Drawn from Steve Gorin’s 2nd quarter 2022 newsletter, this course discusses recent developments in state income tax of business sales, state estate tax, and whether (from an estate planning viewpoint) to try to deduct state income tax attributable to pass-through business income. We will briefly review recent developments in nonresident trusts paying income tax on pass-through business activity and resident estate taxation of QTIP trusts. Then we will spend some time on estate planning implications of states’ efforts to work around federal limitations on deducting state taxation of pass-through business income.

We will also discuss a potpourri of employment tax issues, as well as why giving Form 1099 to an officer can be a bad idea and how a service recipient got his hand slapped for reporting compensation as a gift. We will look at the IRS’s reaction to a Sixth Circuit case regarding S corporation compensation issues and how deferred compensation can wreak havoc in the sale of a business structured as an asset sale. Finally, we will review the S corporation second-class-of-stock prohibition, which is intertwined with the other topics to some extent.

Learning Objectives:

• Review estate planning implications of state tax issues


• Demonstrate the pitfalls of self-employment blockers


• Identify how the IRS attacks on playing games with how one reports employment income


• Review how S corporations might deal with practical issues that may cause distributions to be disproportionate temporarily