This week, The Atlantic reported, to the surprise of no one, that charitable donations increase as the year draws to a close and spike on the last day.  Why is this?  Last minute tax planning.  People want to make sure that they lower their tax bill for the year by making a charitable contribution, which is then deductible.  The last day to make such a gift for the tax year 2013 is, naturally, December 31, 2013. Two questions arise. First, to whom do you make such gifts, and second, is it worth it? Who Gets the Gifts? In order to receive the charitable donation deduction, the organization receiving the donation must be a qualified organization.  Generally, a qualified organization will be classified as a 501(c)(3) not-for-profit organization.  Such an organization generally be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.  It may also include veterans’ groups (e.g.: the VFW), fraternal societies, or government subdivisions that perform government functions (think: police department). …

New year, new tax laws.  Or reversion to old tax laws.  Of particular concern lately (and at this time of the year for so many years) is the expiration of any number of tax breaks.  They are designed to incentivize certain behavior, disincentivize other behavior, and whether they come into being as part of good policy, or as part of cynical political calculations, individuals and businesses come to rely on them – at least for a time.  With this new year, 55 tax breaks are set to expire. These tax breaks are passed as temporary measures; however, people and businesses come to rely on them because when they lapse (often annually), Congress will merely renew them. What kind of tax breaks are at issue? According to a November 2013 report of the Congressional Research Service (CRS), the president’s budget proposal for fiscal year 2014 identified which expiring provisions it wanted to renew and permanently extend, among them: the research and experimentation (R&D) tax credit, enhanced expensing for small businesses, the renewable energy production tax credit …

Slate magazine gives us today’s chuckle.  Your daily laugh at the expense of attorneys concerns the overzealous representation of none other than corporate coffee behemoth Starbucks. According to the Slate article, lawyers for Starbucks became concerned when a bar and microbrewery in Cottleville, Missouri, began selling a stout called “Frappicino.”  Attorneys for Starbucks sent a cease and desist letter to the microbrew informing them that they were violating a registered trademark of Starbucks.   The bar owner was not amused and penned this response. At a very high level, intellectual property law is broken down into three basic categories: patent, copyright, and trademark.  Thinking about them in the context of Starbucks, patent would be the specific, unique combination of ingredients in a Frappucino, copyright would be the slogan advertising a Frappucino, and a trademark would be the name “Frappucino” or even the Starbucks logo. The owner of any of these three often has legitimate interests in protecting their intellectual property.  Basic economics instructs us that value in a thing often stems from its scarcity or …

From time to time, we will post some other developments in Texas law as we see them.  This is the first in that series. The Texas Supreme Court continued its line of cases narrowing protections for whistleblowers.  Earlier this month, the court handed down an opinion deciding whether a whistleblower’s report of alleged violations of law by a school district would receive protection under the Whistleblower Act if the reports were made only to other officials within the school district.  Existing – but recent – precedent from only a few months prior indicated that internal complaints were insufficient to fall within the ambit of the Whistleblower Act. The problem goes to the language of the statute itself and the interpretation of “law-enforcement authority” status under the Act. The Court held that such reports – made internally – were not contemplated by the Act and did not give such internal compliance officers such authority. Background A principal at a pre-K school in the Ysleta Independent School District (YISD) reported asbestos hazards at the school to the …

There are only two certainties in life – death and taxes.  And today, taxes have a birthday.  Clocking in at one century, today marks the anniversary of the law that allows the levy of a federal income tax.   NBC News has a story today summarizing the history of our federal tax law.  According to the article, there was no federal income tax as we know it until the passage and ratification of the 16th Amendment to the U.S. Constitution in February 1913.  Until that time, there was no consistent, institutionalized federal income tax.  Congress simply raised money ad hoc, as needed – for example, a three percent tax during the Civil War.   The Code has been completely overhauled three times – in 1939, 1954, and most recently in 1986.  It has been the subject of endless debate, it is possibly the one thing in America on which everyone has an opinion, and it has been used for everything from simply raising revenue to incentivizing various policy goals (think healthcare and home buying, to name two …

