Louisiana Law Blog

by Kevin C. Curry

Taxpayers often own a vacation home or other residential property that they desire to exchange in a tax-deferred like kind exchange under Section 1031 of the Internal Revenue Code. Under Section 1031, no gain or loss is recognized on the exchange of property held for use in a trade or business or for investment if the property is exchanged solely for property of like kind that is to be used in either a trade or business or for investment. Personal residences and similar personal-use property generally do not qualify as property held for investment or used in a trade or business within the meaning of Section 1031. When it comes to vacation homes and similar property that a taxpayer uses occasionally for personal use, there has generally been uncertainty as to whether or not that property would qualify for a Section 1031 exchange.

 

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law
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by Kevin C. Curry

The IRS issued Notice 2008-25 explaining how the recapture rules for the 50% bonus depreciation under the GO Zone legislation applies to GO Zone property involved in either a like kind exchange under Section 1031 of the Internal Revenue Code (the "Code") or an involuntary conversion under Section 1033 of the Code.

 

In general, for qualified GO Zone property, taxpayers can claim a 50% bonus depreciation deduction for the qualified Go Zone property. However, this depreciation deduction is subject to recapture if the property ceases to be substantially used in the GO Zone or in the active conduct of a trade or business by the taxpayer. If GO Zone property is no longer GO Zone property in the hands of the same taxpayer at any time before the end of the GO Zone property’s recovery period under the normal depreciation rules, then the taxpayer must generally recapture in the taxable year in which the GO Zone property is no longer GO Zone property (the recapture year) the benefit derived from claiming the GO Zone bonus depreciation deduction. The benefit derived from claiming this bonus depreciation deduction is equal to the excess of the total depreciation claimed, including the bonus depreciation, for the property for the taxable years before the recapture year over the total depreciation that would have been allowable for the taxable years prior to the recapture year under the normal depreciation rules. The recapture amount will be treated as ordinary income in the recapture year.

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law
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by Kevin C. Curry

In IRS News Release 2007-134 issued on July 31, 2007, the Internal Revenue Service has granted an additional year to the time limit for victims of Hurricanes Katrina, Rita and Wilma to sell the vacant land upon which their home had sat and was destroyed as a result of the hurricanes. 

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law , Hurricane Katrina , Louisiana In General
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by Anthony G. Boone

The purpose of due diligence in the acquisition of licensing of intellectual property assets (namely patents and copyrights) is to give a buyer an opportunity to investigate and evaluate the asset concerned in some detail. More particularly, due diligence involving patens and copyrights can present ownership issues if the author/inventor is or was married and resides in a community property state. Whatever level of diligence is required for the particular transaction, the buyer should consider inquiring as to the current and past marital status of the inventor/author of the intellectual property if the inventor/author is either the seller; a direct owner of the seller; or in some cases, even a past owner of the intellectual property.

 

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law , Intellectual Property , Louisiana In General
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by Kevin C. Curry

On February 16, 2007, the IRS issued a formal ruling approving a sale of a life insurance policy to a grantor trust. This ruling is a rare formal ruling by the IRS in the grantor trust area. Grantor trusts, or intentionally defective grantor trusts, are used often in a variety of estate planning situations. Grantor trusts are typically used in estate planning situations where the parties want the income of the trust to be taxed to the grantor of the trust (the person who set up the trust) or where they want the grantor to be deemed to be the owner of the trust property for income tax purposes.

>> Continue Reading Posted In Business and Corporate , Estate Planning, Tax, and Probate Law , State and Local Taxation
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The need for "estate planning" is often dismissed by individuals as being a luxury which can only be utilized by the wealthy. However, anyone who owns any property has need for at least some knowledge of estate planning in order to determine who will receive his or her property at the time of death. The term "estate planning" is not restricted to planning or drafting of wills for individuals who will have a federal estate tax consequence at death. "Estate planning", when used in its broadest sense, is necessary for the husband and wife who want to leave as much as they can to their surviving spouse for that surviving spouse's economic well-being and protection. It is also necessary for the young husband and wife who have several children, a house with a large mortgage, a small savings, and life insurance. Estate planning is also necessary for the single individual with no children who desires to distribute his or her property in a manner different from the statutory course. Do not let the term "estate planning" fool you. It applies to each of us in some form or fashion.

