Question:        I own a policy of insurance on my life that I am selling to a third party at a profit.  What tax consequences and other concerns do I have? Answer:          Any gain from the sale of a life insurance policy you own will be subject to income tax.  Like the sale of most other assets, the difference between the amount realized or the amount you receive from the sale and your tax basis in the policy will be subject to tax.  Based on recent legislative changes, your tax basis in the policy will generally be the aggregate amount of…
William Valle’s commission lawsuit against Powertech Industrial Co. Ltd. offers a little bit of everything. Two versions of a contract, changing commission rates, enforceability questions, and the duty of good faith and fair dealing are all raised in this dispute. (So too is the perennial employee v. independent contractor battle, but that part of their contest will be saved for another day.) The case recently went to trial before the Hon. Diane J. Casper, who years ago demonstrated her mettle while presiding over the criminal trial of Boston mobster and FBI “most wanted” list mainstay James “Whitey” Bulger. The beginning…
Question:        I personally realized a large capital gain from the sale of my stock.  Can I avoid or defer the gain by reinvesting some or all of the sale proceeds in a qualified opportunity zone investment? Answer:          A new trilogy of tax benefits are provided by the Federal government for those willing to make long-term investments in economically-distressed community areas.  The tax on the capital gain itself can be deferred for a number of years. Further, the amount of the capital gain which ultimately will be taxed can be reduced. Finally, the appreciation in the qualified opportunity zone investment itself…
Former Chicago Ald. Willie Cochran will be sentenced next week. After admitting helping himself to the proceeds of a donors’ fund earmarked for ward activities, Cochran asked the court for the proverbial wrist slap (six months’ home confinement), rather than the 12 to 18 months in prison indicated under federal sentencing guidelines. Fittingly, among the improper aldermanic purchases with monies meant to benefit the citizens of the 20th Ward was a CD titled “Call Me Irresponsible.” By Cochran’s own count, he is the 35th alderman to get indicted, yet few public corruption defendants before him have sought to avoid the…
Property owners are receiving reassessment notices with increases of 200% or even 300% on commercial property and apartment buildings. Even those who planned for the reassessment this year never imagined increases on this scale and do not know how to budget for the potential tax increase. As an attorney who contests property tax assessments, I have been hearing a lot from taxpayers this year. Townships in the north and west regions of Cook County are being reassessed in 2019 as part of the triennial reassessment cycle. All other counties in the state are also being reassessed this year on the…
Question:        I am buying an insurance policy on my life that contains a long-term care insurance rider. Can I transfer the policy to an irrevocable insurance trust and still benefit from the long-term care feature? Answer:          You can benefit from the long-term care feature of a life insurance policy held by an irrevocable life insurance trust (an “ILIT”) you create. Neither the ILIT policy ownership nor you benefitting from this type of policy is an issue. The concern is ensuring you can benefit in a manner that does not defeat the tax benefits you are seeking with an ILIT. Insured…
The Vacationing Lawyer. In concept, it would stir envy for the practitioner contrarian enough to use it as an autobiography title. In practice, it’s an oxymoron. I’m just back from a long-planned 10-day African getaway, and rather than actually getting away, it sure felt like work stowed away. I was expecting more from the international customs officials, but without a ticket or even an invitation, work was waved right through. It’s old hat by now to complain about ubiquitous cellphones and tablets, borderless email and texting, and the long reach of the office. Per bestselling author Curt Steinhorst, we check…
The reasons why smaller law firms offer significant advantages to companies are well known—this is especially true for businesses that are midsized or emerging. But the following is a primer for in-house counsel when their businesses are facing litigation and need help from outside counsel. With a smaller law firm, experienced lawyers are the norm, rather than the associates who typically handle the day-to-day business for large law firms. The attention given to the client is second to none. As a result, relationships between the law firm and general in-house counsel tend to be closer. Then, of course, there is…
