Vichich v. Comm'r

1 Analyses of this case by attorneys

  1. Wealth Management Update - June 2016

    Proskauer Rose LLPScott BowmanJune 2, 2016

    Because the Court found that the dynasty trusts did not receive an economic benefit beyond that of current life insurance protection, it deemed Clara's revocable trust to be the owner of the policies and the economic benefit regime to apply to the split-dollar arrangements.The Tax Court prevented taxpayer from using her deceased husband's AMT tax credit carryforward to offset her own individual income tax liability in Vichich v. Commissioner, 146 T.C. No. 12; No. 7509-12 (April 21, 2016) Following the death of her husband, Nadine Vichich attempted to use an AMT credit carryforward that arose from her husband's exercise of incentive stock options before his death. Because the applicable statue and regulations did not provide a clear answer regarding whether such credits could be transferred to a surviving spouse, and there was no judicial guidance on the issue, the Court looked to general tax principles that apply to deductions to make its decision, noting that (a) the ability to offset one spouse's income with another's losses is only available to spouses who file joint income tax returns; (b) spouses generally cannot inherit or otherwise retain, after a marriage ends, a tax benefit that was originally conferred on the other spouse; and (c) deductions generally are not transferrable on the death of the taxpayer who incurred them.