The Ninth Circuit affirmed the Tax Court's application of the Elliotts test and its determination that a portion of H's
salary should be disallowed as unreasonable compensation.
W is not covered under H's
health plan and has no other health coverage.
The limitations period on the assessment of H's
gift tax liability remains open based on fraud, despite the passage of more than three years from filing of his gift tax return.
The IRS apparently inadvertently missed the lack of signatures on H's
2518, citing H's
lists of property and his intent to disclaim W's property.
The Tax Court did not address H's
waiver argument except to state that there is no statutory language requiring the IRS to waive the signature requirement.
After a year of negotiations, H and P signed an agreement under which H agreed to pay DPH in return for the firm turning over 180 clients to H's
new corporation (HA).
In September 1991, the IRS appraised the T Steel stock and determined that it was worth approximately seven times as much as stated on T's and H's
1987 gift tax returns.
Likewise, the design of precision springs (which is H's
specialty) is an extremely specialized branch of mechanical engineering; there are very few engineers who have made careers specializing in this area, let alone engineers like H who have the ability to identify and attract clients and to develop springs to perform a specific function for that client.
In 1994, W and her new husband filed amended returns to claim refunds, contending that they had erroneously included the installment payments received, from the 1986 sales in the years subsequent to H's
death in gross income.
Example 2: H's
will provided that income from a testamentary trust for which no marital deduction was claimed was to be distributed to his surviving spouse, W, during her life.
If W passes away following H's
death, but before his estate tax return has been filed, the executor of H's
estate may be able to obtain a previously taxed property credit for W's estate (as well as obtaining tax savings by equalizing the two estates) by forgoing the Q TIP election.