who owns property -- a home, a car, a bank account,
investments, business interests, a retirement plan account,
collectibles, personal belongings, etc. -- needs an estate
Many taxpayers with charitable intentions struggle with the decision of whether to donate property to charity during their lifetimes or to make a charitable bequest in their wills that will be fulfilled from the property included in their estates (testamentary bequests). While taxpayers frequently base their choice between lifetime charitable gifts and testamentary bequests on non-tax considerations, they need to be aware of the tax implications of their decision.
This article explains the situations in which a marriage is considered terminated for tax purposes. In some divorce situations, where the 'abandoned spouse' rule does not apply, a spouse may be reluctant to file a joint return due to the joint and several tax liability resulting from joint returns. In some instances, completing the divorce and terminating the marriage may in fact save income taxes.
The passive activity loss (PAL) rules were introduced by the Tax Reform Act of 1986 and were designed to curb perceived tax shelter abuses. However, the PAL rules are far-reaching and affect activities other than tax shelters. Additionally, these rules limit the deductibility of losses for federal income tax purposes. This article explains what constitutes a passive activity and particularly how the rules affect rental activities.
National Taxpayer Advocate Nina E. Olson recently released her annual report to Congress, urging the Internal Revenue Service to adopt a comprehensive Taxpayer Bill of Rights (TBOR)-a step she said would increase trust in the agency and, more generally, strengthen its ability to serve taxpayers and collect tax. This article looks at why she feels the IRS is not performing up to its potential level of effectiveness.