Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Byrnes & Bloink’s Thanksgiving TaxFacts Intelligence for Wealth Advisors

Posted by William Byrnes on December 3, 2019


Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Jan 13 – April 19 transfer pricing courses.  Texas A&M University is a public university and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

Often-Overlooked Section 1202 Tax Break for Small Business Adds New Value Post-Reform

Section 1202, while often overlooked by small business owners and investors alike, can provide a valuable tax benefit post-reform because many small businesses have transitioned to C corporation status to take advantage of the simpler 21 percent corporate tax rate. Section 1202 allows for an exclusion of up to 100 percent of gain realized when qualified small business stock is sold. To qualify, the stock must be acquired by the taxpayer when the stock was originally issued and held for at least five years. Further, the Section 1202 stock exclusion only applies to stock in C corporations with active businesses and assets of $50 million or less (measured when the stock is issued). Excluded gains are limited to the greater of: $10 million or 10 times the basis of the qualified small business stock. For more information on the exclusion, visit Tax Facts Online. Read More

IRS Expands Nondiscrimination Relief for Closed Defined Benefit Plans

Although the IRS has previously extended the nondiscrimination relief for closed DB plans in Notice 2014-5, newly released Notice 2019-60 also expands the relief to include relief from benefits, rights and features testing for closed plans. To qualify, the plan must have closed via amendments adopted before December 13, 2013. Notice 2019-60 does not change prior relief, but adds additional relief. Closed plans’ benefits, rights and features are treated as satisfying testing if the benefits, rights and features were provided at the time of the amendment closing the plan and one of two conditions are satisfied: (1) no amendments were adopted after January 29, 2016 that expanded or restricted eligibility for the benefits, rights and features or (2) if there was such an amendment, the benefit, right or feature does not benefit a relatively larger proportion of highly compensated employees (measured using the plan’s ratio percentage) than before the amendment. This relief is available for plan years ending after November 13, 2019 and before January 1, 2021. For more information on defined benefit plan nondiscrimination testing, visit Tax Facts Online. Read More

Advisory Fees Withdrawn From Annuity Not Treated as Distributions to the Owner

A recent IRS letter ruling found that investment advisory fees paid periodically from an annuity contract case value should not be treated as amounts received by the contract owner. The annuities in this case were nonqualified deferred annuities. As part of the annuity, the product owner would receive investment advice from a licensed advisor on how to allocate the case value of the contract. The fees were to be negotiated in an arm’s length transaction, but were not to exceed 1.5 percent of the annuity cash value. The fees were paid directly to the advisor (in other words, the owner would never receive the amounts deducted from the annuity value). The IRS found the fees “integral” to operation of the annuity contract based on the fact that the owner would receive ongoing investment advice. Further, the fees did not compensate the advisor for services related to any other asset (other than the annuity). The IRS concluded that the fees were an expense of the contract, not distributions to the owner. For more information on the tax treatment of nonqualified annuities, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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