June Tax Impact Newsletter

Here’s a brief glance at what you’ll find in this issue…

When Debt is really equity

Bad debt deduction

The tax code allows an individual to claim a deduction for business debts that have become worthless. But qualifying for the deduction maybe more complicated than one would think. In a recent case, the IRS denied more than $17 million in bad debt deductions on the grounds that the advances in question represented equity rather than debt, hitting the taxpayer with millions of dollars in taxes and penalties. This article recounts the U.S. Tax Court case Allen v. Commissioner.

Allen v. Commissioner (T.C. Memo 2023-86).

Handle your estate planning documents with care

The family of a person who unexpectedly dies should know how to find and access the deceased’s estate planning documents. If that’s not currently the case, that person’s well-laid estate plan can be derailed. This article details the steps to take to keep family members in the loop.

Charitable gift annuities: A versatile planning tool

Charitably inclined individuals can use a charitable gift annuity to donate to charity while enjoying significant tax breaks and a lifetime income stream. And if they’re age 70½ or older, they can now transfer up to$53,000 ($106,000 for married couples) to a charitable gift annuity directly from an IRA and apply the gift toward their required minimum distributions(RMDs) for the year. This article explains the benefits of this technique and why it’s important to properly evaluate the charities receiving gifts.

Tax Tips

These brief tips detail how a tax-free Section 1035 exchange can help finance long-term care insurance; explain the tax credit available for used clean vehicles; and explore the advantages of hiring your children to work for your business.

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Please reach out to us with any questions you may have on the topics discussed in this newsletter.

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