IRS PROVIDES MOBILITY TO SAME-SEX MARRIED COUPLES

Since the U.S. Supreme Court ruled in Windsor, 133 S. Ct. 2675 (2013) that same sex married couples would be recognized for federal purposes, a question has existed as to what happens if a same sex couple married in a state that allows such marriages, but moves to or lives in a state that does not. The IRS has now issued a Revenue Ruling that provides that the key fact for federal tax purposes is where the couple married. If they marry in a state that recognizes same sex marriages, the IRS will treat them as married for federal tax purposes – even if they move to or reside in a state that does not.

This rule will greatly simplify tax administration, as well as simplify the lives of same sex married couples. There is now only one question to determine marital status – was the marriage in a state that recognizes same sex marriage.

The ruling also clarifies that for federal tax purposes the term “marriage” does not include registered domestic partnerships, civil unions, or other similar formal relationships recognized under state law that are not denominated as a marriage under that state’s law.

Rev.Rul. 2013-17

NEW CHART! HISTORICAL FEDERAL TRANSFER TAX RATES, EXEMPTIONS, AND OTHER INFO

For much of the 1980's and 1990's, federal transfer tax rates, exemptions, and credits were static and easy to remember. Then the roller coaster changes started. I don't know about you, but the number of changes has exceeded my capacity to remember them all. I've kept a cheat sheet under the glass of my desk for a few years. I have now expanded and updated it, and thought it would be worthwhile to put it out there for others. You can download a copy of the table from here. 

For other helpful tables and charts, take a look at the links in the column on the right.

NOMINEE/AGENCY RELATIONSHIP FOUND, EVEN WITHOUT A NOMINEE AGREEMENT

At times, persons acquire property in their own names, but the true owner is a third party. Generally, for the IRS to respect the true owner as the owner for tax purposes (and not tax the titleholder), there must be a written nominee or agency agreement (among other requirements). In a case that may be useful to taxpayers who want to prove up a nominee/agent relationship for tax purposes but did not enter into a written agreement, the Tax Court respected an agency relationship without such an agreement.

In the case, a son and daughter-in-law purchased three parcels of realty on behalf of the father’s real estate development business. The deeds were in the name of the son and daughter-in-law.  This was done because the business had exhausted its own lines of credit.  As cash flow from sales of the parcels were received, the funds were turned over to the father. The son was also an employee of the business.

The IRS sought to tax the son and daughter-in-law on the gains from the sale of the parcels. The son and daughter-in-law argued that the income really belonged to their father, per their agency relationship.

Notwithstanding the absence of a written agency agreement (at least one was not mentioned in the opinion), the court respected the agency relationship and determined that the son and daughter-in-law were not the owners of the parcels for income tax purposes.

Chad B. Hessing, et ux., TC Memo 2013-179