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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 IRS Issues Notice Explaining Go Zone Recapture Rules For Like Kind Exchanges of Go Zone Property

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 Victims of 2005 Hurricanes Get Additional Year to Sell Vacant Land

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 Intellectual Property Due Diligence In a Community Property State

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 IRS Issues New Grantor Trust Ruling

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 Louisiana Estate Planning: Some Information You Should Know

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 Annual Gift Tax Exclusion Increased for 2006

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 Transferring the Family Business to Your Children