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MYTH 21
THE JOINT BANK ACCOUNT CASE

JOINT ACCOUNTS DO NOT GIVE LEGAL CONTROL OVER A BUSINESS

Key Concept: Control and inheritance
Sub-Concept: Joint accounts do not transfer business authority
IRS or Law Link: Uniform Probate Code
https://www.uniformlaws.org/projects/probatecode
Case Study: Joint Bank Account Business Dispute

Summary:

Joint accounts do not create legal authority to manage a business.
Banks routinely freeze business accounts when an owner dies.
Heirs cannot act until a court or trust document grants authority.

Key Takeaway and Action Steps:
Do not rely on joint accounts as part of a succession plan. Use trusts and operating agreements to name successor managers.

Hypothetical:
A daughter listed on her father’s joint bank account assumes she can run his business after he dies. The bank freezes the account because she has no legal appointment.

Tags: #BusinessSuccession #ProbateLaw

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MYTH 22
IRS v COINBASE

CRYPTO IS TRACKABLE, TAXABLE, AND NOT PRIVATE

Key Concept: Digital asset taxation
Sub-Concept: IRS treats crypto like property
IRS or Law Link: IRS Notice 2014-21
https://www.irs.gov/pub/irs-drop/n-14-21.pdf
Case Study: IRS v Coinbase (2017)

Summary:

The IRS compelled Coinbase to release user data.
Crypto trades are taxed like stock sales.
Unreported gains trigger audits and penalties.

Key Takeaway and Action Steps:
Report all crypto gains and losses. Maintain complete transaction records. Add crypto to trust planning and digital asset instructions.

Hypothetical:
An investor trades 200,000 dollars of crypto without reporting. The IRS audit starts after Coinbase hands over the user data.

Tags: #CryptoTax #IRSCompliance

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MYTH 23
UNITED STATES v ESTATE OF GERMAN

A REVOCABLE TRUST AVOIDS PROBATE BUT NOT ESTATE TAX

Key Concept: Trust taxation
Sub-Concept: Control equals estate inclusion
IRS or Law Link: IRC Section 2038
https://www.law.cornell.edu/uscode/text/26/2038
Case Study: United States v Estate of German (1982)

Summary:

Revocable trust assets remain fully taxable in the estate.
Control and revocation powers keep assets in the tax base.
Families often confuse probate avoidance with estate tax planning.

Key Takeaway and Action Steps:
Use irrevocable trusts for tax reduction. Use revocable trusts for probate avoidance only.

Hypothetical:
A 5 million dollar home placed in a revocable trust is still taxed in the estate because the owner retained full control.

Tags: #EstateTax #TrustPlanning

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MYTH 24
ESTATE OF GALLO

NO PLAN CAN RESULT IN YEARS OF FAMILY LITIGATION

Key Concept: No-plan risk
Sub-Concept: Dying without documents triggers probate conflict
IRS or Law Link: Uniform Probate Code Section 3-112
https://www.uniformlaws.org/projects/probatecode
Case Study: Estate of Gallo

Summary:

No will or trust led to family arguments and court battles.
Probate court appointed a neutral administrator.
Litigation fees consumed a large share of the estate.

Key Takeaway and Action Steps:
Create a will and a trust. Name successor trustees. Prevent court interference and family conflict.

Hypothetical:
Three siblings spend two years fighting over their father’s company, with more than 300,000 dollars lost to legal fees.

Tags: #ProbateRisk #EstatePlanning

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MYTH 25
ESTATE OF LINTON

THE IRS TAXES PAPER-ONLY GIFTS AS IF NO GIFT EVER HAPPENED

Key Concept: Gift completion
Sub-Concept: Transfers must have economic substance
IRS or Law Link: IRC Section 2511
https://www.law.cornell.edu/uscode/text/26/2511
Case Study: Estate of Linton (2012)

Summary:

The family documented a gift but did not transfer real control.
IRS treated the “gift” as incomplete.
The entire asset was pulled back into the estate.

