving spouse) are used to “stretch out” the required minimum distributions of the plan. Third, the spouse will be able to use the Uniform Lifetime Table, which provides for additional life expectancy built into the table as compared to the Single Lifetime Table. The major drawback of the spousal rollover is that any withdrawals prior to the spouse attaining age 59 ½ will be subject to a 10% early withdrawal penalty.

This article highlights the framework to use when calculating minimum distributions. This serves as a consolidated basis for understanding the mechanics and calculations for required minimum distributions.

Bruce Stone’s Reminiscences of Kiev – A Very Interesting Story – Part 2 of 2

This is Part 2 of Bruce Stone’s story about his 1974 experience in Ukraine.  Please click here to read Part 1 of this story.

There stood, not a uniformed KGB officer, but the kindly hotel concierge.  He told me that my flight was leaving early, and that I had to get dressed and get down to the car that was waiting to take me to the airport.  I thanked him, closed the door, and nearly collapsed.

I made that flight to Sochi, and I continued on with my travels around the USSR, extending through the southern Muslim areas all the way into Siberia, in a grand circle of thousands of miles.  I met many more people, including Communist Party officials, almost all of whom were friendly and inquisitive about America.  On the day that I left the Soviet Union for my flight back to the US – the very same day that Nobel Prize author Alexsandr Solzhenitsyn was expelled from his home country – I felt relief at leaving such an oppressive culture imposed by a totalitarian government, and with a deep sense of sympathy for those good people who had to live under that system.

And yes, I spent those rubles as I traveled around the Soviet Union, and yes, after I got home, I sent many record albums and a bolt of denim cloth to my young friend in Kiev.  Eventually I lost track of him.  Today, like me, he is forty years older, and I worry for him and his safety.  Will the era of freedom that he and millions of others have encountered come to an end?  What awaits them in these troubled times?  Why do so many different wonderful people have to be in a state of uncertainty and loss of freedom for so many decades?  What can I do to help them?

I hope, of course, that common sense will prevail, and that independence and prosperity will continue for my friend from so many years ago.

Seminar Announcement – Ohio – Our Second Favorite State – Go There June 4^th To See Some Amazing Presentations

On Wednesday, June 4, 2014, Alan Gassman will be a speaker at the Ohio State Bar Association’s 25^th Annual Estate Planning Conference on Wealth Transfer

A brief description of Alan’s presentations is as follows:

• Structuring Joint Exempt Step-Up Trusts (“JESTs”): Maximizing Stepped-Up Basis Planning, Fully Funding Credit Shelter Trusts with Joint Assets and Practical and Technical Aspects Thereof – With Forms

The JEST has the capacity to not only cause a step-up in income tax basis of all of a couple’s revocable trust assets on the first death, but also mechanisms to provide for full funding of a credit shelter trust from joint or separate assets, and creditor and family protection features as well.  In order to best use the JEST structure, advisors must be well versed in drafting and planning techniques which are derived from IRS Technical Advice Memorandums, Private Letter Rulings, and academic and practitioner literature.

Attendees will learn how to use the JEST forms and simplified versions thereof that have been developed by the presenter, and will be included in the materials.

• Planning with Commercial Annuities

This presentation will cover the unique income tax and financial planning characteristics of fixed and variable annuities, and provide estate and tax planners with a number of strategies for understanding and planning with existing and contemplated contracts. With over 1 trillion dollars of US taxpayer money invested in annuity contracts, more and more clients are showing up in their estate planners offices with large annuity contracts and common misunderstandings about “guaranteed income” and “guaranteed rates of return” features.   The presentation will cover common policy features, what is actually happening inside of a policy, illustration techniques, and changes that can be made to defer income tax and reduce overall tax liability.   Minimum distribution rules akin to the IRA and pension Section 409A rules and common carrier practices will also be discussed.

Additionally, Alan will be participating in a panel discussion on Tuesday evening, June 3, 2014 sponsored by Johnson Investment Counsel and The Ohio State University.

