Recent Developments

■ Tax Losses. Businesses May Take Advantage Of Expanded
Loss Carryback Option Under New IRS Procedure IR-2009-105 and Rev. Proc.
2009-52. You can elect under IRC Sec. 172(b)(1)(H) to carry back a net
operating loss (NOL) for 3, 4 or 5 years, or a loss from operations for 4 or 5
years, against income in those years. An NOL or loss from operations carried
back five years may offset no more than 50 percent of a taxpayer’s taxable
income in that fifth preceding year.
This limitation does not apply to the fourth or third preceding year.

■ Estate Tax. H.R. 4154 would make permanent the current
estate tax rate of 45% and the non-inflation indexed exemption of $3.5 million.
This means $7 million for couples with proper planning (so you still
need to hug your estate planner!). If nothing is done the rate would fall to
zero in 2010 and resume 55% in 2011. Compared to the $1M 55% system that
existed not so many years ago, this will
cost the federal fisc $234 billion! Bottom line, stop ignoring the
estate tax and go plan. See the lead article for more reasons why!

■ 2010 Standard Mileage Rates: In 1/1/2010 the standard auto mileage rate
will be 50 cents per mile for business purposes, 16.5 cents per mile driven for
medical or moving purposes, and 14 cents per mile for charitable purposes. News
Release IR-2009-111 and Rev. Proc. 2009-54, 2009-51 IRB.

■ S Corporation: Tough rules govern who can be an S
corporation shareholder. Regular IRAs can’t. Rev. Rul 92-73. Don’t get cute,
Roth IRAs can’t either! Taproot Administrative Services, Inc. v. Commr.,
133 T.C. No. 9 (2009).

■ Grantor Trusts With a Twist: You might be able to structure a trust where
the beneficiary, not the settlor setting up the trust, is treated as the
grantor for income tax purposes.  PLR 200949012.
Cool stuff. Dad may be able to set up such a trust for Doctor Daughter so she
can sell exposed assets to the trust and achieve asset protection.

■ Tax Losses. Businesses May Take Advantage Of Expanded
Loss Carryback Option Under New IRS Procedure IR-2009-105 and Rev. Proc.
2009-52. You can elect under IRC Sec. 172(b)(1)(H) to carry back a net
operating loss (NOL) for 3, 4 or 5 years, or a loss from operations for 4 or 5
years, against income in those years. An NOL or loss from operations carried
back five years may offset no more than 50 percent of a taxpayer’s taxable
income in that fifth preceding year.
This limitation does not apply to the fourth or third preceding year.

■ Estate Tax. H.R. 4154 would make permanent the current
estate tax rate of 45% and the non-inflation indexed exemption of $3.5 million.
This means $7 million for couples with proper planning (so you still
need to hug your estate planner!). If nothing is done the rate would fall to
zero in 2010 and resume 55% in 2011. Compared to the $1M 55% system that
existed not so many years ago, this will
cost the federal fisc $234 billion! Bottom line, stop ignoring the
estate tax and go plan. See the lead article for more reasons why!

■ 2010 Standard Mileage Rates: In 1/1/2010 the standard auto mileage rate
will be 50 cents per mile for business purposes, 16.5 cents per mile driven for
medical or moving purposes, and 14 cents per mile for charitable purposes. News
Release IR-2009-111 and Rev. Proc. 2009-54, 2009-51 IRB.

■ S Corporation: Tough rules govern who can be an S
corporation shareholder. Regular IRAs can’t. Rev. Rul 92-73. Don’t get cute,
Roth IRAs can’t either! Taproot Administrative Services, Inc. v. Commr.,
133 T.C. No. 9 (2009).

■ Grantor Trusts With a Twist: You might be able to structure a trust where
the beneficiary, not the settlor setting up the trust, is treated as the
grantor for income tax purposes.  PLR 200949012.
Cool stuff. Dad may be able to set up such a trust for Doctor Daughter so she
can sell exposed assets to the trust and achieve asset protection.