Key Takeaway and Action Steps:
Complete ALL steps of a gift. Transfer control, title, and economic rights. Substance beats paperwork.

Hypothetical:
Parents gift LLC units to their children but keep the checkbook. IRS taxes the entire LLC in their estate.

Tags: #GiftTax #SubstanceOverForm

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MYTH 26
ESTATE OF WHEELER

DEATHBED TRANSFERS ARE A RED FLAG FOR THE IRS

Key Concept: Timing rules
Sub-Concept: Transfers within 3 years can be clawed back
IRS or Law Link: IRC Section 2035(a)
https://www.law.cornell.edu/uscode/text/26/2035
Case Study: Estate of Wheeler

Summary:

Gifts made close to death receive heavy IRS scrutiny.
Transfers within 3 years can be included in the taxable estate.
IRS denies last-minute attempts to avoid tax.

Key Takeaway and Action Steps:
Do planning early. Do not wait for medical decline. Avoid last-minute entity transfers.

Hypothetical:
An owner transfers a 10 million dollar LLC interest four months before death. IRS adds it back to the estate.

Tags: #EstateTax #IRC2035

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MYTH 27
ESTATE OF POWELL

SERVING AS TRUSTEE OF YOUR OWN IRREVOCABLE TRUST CREATES RISK

Key Concept: Retained control
Sub-Concept: Trustee powers can cause estate inclusion
IRS or Law Link: IRC Sections 2036 and 2038
https://www.law.cornell.edu/uscode/text/26/2036
Case Study: Estate of Powell (2017)

Summary:

The mother was trustee of the trust holding her own assets.
IRS included the trust assets in her taxable estate.
Control over distributions destroyed the estate plan.

Key Takeaway and Action Steps:
Use an independent trustee. Remove personal control. Align the trust with estate freeze goals.

Hypothetical:
A man creates an ILIT but insists on being trustee. IRS pulls the entire 2.5 million dollar policy into his estate.

Tags: #TrustPlanning #RetainedControl

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MYTH 28
THE S CORPORATION CASE

A WILL CANNOT TRANSFER SHARES TO JUST ANY BENEFICIARY

Key Concept: S corporation eligibility
Sub-Concept: Only certain shareholders and trusts qualify
IRS or Law Link: IRC Section 1361
https://www.law.cornell.edu/uscode/text/26/1361
Case Study: S Corporation Eligibility Dispute

Summary:

A will transferred S corp shares to an ineligible trust.
S corp status terminated automatically.
The company became subject to corporate taxation.

Key Takeaway and Action Steps:
Use QSSTs and ESBTs for S corp succession. Do not rely on a will. Pre-plan shareholder eligibility.

Hypothetical:
After death, shares fall into a non-qualifying trust and instantly terminate S corporation status.

Tags: #SCorpRules #SmallBusinessTax

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MYTH 29
HACKL v COMMISSIONER

NOT ALL GIFTS QUALIFY FOR THE ANNUAL EXCLUSION

Key Concept: Gift exclusions
Sub-Concept: Gifts must be present-interest gifts
IRS or Law Link: IRC Section 2503(b)
https://www.law.cornell.edu/uscode/text/26/2503
Case Study: Hackl v Commissioner (2003)

Summary:

LLC units lacked immediate rights for the recipient.
IRS denied the annual exclusion.
Donor owed gift tax.

Key Takeaway and Action Steps:
Provide real rights to income or withdrawal. Use Crummey notices when needed for trust gifts.

Hypothetical:
A parent gifts LLC units but prohibits voting or distributions. IRS denies the exclusion because the child lacked immediate benefit.

Tags: #GiftTax #IRC2503

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MYTH 30
THOMPSON v COMMISSIONER

PERSONALLY OWNED IP IS STILL PART OF YOUR TAXABLE ESTATE

Key Concept: Intellectual property valuation
Sub-Concept: IP must be transferred properly to avoid inclusion
IRS or Law Link: IRC Section 2031
https://www.law.cornell.edu/uscode/text/26/2031
Case Study: Thompson v Commissioner

Summary: