LAW AND ANALYSIS. Section 2601 imposes a tax on every generation-skipping transfer (GST). A GST is defined under section 2611(a) as: (1) a taxable distribution; (2) a taxable termination, and; (3) a direct skip. Section 2602 provides that the amount of generation-skipping transfer (GST) tax is the taxable amount multiplied by the applicable rate. Section 2641(a) defines applicable rate as the product of the maximum federal estate tax rate and the inclusion ratio with respect to the transfer.
LAW AND ANALYSIS. Ruling 1 The provisions of chapter 14 of the Code (§§ 2701-2704), were added by the Revenue Reconciliation Act of 1990 and are effective for transfers occurring after October 8, 1990. Section 2702(a)(1) provides, generally, that solely for purposes of determining whether a transfer of an interest in trust to (or for the benefit of) a member of the transferor's family is a gift (and the value of such transfer), the value of any interest in such trust retained by the transferor or any applicable family member shall be determined as provided in § 2702(a)(2). Section 2702(a)(2) provides that the value of any retained interest which is not a qualified interest shall be treated as being zero. Section 2702(b) defines a qualified interest as (1) any interest which consists of the right to receive fixed amounts payable not less frequently than annually, (2) any interest which consists of the right to receive amounts which are payable not less frequently than annually and are a fixed percentage of the fair market value of the property in the trust (determined annually), and (3) any noncontingent remainder interest if all of the other interests in the trust consist of interests described in (1) or (2) above. Section 2702(c)(1) provides that the transfer of an interest in property with respect to which there is one or more term interests shall be treated as a transfer of an interest in a trust. Section 2702(c)(3) defines a term interest as including a life interest in property. Section 2702(d) provides that in the case of a transfer of an income or remainder interest with respect to a specified portion of the property in a trust, only that portion shall be taken into account in applying § 2702 to the transfer. In the instant case, with respect to the remaining acreage of Real Property that is not being conveyed, the Life Tenants and the Remaindermen will have substantially identical interests both before and after the proposed conveyances. The proposed conveyances will not involve that portion of the acreage of Real Property the life estate of which will continue to be held by the Life Tenants. Accordingly, based on the facts submitted and representations made, we conclude that the remaining acreage of Real Property, not conveyed in the proposed transaction, will continue to be treated as resulting from a transfer occurring prior to October 8, 1990 for purposes of applying chapter 14. Furthermore, the proceeds of any later sale of this remaining acreage, along with th...
LAW AND ANALYSIS. Section 115(1) provides that gross income does not include income derived from the exercise of any essential governmental function and accruing to a state or any political subdivision thereof.
LAW AND ANALYSIS. Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883), commonly called the Xxxxx Act, provides, in part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in and documented under the laws of the United States and owned by citizens of the United States. Section 883 was amended by the Act of September 21, 1965 (Pub. L. 89-194, 79 State. 823), which added the Sixth Proviso, and by the Act of August 11, 1968 (Pub. L. 90-474, 82 State. 700), which amended that proviso. The 1965 Act exempted from the provisions of section 883 the coastwise transportation of empty cargo vans, empty lift vans, and empty shipping tanks in non-coastwise-qualified United States-flag vessels or foreign-flag vessels, on a reciprocal basis, when the vans and tanks are owned or leased by the owner or operator of the transporting vessels and are being transported for use in the carriage of cargo in foreign trade. The 1968 Act added equipment for use with cargo vans, lift vans, and empty shipping tanks, empty barges specifically designed for carriage aboard a vessel, and certain empty instruments of international traffic to the articles included within the Sixth Proviso. These articles and the articles covered by the 1965 Act were required by the 1968 Act to be owned or leased by the owner or operator of the transporting vessel and transported for his use in handling his cargo in foreign trade. The 1968 Act also added stevedoring equipment and material to the articles included within the Sixth Proviso. To qualify for exemption from section 883 under the Sixth Proviso, the stevedoring equipment and material must be owned or leased by the owner or operator of the transporting vessel or owned or leased by the stevedoring company contracting for the lading or unlading of the vessel and the stevedoring equipment and material must be transported without charge for use in the handling of cargo in foreign trade. The language of the proviso regarding containers which requires that they be owned or leased by the owner or operator of the transporting vessel and transported for his use in transporting his cargo in foreign trade, has collided with contemporary business practice in the vessel industry. Newly emergent limited-purpose alliances of vessel owners have blurred the clear boundaries of the proviso ...
