albany esate planning lawyer

The United States Tax Court recently decided a case where the issue was the role that a tax return due to the decedent played in overall estate tax liability. The Estate of Russell Badgett, Jr. et al v. Commissioner, T.C. Memo 2015-226 (Nov. 24, 2015) dealt with a very large overpayment of taxes by the decedent during his last full calendar year of his life. The estate failed to include the value for the tax returns that Mr. Badgett, Jr. (or his estate as it were) received, which ultimately undervalued the estate a rather significant amount.

The Internal Revenue Service indeed caught this accounting error and sent out a notice of deficiency approximately a year and a half after the filing of the last tax return. The Tax Court ruled in favor of the Internal Revenue Service because estate tax returns must list all the property that an estate owns. The Tax Court cited an United States Supreme Court case that held that state law defines what property rights, while federal law defines what property is taxed. Morgan v. Commissioner, 309 U.S. 78, 80 (1940).

THE CASE OF MR. BADGETT, JR.

PROPOSED RULE FOR INVESTMENT PROFESSIONALS

On April 20, 2015 the Department of Labor officially published a proposed rule change in the federal register. To put the matter in dollars and cents is approximately $17 billion dollars per year, according to one estimate by the White House council of economic advisors. The proposed plan seems simple enough, but whenever $17 billion dollars is at stake, many voices on both sides of the debate will weigh in and drown out that which seems simple. To add urgency to the matter, over 10,000 people per day are slated to retire over the next 15 years. Most particularly, the rule would require that retirement advisers give investors advice that is in the client’s best interest. The rule itself is called the “conflict of interest” proposed rule. Another name for the client’s best interest is the “fiduciary rule”. Registered-Investment advisors are already held to the higher standard, while brokers-dealers are held to a lower, “suitability” standard.

CRITICS

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ESTATE PROPERTY INCLUDES TAX RETURNS DUE

WHAT DOES THE DEPARTMENT OF LABOR HAVE TO DO WITH MY RETIREMENT?