Estate Planning and Elder Law Seminar To Discuss Wills, Trusts & Elder Law

Upcoming Seminar Dates:

Thursday, May 19, 2016

Thursday, June 16, 2016

Thursday, July 21, 2016

Thursday, August 18, 2016

PK Law attorneys Kimberly L. Battaglia and Cheryl A. Jones  host regular estate planning and elder law seminars in the PK Law Seminar Room located at the Towson office. Both are members of the firm’s Wealth Preservation Group and have years of experience helping families and individuals with their estate planning and elder law needs.

There is no fee for the seminar. Simply reserve a spot at least one week in advance. The seminars begin at 10:00 a.m. on May 19th and last approximately one hour. Your questions will be answered and informational materials will be given out.

Estate Planning Attorney Cheryl A. Jones will discuss:

  • Trusts vs. Wills
  • Who Needs a Will?
  • Estate Tax Issues
  • Estate Planning Questions

Elder Law Attorney Kimberly L. Battaglia will discuss:

  • Protecting Your Assets From The Nursing Home
  • Creative Estate Planning Strategies
  • Tax Law Changes
  • Powers of Attorney
  • Healthcare Directives
  • Probate Avoidance

To find out when the next scheduled seminar is and make a reservation contact: Rhonda King at rking@pklaw.com or 410.938.8800.

To learn more about PK Law’s Estate Planning and Elder Law Services visit our website at pklaw.com.

The Crossover Between Family Law and Education Law

PK Law Member, Rochelle Eisenberg wrote an article that was published in the March edition of the Maryland Bar Journal.  The article entitled, “The Crossover between Family Law and Education Law” offers a well thought and insightful look at the two areas of law from the perspective of an attorney who has over 25 years of experience in the practice of law. 

Ms. Eisenberg is a Member of PK Law and is part of the firm’s well recognized Labor and Education Group.  She has extensive experience representing  private and public sector clients on behalf of management with experience before federal and state courts, the Equal Employment Opportunity Commission, various state and city human relations commissions (employment and fair housing cases), National Labor Relations Board, Office of Federal Contract Compliance Programs, Maryland State Board of Education, Office of Administrative Hearings, and other administrative agencies.

Her experience also includes representation of colleges and universities, Superintendents and/or local boards of education in Allegany, Baltimore City, Baltimore County, Caroline, Carroll, Cecil, Charles, Dorchester, Garrett, Howard, Kent, Queen Anne’s, St. Mary’s, Somerset, Talbot, Washington and Worcester Counties and others.  She has had involvement in all areas of special education and the education of students with disabilities (including attendance at IEP and 504 meetings, mediations, hearings, federal and state court litigation); regular involvement with issues dealing with student rights and discipline, student services issues, abuse investigations, all facets of employment law, collective bargaining, impasse arbitration, First Amendment cases, wage and hour matters, contract interpretation, the handling of arbitrations and mediations, and drafting legislation.

PK Law Attorney Adam Konstas Selected by Daily Record as one of “20 in their Twenties”

PK Law Associate, Adam Konstas, was selected by the Daily Record as one of 20 outstanding young professionals who are still in their twenties for 2016.   Here is what the Daily Record says about the members of this select “20 in their Twenties” group:

“’While our 20 in Their Twenties honorees have been in the workplace for a decade or less, they are making a strong impact professionally, socially and in their community,’ said Suzanne Fischer-Huettner, publisher of The Daily Record.  ‘They are blazing a new path and doing things differently than the generations before them. We at The Daily Record applaud their creativity, energy and forward thinking.’”

Adam is a rising star in the in the firm’s Education and Labor Group.  He obtained his Juris Doctorate from the University of Baltimore School of Law, magna cum laude, in 2013.  Prior to that he received his Bachelor of Arts, from Franklin & Marshall College. In addition to practicing law, he is an Adjunct Professor at McDaniel College where he teaches Education Law.

Some notable and impressive accomplishments in his relatively short legal career include:

  • Argued before the United States Court of Appeals for the Fourth Circuit in a housing discrimination case on behalf of the Appellant and achieved a partial reversal of the lower court’s decision. 
  • Successfully represented a small locally owned and operated business against a national private-sector union before the National Labor Relations Board. 
  • Successfully represented several public school systems before Federal and State Courts and administrative agencies through both written submissions to the Court/Agency and during trials and hearings. 
  • Presented to the Superintendents of nearly every single school system in the State of Maryland at the Maryland Association of Boards of Education Conference on the legal issues associated with the use of online instructional tools in the classroom. 
  • Successfully represented a major public school system through a Department of Education Office of Civil Rights Investigation. 
  • Drafted various policies and procedures currently in use in several public school systems throughout the State. 

He also has found time to be active in the community.  He was a 2014 Business Volunteers Maryland GIVE class member where he worked closely with the 29th Street Community Center in Charles Village to help them achieve crucial fundraising goals and complete much needed site renovations.  Adam continues to serve in an advisory capacity for the GIVE Program.  For the last several years, he has served as an instructor at the Baltimore County Bar Association’s Civics and Law Academy and is currently the Vice-Chair of the Law Day Committee.  He also serves as an assistant lacrosse coach with the Pikesville Recreation Council for the Midget Boys program.   

