En Banc welcome the Taxation Section. The topics for this month are:
1. What general rules of thumb, if any, can be set forth for what to do about 2010, 2011 and 2012 gift and estate tax planning? Is there a best source for tax lawyers determining what to do about 2010, 2011 and 2012 gift and estate tax decisions? The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 changes the estate, gift, and generation-skipping transfer (GST) tax rules for 2010, 2011, and 2012 with pre-2001 law revived in 2013. The law generally provides a $5 million gift and estate tax unified exemption amount and portability of the exemption amount to surviving spouses.
2. How have changes in the law since the 2009 Offshore Voluntary Disclosure Initiative (OVDI), such as final Treasury Regulations issued on February 23, 2011 by the Treasury Department's Financial Crimes Enforcement Network (FinCEN) regarding the Report of Foreign Bank and Financial Accounts (FBAR), affected decisions regarding the 2011 OVDI? In 2009, the IRS offered penalty abatement, no criminal enforcement and other inducements for US taxpayers who have unreported foreign bank accounts in 2003 through 2008, if the taxpayers came forth with proper information, made proper filings and agreed to pay unpaid, back taxes, interest and certain other penalty amounts. In February 2011, the IRS announced a similar program with higher penalties that expires on August 31, 2011.
3. What tax and non-tax experiences have practitioners had with loans by S corporation shareholders to S corporations and by partners to partnerships that support initially capitalizing the S corporation or partnership with significant debt? Is capitalizing the entity with significant pro rata debt to the owners a carry back from days when most business entities were C corporations? Payments must be made on owner debts or interest may be imputed. The passive and investment character of interest expense and income needs to match. Repayments of S corporation shareholder loans may create income to the shareholder/creditor. IRC Section 108(e)(8) imposes impediments to converting debt to equity, particularly with partnerships. Bankruptcy courts may look less favorably on insider debt than other entity debt.
4. What will be the impact of the US Supreme Court decision of Mayo Foundation on tax law? For instance, how will it change tax legislation, the regulatory process, tax return disclosures and regulation challenges? The US Supreme Court in Mayo Foundation, __ US __, 107 AFTR 2d 2011-341 (2011), adopted the two-part Chevron test in upholding a Treasury Regulation. Under Chevron, a court generally does not disturb an agency rule unless it is "arbitrary or capricious in substance, or manifestly contrary to the statute." Moreover, the Mayo Court determined that the same standard of deference applies to regulations issued under the general grant of authority under Section 7805(a), known as interpretive regulations, as to those issued under a more specific grant of authority, known as legislative regulations.
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