LAW AND ANALYSIS. (1) Whether the termination of Taxpayer’s PPA pursuant to Agreement 2 constitutes a “compulsory or involuntary conversion” of its PPA and its facility within the meaning of 1033 and 1231. Section 1033(a)(2) provides in that if property (as a of its destruction in or in part, seizure, or requisition or condemnation or threat or imminence thereof) is compulsorily or involuntarily converted into money, the gain (if any) shall be recognized except to the extent hereinafter provided in this paragraph. in Section 1033(a)(2)(A) provides that if a taxpayer during the period specified 1033(a)(2)(B), for the purpose of replacing the property so converted, purchases similar or related in service or use to the property so converted, then at the taxpayer’s election, the gain shall be recognized only to the extent that the amount realized upon conversion (regardless of whether such amount is received in one or more taxable years) exceeds cost of such other property.
LAW AND ANALYSIS. Section 115(1) of the Code provides that gross income does not include income derived from any public utility or the exercise of any essential government function and accruing to a state or any political subdivision thereof. In Rev. Rul. 77-261, 1977-2 C.B. 45, income from an investment fund, established under a written declaration of trust by a state, for the temporary investment of cash balances of the state and its participating political subdivisions, was excludable from gross income for federal income tax purposes under § 115(1). The ruling indicated that the statutory exclusion was intended to extend not to the income of a state or municipality resulting from its own participation in activities, but rather to the income of a corporation or other entity engaged in the operation of a public utility or the performance of some governmental function that accrued to either a state or municipality. The ruling points out that it may be assumed that Congress did not desire in any way to restrict a state’s participation in enterprises that might be useful in carrying out projects that are desirable from the standpoint of a state government and which are within the ambit of a sovereign to properly conduct. In addition, pursuant to section 6012(a)(2) and the underlying regulations, the investment fund, being classified as a corporation that is subject to taxation under subtitle A of the Code, was required to file a federal income tax return each year. In Rev. Rul. 90-74, 1990-2 C.B. 34, the Service determined that the income of an organization formed, funded, and operated by political subdivisions to pool various risks (casualty, public liability, workers’ compensation, and employees’ health) is excludable from gross income under § 115 of the Code. In Rev. Rul. 90-74, private interests neither materially participate in the organization nor benefit more than incidentally from the organization. Trust, as a part of Program, provides health benefits to retired employees of the participating employers in Program, all of which are political subdivisions of a state or entities the income of which is excluded from gross income under § 115(1) of the Code. Providing health benefits to current and former employees constitutes the performance of an essential government function. Based upon Rev. Rul. 90-74 and Rev. Rul. 77- 261, Trust performs an essential governmental function within the meaning of § 115(1) of the Code. The income of Trust accrues to its participating emplo...
LAW AND ANALYSIS. Courts have long held that the substance of an agreement rather than its form determines its true character as a management contract, lease, or other arrangement.
LAW AND ANALYSIS. 13. The Contract between the parties consists of a series of documents. Of particular relevance to this Application are the General Conditions of Contract (“GCC”) and Particulars of Contract (“PCC”) which form part of the contract. The GCC and PCC are to be read conjunctively, with the changes or amendments effected by the PCC informing the GCC. Accordingly, Clause 20.6 of the Contract which deals with arbitration provides as follows: “Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by reference at the option of either party to arbitration in accordance with the Arbitration Act Chapter 4:01 (sic) of the Laws of Trinidad and Tobago (1980) or any modification, amendment or re- enactment thereof. The arbitrator shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of the DAB, relevant to the dispute. Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the dispute. Neither party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision, or the reasons for dissatisfaction. Any decision of the DAB shall be admissible in evidence given in the arbitration. Arbitration may be commenced prior to or after completion of the Works. The obligation of the Parties, the Engineer and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works.”.
LAW AND ANALYSIS. Section 2703(a) provides that the value of any property shall be determined without regard to (1) any option, agreement, or other right to acquire or use the property at a price less than the fair market value of the property (without regard to such option, agreement, or right), or (2) any restriction on the right to sell or use such property. Section 2703(b) provides that section 2703(a) shall not apply to any option, agreement, right, or restriction which meets each of the following requirements:
LAW AND ANALYSIS. Issue [1]: What was the relationship between the First and Third Defendants?
