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Choosing the Best Interest Rate for an Intra-Family Loan? Don’t leave opportunities on the table, say BNA tax experts.

NEWS RELEASE

Contacts:
Mark Carrington
(703) 341.5880
mcarrington@bna.com

Arlington, Va. (August 13, 2009) – Tax advisors often assume that the optimal interest rate on an intra-family loan is the lowest rate that avoids interest imputation and resulting taxation on the loan.  “Although that approach will avoid imputed income to the lender, it will leave on the table opportunities to further the client’s income tax and estate tax planning goals,” says BNA Tax & Accounting Portfolio author and University of Miami adjunct law professor, Jerry Hesch. 

Hesch, accompanied by fellow estate tax authority Alan S. Gassman, Esq. of Clearwater, Florida, will share their expertise in Interesting Interest; Minimum and Maximum Interest Rates for Intra-Family Transactions and Application of the OID Rules to Intra-Family Debt Obligations, a BNA webinar on August 18 at 12:30 pm.

What Will Be Covered
The speakers will examine the minimum interest rates thatmust be used for intra-family sales and loans, discuss the maximum interest rates permitted, and examine the application of these minimum and maximum rules to commonly-used income tax planning and estate planning transactions such as how the interest risk premium for a SCIN is computed.

Hesch and Gassman will also address when cash method taxpayers must report interest income and interest deductions under the OID rules even though the interest has not been paid.  The speakers will analyze the income tax and gift tax treatment when high interest rate debt obligations (even those between a grantor and a grantor trust) are renegotiated, and how to restructure the promissory note so that there is no gift.

The program will then examine how to “defrost the freeze,” dealing with the potential gift tax and income tax issues raised when the remaining principal on the intra-family debt obligation, be it an installment sale or a GRAT, is in excess of the value of the asset sold to the grantor trust or contributed to the GRAT.

This 60 – 90 minute webinar will provide participants with a conceptual understanding and practical application of:

• The imputed interest rules of Code Section 7872 and how they work for both income and gift tax purposes
• When the use of a high interest rate may be advisable
• How interest income is accrued and reported under the OID rules
• The tax consequences of undoing an “underwater” obligation between family members

Participants will learn how to:

• Identify opportunities for tax savings when creating intra-family obligations
• Avoid the pitfalls inherent in the OID rules
• Advise clients on how to exit from unproductive planning strategies at the lowest tax cost

To register for this webinar and obtain further information about CLE and CPE credits, go to: http://tmstore.bna.com/Pagemanager.aspx?pageId=8604 or call 1-800-372-1033, menu Option 6, then Option 1. The fee is $249 for BNA subscribers, $299 for nonsubscribers.

To receive automatic, email notification of upcoming BNA webinars that may be of interest to you, go to: http://www.bna.com/emailsignup.htm

About the Speakers:
Jerome M. Hesch practices law in Miami, Florida and is a leading tax and estate planning consultant for lawyers throughout the country. He is a member of ACTEC, has published numerous articles, several Tax Management Portfolios, and co-authored a law school casebook on Federal Income Taxation, now in its third edition. He has appeared for groups such as the AICPA, the University of Miami Heckerling Institute on Estate Planning, the University of Southern California Tax Institute and the New York University Institute on Federal Taxation. He has participated in several bar association projects, such as the Drafting Committee for the Florida Revised Uniform Partnership Act and preparing the ABA’s comments on the IRS’s proposed private annuity regulations.

Alan S. Gassman is a partner in Gassman, Bates & Associates, P.A., a firm that concentrates on providing legal and tax advice and services for physicians and business persons in their estate planning, business, and tax structuring matters. He is the author of over 150 articles published in national publications, symposia, and law school text books on physician planning, estate tax planning, and income tax issues, problems, and solutions.

About BNA Tax & Accounting Webinars

Designed for today's busy practitioners, our webinars offer the same expertise and relevance that are the hallmark of all BNA Tax & Accounting resources. In just 60-90 minutes, practitioners gain in-depth knowledge on a current tax or accounting topic from experts in that area -- and benefit from practical applications that can be put to work immediately. Conference attendees have the opportunity to ask the speakers questions, and may be eligible to earn CLE or CPE credits - all from the convenience of their own office or conference room.

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