Real property used in a taxpayer’s trade or business is excluded from the IRS’s definition of a capital asset, enabling taxpayers to take advantage of the generally more beneficial ordinary loss deduction rather than the capital loss deduction upon its sale. As the petitioners discovered in Keefe v. Commissioner, 2020 WL 4032469 (2d Cir. July 17, 2020), however, the treatment of a sale of real estate as a sale of business property rather than a sale of a capital asset needs to be backed up by the facts, and an incorrect characterization on a tax return can be quite expensive.

By Mary E. Vandenack, founding and managing member of Vandenack Weaver LLC

Significant amounts of wealth are likely to be transferred over the next 25 years. The United States has an aging population in control of an estimated $59 trillion in assets. A growing area of case law in the United States has been that of tortious interference with inheritance. Tortious interference with inheritance occurs when an individual, by fraud or duress, or other tortious means, intentionally prevents another from receiving an inheritance or gift that he would otherwise have received. Tortious interference is rooted in and related to other concepts such as undue influence and fraud. 

In a postdeath trust administration, beneficiaries are often most concerned with the distribution of assets. Who gets what and when? Trustees, and attorneys counseling trustees, must recognize the importance of when, or more importantly, when not to distribute trust property. The trustee’s proper timing of final distributions to beneficiaries can make all the difference in whether a trust administration concludes smoothly or becomes unnecessarily complicated. Generally, distributions should not be made until all debts and taxes have been paid and any remaining expenses of administration are reasonably accounted for with a reserve.