Question:        I received a distribution from a limited liability company in which I am an owner representing proceeds from the refinancing of a commercial loan on company property. Can I deduct my share of the interest on this debt? Answer:          The deductibility of interest on your share of limited liability company (“LLC”) debt depends upon how you utilize the refinancing proceeds which are distributed to you.  If the proceeds are utilized for an expenditure or investment for which interest deductions are allowable, then you can deduct your share of the interest on the LLC debt.  In all other cases, your…
While sales rep protection statutes vary state to state, most contain a provision invalidating any contract term that would negate or limit the rights provided or would make the contract subject to the laws of a different state. Just when independent reps seem to have grown familiar with the sales rep protection statutes enacted in most states to help level the playing field with their principals, more and more of their contracts seem to get drafted with the aim of stripping those protections away. But are provisions inserted into rep contracts limiting sales rep statutes enforceable? Before answering, a quick…
Question:        I am planning to remarry and want my 401(k) plan benefits paid to my children upon my death, not to my future spouse.  Do I need a prenuptial agreement to accomplish this? Answer:          Specific requirements must be satisfied under the Internal Revenue Code for persons who wish for 401(k) and other qualified plan benefits to be paid to someone other than the participant’s surviving spouse. A participant’s spouse must waive the right to receive the participant’s plan benefits by consenting in writing.  The spouse’s written consent must be witnessed by an appropriate representative of the plan or by a…
Staff ace Aaron Nola was headed to salary arbitration weeks ago until he reached a four-year, $45 million deal with the Philadelphia Phillies. “I don’t play specifically for the money,” he actually said after signing his contract, “I play for the love of the game. I play for my teammates.” One of those teammates Nola will selflessly pitch for this season just signed what was, for almost three weeks, the largest contract in baseball history, one that makes his own $45 million deal seem minor league. It feels obligatory to open the 2019 spring training column with mention of Bryce…
After finishing various levels of schooling, training and employment, and upon reaching a certain age, encountering a heretofore unknown activity provokes surprising interest. When that activity is designated with an equally novel term, the curiosity only heightens. Consider “skiplagging.” Would-be air travelers frustrated at the high cost of flying from Point A to Point B might ordinarily weigh traveling on less convenient dates, resort to transport by train, bus or car, or perhaps settle for visiting less expensive Point C instead. The unpleasant option of flying with stopovers may also be available, sometimes requiring an overnight stay after an unpleasant…
Question:        Is there any way to deduct business entertainment expenses after the most recent tax legislation? Answer:          The Tax Cuts and Jobs Act of 2017 fully eliminated deductions for entertainment expenses incurred by taxpayers, effective for tax years beginning after December 31, 2017.  With the new tax law, taxpayers can no longer deduct any of the expenses in connection with amusement, recreation and other entertainment events where businesses entertain clients, suppliers, vendors, employees and others.  One viable approach for dealing with the disallowance of deductions for entertainment expenses is identifying expenses incurred and determining if they can be reclassified or…
…An exploitative principal angling to replace its longtime independent rep and withhold the commissions due could find a means to escape the statute’s reach by stopping just short of affecting a full termination. Regular readers of this column probably recall that most states have enacted statutes to protect sales reps whose commissions are wrongfully withheld by their principals. While each of these states has its own version of a sales rep protection statute, the statutes share the goal of promoting the prompt payment of commissions. When an unscrupulous principal retains a rep’s earned commission, most statutes will subject the principal…
A sales representative typically will review a sales representative agreement twice — at the start of its relationship with a new principal, and then at the end. If the rep takes the time to read, understand, question, and yes, even negotiate the terms of a rep agreement at the start, there should be no surprises, and hopefully no problems, at the end. It’s the difference between fire prevention and extinguishing a raging fire. But, too often, reps belatedly learn that their multi-year contracts can be terminated upon 30-days’ notice, or that they won’t receive post-termination commissions, or that their principal…