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law
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The annual gift tax exclusion for the federal gift tax has increased to $12,000 for 2006. The annual exclusion had been $11,000. The annual exclusion is the amount any individual can give another individual per year without triggering a taxable gift for federal gift tax purposes.

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law , State and Local Taxation
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The IRS has granted various extensions to taxpayers in areas affected by Hurricane Katrina. Generally, this relief extends the due dates for any business or individual return due on or after August 29, 2005 until January 3, 2006.

>> Continue Reading Posted In Business and Corporate , Estate Planning, Tax, and Probate Law , Hurricane Katrina , Hurricane Katrina - Relief , Louisiana In General , State and Local Taxation
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By Carey J. Messina

So you've built a successful business that provides you a good salary and employment for several of your children. Things are going fine, but you are worried about what happens to the business when you retire in a few years, or die. What are you going to do? (i) sell to that "national group" for cash and a nice consulting arrangement; (ii) sell to several loyal employees who have helped grow the business, but have not participated in management; or (iii) transfer the business to the children working in the business.

>> Continue Reading Posted In Business and Corporate , Estate Planning, Tax, and Probate Law
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By: Carey J. Messina

The Governor has signed into law Act no. 79 of the 2005 Louisiana Legislature which creates New Code fo Civil Procedure Article 2904 allowing for the admissibility of videotape of the execution of a testament. The videotape evidence may be entered in a contradictory trial to probate a testament or in an action to annul a probated testament. For the videotape evidence to be admissible, the testator must be sworn by a person authorized to take oaths and the oath must be recorded on the videotape. The videotape of the execution and reading of the testament by the testator may be admissible as evidence of any of the following:

1. The proper execution of the testament.

2. The intentions of the testator.

3. The mental state or capacity of the testator.

4. The authenticity of the testament.

5. Matters that are determined by a court to be relevant to the probate of the testament.

Videotape is defined broadly under the new provision.

This opens a whole new pandora's box to the world of will executions. Here are a few thoughts. Wills are normally not "read" at the time of execution unless the testator is sight impaired. Is there a new requirement that wills be read when videotaping is used? Will there be some inference drawn in a will contest if the videoping is not done? Could heirs make claims against the attorney preparing the will if videotaping would have proved proper execution of the testament? What will be the cost of videotaping? In order to determine the intentions of the testator, or the mental state or capacity of the testator does the attorney have to ask questions of the testator? If so, what questions are sufficient? Will the attorney have to have a script to make certain all issues are covered during the videotaping? How many copies of the videotape do you need? Clearly the videotape can be used to annul a testament, so in effect it can be used against the testator who has requested the taping. Do attorneys have to offer videotaping to their clients, or is it just a tool of the trade for the attorney if he feels there will be an attack on the testament? This list is not exhaustive but shows just some of the issues that may be raised.

Posted In Estate Planning, Tax, and Probate Law
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By Carey J. Messina

The need for "estate planning" is often dismissed by individuals as being a luxury which can only be utilized by the wealthy. However, anyone who owns any property has need for at least some knowledge of estate planning in order to determine who will receive his or her property at the time of death.

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law
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By Kevin C. Curry

In November 2004, the Louisiana voters approved a new Constitutional Amendment to revise Louisiana's Homestead exemption law for ad valorem tax purposes. While this new law is helpful in clarifying a number of issues, it does create a trap for the unwary. Specifically, the new law has been interpreted to deny the homestead exemption for individuals who transfer their homes into revocable trusts (also known as living trusts).

>> Continue Reading Posted In Estate Planning, Tax, and Probate Law
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