By John G. Hodnette The gain exclusion benefits for the sale of qualified small business stock (“QSBS”) have grown in popularity in recent years, in part due to the 2017 Tax Act’s reduction of the C corporation tax rate from a marginal rate of 35% to a flat 21%. Congress has now made QSBS even more […]
By Keith A. Wood I. 2024 IRS Audit Statistics. The 2024 IRS Data Book released in April 2025 contains audit statistics for years 2014 through 2022, as of the fiscal year ended September 30, 2024 (FY 2024). For tax years 2020 and earlier, the statute of limitations for audits had generally expired as of September […]
By John G. Hodnette Limited Liability Companies (or LLCs) were invented in Wyoming in 1977. They have since spread to all states and become one of the most popular entities to use for businesses. From a tax perspective, LLCs are hybrid entities that can elect to be taxed in a number of different ways. Regulations that […]
By John G. Hodnette Section 269(a) applies where a “person or persons acquire, directly or indirectly, control of a corporation” and “the principal purpose for which such acquisition was made is evasion or avoidance of Federal income tax by securing the benefit of a deduction, credit, or other allowance which such person or corporation would not […]
By Keith A. Wood I. Real Property Distributed from Testamentary Trust Meets the Section 1031 “Held for Investment” Requirement; PLR 202449007. A testamentary trust terminated on the death of the decedent’s child. Real property held in the testamentary trust then passed to the decedent’s grandchildren. Prior to the trust termination, the trustees entered into a […]
By Keith A. Wood I. IRS Cannot Impose Tax on Withdrawals from an IRA It Seized; Hubbard v. Commissioner, 135 AFTR 2d 2025-484 (6th Cir). Mr. Hubbard was a Kentucky pharmacist. He was convicted on drug and money laundering offenses for operating a pill mill. The court allowed the IRS to seize a number of […]
By John G. Hodnette Enacted in 2017, Section 1061 provides a minimum holding period of three years for long-term capital gains for carried interests issued to certain service providers. Section 1061 treats as short-term capital gain (generally taxed at ordinary rates) the portion of gain allocated to a service provider with respect to an applicable partnership […]
By Helen Herbert I hope this message finds you well. As we approach Memorial Day, I want to personally encourage you to attend the 24th Annual North Carolina Tax Section Workshop taking place Friday, May 23 to Sunday, May 25. This workshop is being held at the Kiawah Island Golf Resort and is an opportunity […]
By John G. Hodnette Section 351(a) provides no gain or loss is recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation, and immediately after the exchange such person or persons are in control (as defined in Section 368(c)) of the corporation. One of the […]
By John G. Hodnette A taxpayer’s relief from indebtedness is generally a taxable event. However, where Section 351 applies to a contribution of assets to a corporation for stock, the corporation’s assumption of liabilities may or may not be taxable under Section 357. Section 357(a) states assumptions of indebtedness pursuant to a Section 351 transaction generally […]