Ralph E Lerner: Taxation I & II.ppt
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Transcript of Ralph E Lerner: Taxation I & II.ppt
Taxationby
Ralph E. LernerRalphELerner.com
[email protected] Madison Ave, New York, NY, 10022
(212) 521-4437
http://www.RalphELerner.com/
Casualty Loss – §165(h)
The lower of the fair market value or the cost per item lost less $100 per casualty.
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Casualty Loss – §165(h)
The lower of the fair market value or the cost per item lost less $100 per casualty.
Now
But only to the extent such amount is greater than 10% of adjusted gross income.
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Cost
FMV
Deduction (within 30% limit)
Tax Saved (Fed. 35.0 rate)
Cost
UNTAXED PROFIT
$ 1,000
$ 10,000
$ 10,000
$ 3,500
$ 1,000
$ 2,500
and you enjoyed the use of the donated item for the period of ownership
The Art Tax Shelter
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The Four Questions
1. What type of donee organization - public charity or private foundation?
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The Four Questions
1. What type of donee organization - public charity or private foundation?
2. What type of property - ordinary income type property or long-term capital gain type property?
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1. What type of donee organization - public charity or private foundation?
2. What type of property - ordinary income type property or long-term capital gain type property?
3. Have you satisfied the related-use rule?
The Four Questions
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The Four Questions
1. What type of donee organization - public charity or private foundation?
2. What type of property - ordinary income type property or long-term capital gain type property?
3. Have you satisfied the related-use rule?
4. Have you obtained a qualified appraisal by a qualified appraiser?
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FUTURE INTEREST RULE
Section 170(a)(3) - There is no charitable deduction for a gift of a future interest in tangible personal property until there is no intervening interest in, right of possession of, or enjoyment of the property held by the donor, spouse or certain related individuals. http://www.RalphELerner.com/
FRACTIONAL INTEREST
Winokur v. Commissioner
Women of WarholMarilyn, Liz & Jackie
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CHARITABLE REMAINDER TRUST
However, an income tax deduction would be allowed under section 170(a)(3) when the trustee sells the musical instrument.
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FMVCOSTGAINTAXNET7%
$5,100,0000 100,000
5,000,0001,850,0003,350,000
227,500
$5,100,0000 100,000
5,000,000- 0 -
5,100,000357,000
129,500
per yr.28% LTCG
more per yr.
Note: 3,250,000 subject to 50%Estate tax leaves Net $1,625,000
(Fed + St)
per yr.35.0% LTCG
2 children and spouses6 grandchildren10 x 10,000 =
tuition
equalizes after 12 years
$100,000 30,000130,000
1.170A-4(b)(3)(i)The use by a trust of tangible personal property contributed to it for the benefit of a charitable organization is an unrelated use if the use by the trust is one which would have been unrelated if made by the charitable organization.http://www.RalphELerner.com/
I WANT MY OWN MUSEUM
Private Operating Foundation - Reg. 53.4942(b)-2(a)(6) Ex. 4
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FAIR MARKET VALUEHypothetical Willing Buyer/
Hypothetical Willing Seller
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Quedlinburg Treasures
Fair Market Value is determined in the retail market in which the item is most commonly sold to the public.
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Rev. Proc. 96-15Advance Valuation Ruling Request
1. Applies to items $50,000 and above
2. User fee of $2,500 for first three items, $250 for each additional item
3. Requires a qualified appraisal by a qualified appraiser
4. Can be used for income tax or estate tax purposes
5. The ruling, once issued, is binding on the IRS
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ENGEL v. COMMISSIONER
Although comparable sales prces of similar property may be the best measure of value – in a thin market the appraiser must consider replacement cost.
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THE FIRST, THEY SAID, SHOULD BE SWEET LIKE LOVE; THE SECOND BITTER, LIKE LIFE; AND THE THIRD SOFT, LIKE DEATH.http://www.RalphELerner.com/
ROTHKO
Avoid Conflicts of Interest
Duty of Loyalty
An executor must care and manage the assets and affairs of the estate as would prudent persons of discretion and intelligence accented by “not honesty alone” but by the punctilio of an honor the most sensitive.
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