For more information on the seminar and to register please click here.

Upcoming Seminars and Webinars

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Sponsored by Gassman, Crotty & Denicolo, P.A. Co-sponsors invited.

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman, Crotty & Denicolo, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1^st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Alan Gassman will cover Using Estate Planning Techniques to Optimize Family Wealth Preservation.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact visit http://www.avemarialaw.edu/estateplanning/Index.aspx

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WHAT LAWYERS AND TAX ADVISORS NEED TO KNOW WHEN PLANNING FOR SAME SEX COUPLES – UNUSUAL RULES, STRATEGIES, CHECKLISTS AND TRAPS FOR THE UNWARY

Speakers: Alan S. Gassman, Professors Jason Palmer and Rebecca Morgan from Stetson University, Jessica Lillesand of Wells Fargo and Rob Webster, Esq.

Date: Monday, April 28, 2014 | 12:30 – 2:00 p.m.

Location: Bloomberg BNA Tax & Accounting Online webinar

Additional Information:  To register for the webinar please click here.

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR (with 2 hours of Ethics CLE credit)

Alan Gassman will be speaking at the Florida Bar Annual Wealth Protection seminar on How I Structure an Integrated Income, Estate Tax, and Asset Protection Family Plan as well as participating in a panel discussion with Barry Engel, Jerry Hesch and Denis Kleinfeld on What Are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves.

Date: Thursday, May 8, 2014

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information and to register please click here.

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THE JOINT EXEMPT STEP-UP TRUST AND PLANNING WITH COMMERCIAL ANNUITIES

Alan Gassman will be speaking at the Ohio Conference on two different topics: 1) Wealth Transfer on Structuring Joint Exempt Step-Up Trusts (“JESTs”): Maximizing Stepped-Up Basis Planning, Fully Funding Credit Shelter Trusts with Joint Assets and Practical and Technical Aspects Thereof – With Forms and 2) Planning with Commercial Annuities.  Mr. Gassman will also be participating in a panel discussion the evening before hosted by Johnson Investment Counsel and The Ohio State University.

Date: June 4, 2014

Location: Hilton at Easton, Columbus, Ohio

Additional Information:  For more information on the conference and to register for the conference please contact agassman@gassmanpa.com

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VERSION 226.3 OF OUR ESTATEVIEW ESTATE TAX PROJECTION AND ILLUSTRATION SOFTWARE

Alan Gassman, Ken Crotty and David Archer will be presenting a free 30 minute webinar on what is new with our EstateView software.

Speakers: Alan Gassman, Ken Crotty and David Archer

Date: Monday, June 9, 2014 | 12:30 p.m.

Location: Online webinar

Additional Information: To register for the webinar please click here.

HIRING AND TERMINATING EMPLOYEES; WHAT TO DO, WHAT TO AVOID

Speaker: Colleen Flynn, Esq., Dr. Stephanie Thomason and Alan S. Gassman, Esq.

Date: Wednesday, June 18, 2014 | 2:00 – 3:00 p.m.

Location: Bloomberg BNA Tax & Accounting Online webinar

Additional Information:  For more information, to register and a discount code please email agassman@gassmanpa.com

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40^th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Please send us your questions, comments and suggestions for Alan Gassman’s talk on Planning with Variable Annuities.

This presentation will cover the unique income tax and financial planning characteristics of fixed and variable annuities, and provide estate and tax planners with a number of strategies for understanding and planning with existing and contemplated contracts. With over one trillion dollars of US taxpayer money invested in annuity contracts, more and more clients are showing up in their estate planners offices with large annuity contracts and common misunderstandings about “guaranteed income” and “guaranteed rates of return” features.   The presentation will cover common policy features, what is actually happening inside of a policy, illustration techniques, and changes that can be made to defer income tax and reduce overall tax liability.   Minimum distribution rules akin to the IRA and pension Section 409A rules and common carrier practices will also be discussed.

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

 The 7520 rate for April is 2.2% and for March was 2.2%