QTIPs allow marital deduction, but the price is compliance with strict rules

Article Abstract:

Quality terminable interest properties (QTIPs) allow marital deductions for jointly owned property, and can relieve taxpayers' concerns that surviving spouses will indiscriminately use inherited assets. However, QTIPs require adherence to strict rules. Decedents must be: US residents at the time of death; survived by a spouse who is a US citizen; and passing their interests to spouses. Additionally, spouses must be entitled to all property income for life or have a lifelong usufruct property interest. Surviving spouses can avoid other passing of interests by electing against the will. Executors' failure to elect against wills in a specified amount of time will prohibit marital deduction qualification. Executors can protect the election by ensuring: the estate includes the property at issue; the will is included with the estate tax return; and the spouse's bequest is listed with total values.

Husband and wife, Husband-wife relations, Qualified terminable interest property, Qualified terminable interest property trusts, Community property

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Golden parachutes remain popular despite strict rules

Article Abstract:

Parachute arrangements guarantee that key personnel will be paid and will continue to enjoy benefits in the event of a change in the control of the employer corporation. Such arrangements are often implemented by employers to retain talented employees, encourage employee commitment, promote management objectivity, offer an incentive award, or preserve already existing benefit packages. Stringent regulations have not prevented the inclusion of parachute provisions in most executive compensation packages. The golden parachute provisions, in particular, attempt to deter employers from giving 'excess' compensation payments by considering certain 'excess' payments nondeductible. Recipients of golden parachute payments also incur an nondeductible excise tax.

Compensation and benefits, Executives, Executive compensation, Golden parachutes

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Deductions and exclusions can lower education cost

Article Abstract:

Education cost can be reduced in two ways. For self-employed persons, education expenses can be deducted as long as they are ordinary, necessary, and paid or incurred on the tax year that their business or trade are conducted. The provisions of Reg 1.162-5(c) describe the two criteria for determining if the business costs are ordinary and necessary while Reg 1.162-5(b) cites two grounds for not permitting deductions. On the other hand, employees can fund non-deductible education costs with tax-exempted income from the redemption of US savings bonds, as indicated by Sec 135. The bonds must be distributed after 1989 and must be Series EE bonds. Conditions that must be attained in order to qualify for the interest-exemption are discussed.

Management, Finance, Education, Tax deductions, College costs, Higher education costs

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