Wealth & Risk Management Blog

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

Posts Tagged ‘Congress’

Are Indexed Annuities Securities?

Posted by William Byrnes on November 8, 2011


Last year Congress finally concluded about whether indexed annuities are securities. As a security, indexed annuities were  subject to regulation by the SEC by including a provision in the in the Dodd-Frank Wall Street Reform Act that defines indexed annuities as insurance products outside the agency’s jurisdiction.

This year, some states are refusing to take Congress’s “NO” for an answer. In the latest action on the issue, Illinois Secretary of State Jesse White issued an order on May 24 indirectly concluding that indexed annuities are securities under Illinois law.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of indexed annuities in Advisor’s Journal, see Indexed Annuities: Still Insurance (CC 10 42).

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Could 2011 & 2012 Gifts Come Back to Bite the Grantor

Posted by William Byrnes on August 8, 2011


Whether or not to give substantial lifetime gifts in 2011 and 2012 is going to be a hot topic between now and the end of 2012. But deciding whether to take advantage of the record high ($5 million) gift, estate and GST tax exclusion amount and low (35%) transfer tax rate isn’t a trivial matter.

Even your most tax savvy clients are going to need help deciding whether to take advantage of the new law.

The problem is that the new law—which was put into place by the Tax Reform Act of 2010—is scheduled to lapse on January 1, 2013. So is it worth taking the risk that Congress will radically change transfer tax laws for years post-2012? And what will happen to your clients’ transfer tax liability if Congress does change the law?

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Tax Season Starting Late for Some Taxpayers

Posted by William Byrnes on February 5, 2011


Some taxpayers are going to have to wait until mid-to-late February to file their 2010 income tax returns, delaying much needed refunds and potentially clogging up the system for other taxpayers. The IRS is blaming the filing delay on Congress waiting until the end of December to pass the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, H.R. 4853 (Tax Relief Act), which includes a bevy of tax provision extensions, a new two-year estate tax, and a one-year, 2 percent Social Security tax holiday.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the Tax Relief Act of 2010 in Advisor’s Journal, see Obama Tax Compromise Provides 100 Percent Bonus Depreciation of Business Assets Through 2011 (CC 11-01), Obama’s Social Security Tax Holiday: Penny Wise and Pound Foolish? (CC 10-119), Does the New Estate Tax Make the Bypass Trust Obsolete? (CC-10-122), and 2010 Estates: To Elect or Not to Elect (CC 10-124).

 

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2010 Estates: To Elect or Not to Elect

Posted by William Byrnes on January 24, 2011


Did Congress finally settle the estate tax confusion when it passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act) on December 16? Although the estate tax treatment of estates of decedents dying in 2011 and 2012 is crystal clear, most of our clients will outlive the current estate tax regime, and we will be stuck in the same spot we were for the last half of 2010, wondering what the next year holds.

And what about the estates of decedents dying in 2010? Under the Tax Relief Act, estates of decedents dying in 2010 have a choice. They can elect to have the estate subjected to an estate tax regime with an exclusion amount of $5,000,000 (unified credit of $1,730,000) and an estate tax rate of 35 percent. Beneficiaries of these estates will receive the benefit of the stepped-up basis rules applicable prior to 2010.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Obama’s tax agreement, including its estate tax provisions, in Advisor’s Journal, see Obama Tax Agreement Faces Stiff Resistance in Congress (CC 10-112) and Obama Tax Agreement Passed by House (CC 10-117).

For in-depth analysis of the estate tax, see Estate, Gift and GST Taxes.

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Section 1035 Exchanges Are Useful in a Down Economy: A Review

Posted by William Byrnes on November 19, 2010


Why is this Topic Important to Wealth Managers? Section 1035 exchanges are known for deferral of a taxable gain through a step-up in basis into a new contract.  The tax benefits granted by Congress are certainly advantageous, however, in an uncertain economy Section1035 exchanges also offer wealth managers the opportunity for new business.  Because of the potential little to no out-of-pocket expense associated with these transactions, many wealth mangers are currently implementing this advantageous exchange during sluggish times. 

It is often the case that policy owners’ expectations change during the life of a contract.  It makes sense to re-evaluate objectives to ensure they’re still aligned with client goals.  Section 1035 exchanges are one area where this practice is commonplace.

Generally, Congress allows owners of life insurance and annuity contracts to exchange that contract for another, similar or related insurance or annuity contract without recognizing any unrealized gain which may have accrued within the policy, so long as the insured stays the same.

Read the entire article at AdvisorFYI.

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Offshore Planning’s Impact on Calculation of U.S. Income Tax Liability

Posted by William Byrnes on October 5, 2010


Why is this Topic Important to Wealth Managers? Discusses how international planning can impact clients’ tax position domestically.  Provides discussion on a number of common international tax concepts as they relate to U.S. taxpayers.

In previous blog this week, it has been briefly discussed that there may be a number of reasons a client may consider offshore planning, generally.  Today we will focus on one major component of offshore considerations, the impact of world-wide income on U.S. taxpayers. It is generally accepted that U.S. taxpayers are expected to pay income taxes on income earned from sources worldwide.  This concept is commonly referred to as “outbound” taxation.

It is the case that many sovereign nations will also have taxes on personal and/or corporate income that an individual or corporation could become subject to, creating in effect “double taxation.”  And some foreign nations choose to have very low or no tax rate on certain types of income, or on corporations in general, thus allowing foreign income to potentially escape foreign taxation (and current U.S. taxation in the year that it is earned).

What are some rules that that Congress has attempted to avoid double taxation or subject foreign income to U.S. taxation?

Check out the full blogticle at AdvisorFYI.

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Estate and Gift Taxes, Tax Cuts and More

Posted by William Byrnes on September 14, 2010


Why is this Topic Important to Wealth Managers?  Author Ben Terner of the Panel of Experts offers detailed information that has a direct affect on clients’ planning objectives as it relates to estate and gift tax.   Provides a general discussion as well as detailed analysis of the current law and the affect of Congress’ current indecision.

Generally, “[g]ross income does not include the value of property acquired by gift, bequest, devise, or inheritance.” [1] Which means gift income or inheritance income received by the beneficiary is not taxable income to the individual who receives property by such gift, bequest, devise, or inheritance. [2] “Although the donated or inherited property itself is not taxable, income derived from such property is includable in gross income.” [3]

Read the analysis at AdvisorFYI

Posted in Tax Policy | Tagged: , , , , , , , | 2 Comments »

Bush Tax Cuts Set to Expire

Posted by William Byrnes on September 13, 2010


Why is this Topic Important to Wealth Managers? Provides a basic overview of the tax cut provisions that are in effect but set to expire by the end of this year.  Helps financial professional understand implications regarding client’s estate and personal plans in consideration of the Bush Tax Cuts.

As busy as Congress has been over the last year, it’s “finally turning its attention to the expiring 2001 and 2003 tax cuts”, says Robert Rubin who is co-chairman of the Council on Foreign Relations and former Secretary of the U.S. Treasury.  Read the entire analysis at AdvisorFYI

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