Tax & Estate Planning

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Congress failed to address pressing estate and generation-skipping transfer tax matters before it adjourned in December. Consequently, as of January 1, 2010, the provisions of 2001 federal tax legislation (the “2001 Act”) will cause the federal estate and federal generation-skipping transfer (GST) taxes to be repealed for one year, starting on January 1, 2010.    

For 2009, there was a $3.5 million exemption for each tax and a 45 percent top tax rate for each tax. Under the 2001 Act, the federal estate and GST taxes will come back into effect on Jan. 1, 2011, but with only a $1 million exemption for estate tax, a $1.1 million exemption for GST tax (indexed for inflation), and a top rate of (generally) 55 percent for each tax.Continue Reading Federal Estate and Generation-Skipping Tax Repeal in 2010

In order to clarify outdated and inappropriate legal guidelines and streamline the Territory’s slow probate process, the Senate Rules and Judiciary Committee passed a bill Thursday that will adopt the Uniform Probate Code currently enacted in 19 states.

In the U.S. Virgin Islands, probate, the legal proceeding in which a court determines how an estate will be divided, can sometimes take up to 20 or 30 years.  This long and arduous process has been known to deplete estates of any monies while properties stand empty and dilapidated due to years of legal wrangling.

According to Dan Gravel, an attorney with Tom Bolt & Associates, P.C. who concentrates his practice in trusts and estates and who testified in favor of the bill, the Uniform Probate Code (UPC) “will lessen the burden on courts and on families who have to navigate the probate process.” 
 Continue Reading St Thomas Attorney Advocates New Probate Code

Retired? Over 70½? It may be time to see your tax advisor about September 2009 changes to the Required Minimum Distribution rules. The Internal Revenue Service in Notice 2009-82 just announced guidance relating to the waiver of 2009 Required Minimum Distribution (“RMD”) rules which also apply to Virgin Islanders.Continue Reading Changes to Required Minimum Distribution Rules Impact Virgin Islanders

One of the most significant tax provisions contained in the recently enacted American Recovery and Reinvestment Act of 2009 might prove helpful to certain taxpayers looking to restructure their balance sheets.

A debtor generally recognizes income from the cancellation of its debt. A debtor recognizes COD income when it purchases the debt instrument for less than the adjusted issue price of the debt or exchanges an old obligation for a new obligation with a reduced adjusted issue price from the old obligation. For this purpose the same result occurs upon a modification of debt that is treated as an exchange. A debtor also recognizes COD income when a person who bears a relationship to the debtor described in Code section 267(b) or Code section 707(b) acquires the debtor’s debt for less than the adjusted issue price of the debt.Continue Reading Stimulus Legislation Provides Tax Relief For Certain Debt Restructurings

Tom Bolt, Managing Attorney of Tom Bolt & Associates, PC, addressed the Annual Meeting of the Network of Leading Law Firms at their Annual Meeting in New York this past week.  Bolt explained the Virgin Islands Economic Development Program that allows taxpayers to pay only 10% of their federal income tax liability and no other state or federal taxes.

"The IRS’s recent tax opinion, IRS Tax Opinion 76-2006, is a green light for the software industry," Bolt told the international group of attorneys.  "The IRS has said if you are a software developer and establish your operations in the United States Virgin Islands, you can exempt your sale of software anywhere in the world.  In addition, if you place your servers in the Territory and customers download your software or utlize your programs throughout the world, that income is exempt too." Bolt said.  "It is a great undiscovered program just waiting to be tapped."Continue Reading International Lawyers Learn of Virgin Islands EDC Program

The United States Internal Revenue Service delivered an early Christmas present to the United States Virgin Islands, its Economic Development Program and particularly to software developers and companies.  IRS Notice 76-2006 issued in late August specifically cited the USVI tax abatement program for utlization by software companies.  The lucrative benefits of the program include a…