Is Your Corporation “Zeroing Out” Income at End of Year Through Bonuses? Watch Out!

For the last few years the IRS has warned taxpayers that it would look closely at year-end bonuses that resulted in “zeroing out” taxable income of a corporation by deducting the bonuses as salary rather than a payment of dividend to stockholders.  This position landed squarely at the doorstep of a law firm in a case decided on February 10, 2016 in the United States Tax Court.

In Brinks, Gilson & Lione a Professional Corporation v. Commissioner, TC Memo 2016–20, the United States Tax Court upheld an IRS determination that Brinks had mischaracterized dividends that it paid to its attorney-stockholders as compensation.  As a result, the Court also imposed penalties against Brinks finding that its actions were not supported by “substantial authority” and it lacked “reasonable cause” for underpayment of the tax which resulted from the mischaracterization.  It also found that Brinks lacked “good faith” in its actions thereby subjecting it to penalties.

Brinks is by no means a small operation.  At the time the case arose it employed approximately 150 attorneys, roughly half of whom were shareholders, and a staff of about twice the number of attorneys. Its business and affairs are managed by a board of directors (the “Board”).  Brinks operated on a calendar year using the cash basis method of accounting.

The Board set attorney compensation.  Bonuses were determined at the end of the year and were intended to “zero out” the corporation’s taxable income.  The shareholders were entitled to dividends but none had been paid for the two years in question (2007 and 2008) and had not been paid from then retrospectively for a total of ten previous years.  Brinks’ total income for the two years amounted to roughly $100 Million a year and its income tax returns were prepared by outside accountants.

Important in the sole Tax Court Judge’s opinion was the invested capital of Brinks, measured by the book value of its shareholders’ equity, of about $8 million at the end of 2007 and $9 million at the end of 2008.  The Judge opined that it was not reasonable to expect an “independent investor” to forego a return on its investment in which significant capital was involved by way of “consistently” leaving insufficient income in the corporation so that dividends could not be paid to the shareholder-investors.  The Court also found that a significant portion of Brinks’ revenue was attributable to non-shareholders, thus negating Brinks’ argument of a substantial basis in determining the compensation due its shareholders as opposed to dividend payments.  In so doing, the Court cited Pediatric Surgical Associates and Mulcahy, Pauritsch, Salvador & Co, the former a Tax Court case and the latter a case which came before the U.S. Seventh Circuit Court of Appeals, the Circuit to which an appeal of the instant case would lie.

In dismissing Brinks’ arguments that it relied on its outside accountants in determining compensation, the Court found that there was no evidence that the accounting firm advised the law firm on the deductibility of the bonuses and in characterizing the amounts as compensation for services (e.g., on Form W-2s); that Brinks provided the accounting firm with accurate information; and that the accountants’ silence as to the deductibility of the bonuses as compensation constituted a communication on which Brinks relied.  As a result, accuracy related penalties were imposed on Brinks.

If Brinks appeals its case to the U.S. Seventh Circuit Court of Appeals, the appeal would face a number of hurdles, on the face of the facts of the case.  First, there is the lack of return on capital to Brinks’ shareholders which would not be tolerated by an “independent investor”.  Second is the contribution of non-stockholders to the total income of the Firm.  Finally, there is a lack of evidence that Brinks relied on the advice of its accountants in making its determination as to the amount of compensation due its shareholders as opposed to dividends payable to them.

To contact a PK Law Corporate and Real Estate Attorney click here. To contact a PK Law Tax Attorney click here.  For additional information contact information@pklaw.com

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.

 

The Boomerang Effect and Tax Exempt Organizations

The Protecting Americans from Tax Hikes (“PATH”) Act of 2015, contained a provision by which tax-exempt organizations (a “TO”) could challenge revocation of exempt status by virtue of the filing of a declaratory judgment in federal court.  The language of the Act appears to indicate that this was an attempt by Congress to provide TOs with expanded rights in the revocation process by permitting all TOs, not just certain categories of them, to challenge rulings on their status, as was the case in the past.  According to published reports, however, what Congress giveth, the Internal Revenue Service taketh away.

A recently issued memorandum from the Tax Exempt and Government Entities Division (“TEGE”) of the IRS states that TEGE will not modify a TO’s status by shifting it from one Internal Revenue Code exempt organization section (or subsection) to another.  In other words, since all organizations applying for or operating under Internal Revenue Code §501 may seek declaratory relief upon denial or revocation of exempt status, the IRS will not try to “help” such organizations by modifying their status.  The IRS will merely deny or revoke exempt status and let the organization take its battle to federal court, albeit at some time and expense to the TO.  Alternatively, the TO may reapply for exempt status, again at some time and expense (legal, accounting and application fees) to the TO.

Agents conducting audits of exempt organizations are now prohibited from proposing a modification of exempt status for an organization.  Form 6018 (“Consent to Proposed Adverse Action”) will be modified to eliminate such a proposal.  Specific instructions have been issued to agents regarding development of an “administrative record” regarding IRS adverse TO actions and the issuance of “thirty day letters” and “ninety day letters” regarding adverse actions.

PK Law Tax Attorneys can assist with tax issues and controversies.  To contact a PK Law Attorney for additional information or to schedule an appointment go to information@pklaw.com

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.