Recent Developments

Who is an Heir:
A
direct descendant to the JELL-O fortune, born out-of-wedlock and given away for
adoption relinquishing her parental rights, is not entitled to be a beneficiary
of a family trust for descendants and living children. Further, there was no
evidence that the grantor knew of her birth or adoption. In the Matter of
the Accounting by Fleet Bank, as Trustee of the Trust f/b/o Barbara W. Piel, 2008 WL 656471 (N.Y.), 2008 N.Y. Slip Op. 02082,
March 13, 2008.

Qualified Joint
Ventures:

The Small Business Act of 2007 added IRC Sec. 761(f) permitting
spousal qualified joint ventures ("QJVs"). A QJV is not treated as a partnership
for federal tax purposes. If a husband and wife thus own a rental property in
an LLC 50/50 they can avoid filing a partnership tax return. Each is instead
treated as owning a proprietorship and files tax returns accordingly. Making a
QJV election won't cause self-employment (SE) tax on income from rental real
estate that would otherwise not be subject to SE tax. The IRS reasoned that the
purpose of a QJV was not to characterize income as subject  to SE tax that would not otherwise have
been. CCA 200816030 .

Alternate Valuation:
The Tax Court,
in Kohler, TC Memo 2006-152,
permitted a reduction in the value of stock as a result of a corporate
restructure when the estate elected to value assets at the date 6 months after
death (called the alternate valuation date). The IRS has attempted to flush
away that result by issuing proposed regulations that provide that only changes
in market conditions could reduce value for estate tax purposes. Prop. Treas.
Reg. Sec. 20.2032-1.