New York.  Chicago. D.C. Boston.  Philadelphia. When you think public transportation in this country, those are probably the big five cities that come to mind. And with good reason.   With the exception of the Metro in Washington, D.C., light and commuter rail in those cities developed in the late 19th Century and have been around longer than in any other city.  They are also the most comprehensive systems and the most widely used. But Austin, Texas?  Sure, lumping Austin in that category seems far fetched, especially given the number of votes that have affirmatively struck it down or simply fallen short in getting it over the goal line.  But the factors making such an idea seem absurd or crazy might be falling away.  The push to expand or implement a public transportation solution to traffic and environmental woes in Central Texas appears to be gaining momentum. Multiple sources are reporting that not only is the Austin City Council looking at more viable and robust public transportation – and specifically, light rail – in and around …

This isn’t what it looks like.  Promise.  This is not becoming a train blog. However, the number of articles discussing public transit and its benefits that have hit my regular reading outlets in the last week is higher than normal.  Living in Austin, a city that is pretty much devoid of public transportation – and having lived in both Chicago and Philadelphia – cities with relatively robust public transportation, I will admit I am fascinated by the topic.  I know what cars mean to us here, but I hold out hope that public transportation – and specifically, rail – will play a larger role in the future of Texas life and commerce. The Atlantic Cities, a side project of The Atlantic, recently reported on study concerning public transit and happiness.  You can read the full article and see the link to the study here.  The study focused on respondents living near a light rail line in Minneapolis and controlled for other factors, but the upshot was that service and access affected satisfaction or happiness by …

Here’s something fun – the Last Will and Testament of Sam Houston. Presented without comment.   It’s just a fun and curious read, courtesy of the Clerk of Travis County, Texas.  Ok. Without further comment. TEXT OF SAM HOUSTON’S WILL In the name of God, the Father, Son and Holy Spirit, I, Sam Houston of the county of Walker and State of Texas, being fully aware of the uncertainty of life and certainty of death, do ordain and declare this my last Will and Testament. First: I will that all my just debts be paid out of my personal effects, as I think them sufficient, without disposing of any of the family servants. Second: I bequeath by entire remaining estate to my beloved wife Margaret, and our children, and I desire that they may remain with her, so long as she may remain in widowhood; and should she at anytime remarry, I desire that my daughters, should be subject to her control so long as their minority lasts; Third: My will is that my sons …

Here, we often discuss ways to plan for tax recognition events, but on a smaller scale – planning concerning your house, your IRA, your other plans, bank account, your small business, etc.  At the core of all this is the economic substance doctrine.  The same rules apply to the bigger players too. The New York Times reported Friday that BB&T Corp. lost a case in the U.S. Court of Federal Claims.  According to the story, the judge ruled that a financial product sold by a unit of BB&T was “an economically meaningless tax shelter,” and that BB&T was not entitled to a $772 million refund from the IRS. The financial product in question was a STARS transaction, or a structured trust advantaged repackaged securities transaction.  As The New York Times reported, the purpose of the transaction was to scoop up foreign tax credits for clients.  Why? “Foreign tax credits are awarded to U.S. companies by the IRS to ensure that they are not taxed twice on the same profits by the U.S. government and by …

It’s been a long hiatus.  And as inconsistency is the death of any blog, I’m afraid this one might be on life support – if it’s lucky. It does seem a bit strange to get back on board with a tax and estate planning blog with the following article.  After all, estate and tax planning generally concern the mitigation of taxes through legal tools and maximizing returns through capital gains, for example.  This article actually suggests that capital gains should be taxed at higher rates than are currently legislated. This post does not suggest one option or the other, but it is provided to highlight some of the broader social and policy arguments or tensions surrounding the legal tools of tax and estate planning.  Inadvertently (for its part, not ours), it even points out the advantages of prudent and thoughtful tax and estate planning or their underlying mechanics. More posts will follow. The last two or so months of intense work have made a fallow field for thoughts on these subject areas.