Law Offices of Connie Yi, PC - estate planning
Tell Us About Your Case

For the safety of our community, clients and staff, we have suspended all in-person meeting effective March 17, 2020. All consultation meetings will be via Phone or Zoom Video Conferencing. Please contact us at 925-484-0888 or email us directly at [email protected] to schedule the consultation.

Bay Area Estate And Tax Planning Law Firm
Estate Planning
Trust Administration and probate

Sacramento couple is tripped up by technicalities

| Jul 13, 2012 | Uncategorized |

It is difficult to imagine the frustration that must have been felt by a Sacramento couple as they tried to do something good, and were slapped on the hands for their efforts.

The couple donated a parcel of land to a charitable remainder trust, and took a deduction for their donation. However the Internal Revenue Service did not allow that deduction. The $18.5 million deduction was denied during an IRS audit.

The problem wasn’t the amount of the deduction — it was a missing piece of paperwork. The taxes were prepared by the husband, rather than an outside professional, and the missing piece of paperwork may have cost the couple their deduction. They were missing an appraisal of the land which they put into the trust.

According to industry authorities, a charitable remainder trust is one in which the taxpayer claims an immediate deduction even though they could still be collecting income on the assets. When they die the remainder goes to the charity. When notified of the missing assessment, the couple obtained one right away, which came in at $20.3 million which was higher than their deduction amount.

The IRS still denied their deduction so the couple appealed that ruling in Tax Court, which is set up to handle IRS disputes. The judge denied their deduction again. The judge stated that, “a taxpayer relies on his private interpretation of a tax form at his own risk.”

For this particular couple, this may have been a very difficult lesson to learn. However, it points out the important role that qualified and experienced professionals can play in tax disputes and other IRS matters.

Source: The Sacramento Bee, “Fine print trips up Sacramento couple’s $18.5 million tax deduction for charity,” Dale Kasler, June 1, 2012


FindLaw Network

Recent Blog Post

Even a fortune can disappear without sound estate planning

Some figures baffle.Like the speed of light. Like the age and size of the universe. And like estimates pegging the personal fortunes of America's richest families.Consider this imagery relevant to the storied Vanderbilt family for a moment: a pile of money equaling...

Remarrying couples unquestionably need to focus on estate planning

Many remarrying California individuals fail to timely consider and update existing estate plans to reflect new realities.Don't be one of them. Many remarrying California individuals fail to timely consider and update existing estate plans to reflect new...

View More Blog Posts