Arizona Taxation

A qualified personal residence trust, or QPRT, can reduce the federal estate tax associated with transferring property to heirs, reduce the federal gift tax associated with such transfer, and, provide asset protection.

The United States Bankruptcy Code ("Code") provides for the discharge of federal income tax obligations in certain, limited situations. While there are numerous restrictions on bankruptcy discharge of such taxes, one is of particluar importance: timing.

Arizona law permits the reduction, or elimination, of property tax obligations for qualified real property owners and also allows permits real property owners to defer payment of property taxes until the real property is sold or the real property owner dies.

The Internal Revenue Code (IRC) allows that after the death of the account owner, the proceeds from an Individual Retirement Account (IRA) may be distributed to a single beneficiary, multiple beneficiaries, multiple trusts (each having one beneficiary), and multiple trusts (each having multiple beneficiaries).

Built-in gain, or BIG, is a term used by the IRS to describe gain that must be recognized by a corporation in addition to its shareholders. IRC § 1374. Built-in gain applies to 1) corporations previously taxed under Subchapter C (C-Corporations) of the Internal Revenue Code (IRC) that elect taxation under Subchapter S (S-Corporations) and whose assets appreciated before the election was made or 2) corporations that acquire assets with carry-over basis from a predecessor C-Corporation.

On 14 April 2011, President Obama signed The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011, which repealed substantially broader Internal Revenue Service (IRS) Form 1099 reporting requirements scheduled to become effective beginning in 2012 because of The Patient Protection and Affordable Care Act (PPACA) and scheduled to become effective beginning in 2011 because ofThe Small Business Jobs Act of 2011.

Minority discounts are a generally accepted practice used in determining the fair market value of non-controlling, minority interests in corporations. Such discounts are also often deemed valid by the Internal Revenue Service (IRS) when calculating the federal estate and/or federal gift taxes that are associated with interfamilial transfers of interests within a corporation.

Although S-corporations and LLCs that elect partnership tax treatment are often thought to be very similar in terms of taxation, i.e. they allow pass-through taxation in which the entity itself is not taxed, there are a number of important taxation-related differences between them because they are not taxed under the same provisions of the Internal Revenue Code (LLCs may be taxed as partnerships under Subchapter K of the Internal Revenue Code while S-corporations are taxed under Subchapter S, hence the name "S-corporation").

Although it's fairly well-known that the federal estate tax was repealed for 2010 but returned in 2011, what is the status of Arizona's estate tax? As of January 2011, Arizona does not collect an estate tax, known to many as an inheritance tax.