Holistic Litigation Strategies


We assisted our client in a litigation involving the valuation of shares of a C corporation whose main asset was real estate. We needed to determine whether the value of the shares should be discounted for the entire amount of built in capital gains tax or a portion of it, reflect the reduced value from selling and liquidation expenses or discounted for lack of marketability.


Known for our collaborative approach to business solutions, our litigation, tax and business attorneys worked collaboratively. We negotiated a favorable settlement of the case before the United States Tax Court case following a full trial and while awaiting a decision.


Ahead of the curve in our desire and ability to be strategic and innovative in our design of solutions for clients, GIBNEY IS A HIGH-TOUCH FIRM that takes YOUR INTERESTS, YOUR BUSINESS AND OUR RELATIONSHIPS PERSONALLY. Not only are we lawyers driving solutions, we are consultants creating higher levels of relevance and value in meaningful client relationships.

The Tax Cuts and Jobs Act: The New Provisions and How to Prepare Your Individual and Business Income Taxes

The Tax Cuts and Jobs Act was signed into law on December 22, 2017 by President Donald Trump. Changes to individual income taxes include lowered tax brackets, increased Alternative Minimum Tax thresholds and higher estate, gift and generation skipping tax exemptions. For businesses, changes include a reduced corporate tax rate and the repeal of the Corporate Alternative Minimum Tax.

Here is a summary of provisions, year-end planning opportunities and tips for how to start planning ahead for 2018 and beyond.

What the Tax Bill Means for Individuals

  • Tax Rates: The tax rates are lowered for all taxpayers. The brackets include a 10%, 12%, 22%, 24%, 32%, 35%, and 37% bracket. The 37% bracket for individuals is $500,000 and for married filing jointly will be $600,000.
  • Alternative Minimum Tax (AMT): The AMT remains but the thresholds at which it becomes applicable increase to $109,400 for married filers and $70,300 for single filers. Phase out exemption amounts are $1,000,000 for married taxpayers and $500,000 for single taxpayers.
  • Federal Estate, Gift and Generation Skipping Tax: The tax exemptions are increased to $10 million per person and will be adjusted for inflation. There is no mention of a total repeal of the estate, gift or generation skipping tax.
  • Child Tax Credit: The Child Tax Credit will be $2,000 per child under age 17 with $1,400 being a refundable amount. The credit phases out at $400,000, not subject to inflation. There is also a $500 nonrefundable credit for non-qualifying dependents.
  • Personal Exemption: The personal exemption is eliminated.
  • Standard Deduction: The standard deduction is doubled to $12,000 for single filers and $24,000 for married couples, adjusted for inflation.
  • Itemized Deductions: All miscellaneous itemized deductions subject to the 2% floor are eliminated. This includes tax preparation fees, investment interest, employee expenses (other than teacher’s expenses up to $500 – $250 per teacher).
  • Mortgage Interest: The mortgage interest deduction is limited for interest on loans over $750,000 acquired after December 15, 2017. The $1,000,000 limitation remains for debt acquired before December 15, 2017. The interest on home equity indebtedness is eliminated.
  • State, Income and Property Tax Deductions: State, local, and foreign income and property taxes deductions are limited to $10,000.
  • Medical Expenses: For tax years 2017 and 2018, the medical expense deduction floor is reduced to 7.5% of adjusted gross income.
  • Moving Expenses: Moving expense deductions are suspended.
  • Cash Contributions: The AGI limitation on cash contributions increases to 60%.
  • Tuition Expenses: Expenses up to $10,000 per year for tuition in connection with enrollment in elementary or secondary schools, whether they be public, private, or religious, can now be taken out of 529 accounts.
  • Net Operating Loss: The Net Operating Loss deduction is limited to 80% of the taxpayer’s taxable income for tax years beginning in 2018.

How the Bill Impacts Businesses

  • Tax Rate: The corporate tax rate is permanently reduced from 35% to 21%.
  • Corporate Alternative Minimum Tax (AMT): The AMT is repealed starting in 2018.
  • Business Income Deductions: Business taxpayers (other than C Corporations) are allowed a deduction of up to 20% qualified business income. This includes business income from a partnership, S corporation, and sole proprietorships. The provisions for this deduction are complicated and limited for many businesses.
  • Accounting Methods: Companies with average gross receipts of up to $25 million may now use the cash method of accounting.
  • Real Estate and Improvements: Deprecation recovery periods are accelerated on residential and non-residential real estate and improvements placed into service after December 31, 2017.
  • Paid Family Leave: The Act contains benefits for employers that provide paid family leave to its employees. Certain eligible employers can claim a business credit for 12.5% of the benefits paid to qualifying employees, provided the plan meets certain thresholds.
  • Entertainment: The deduction for business entertainment expenses has been eliminated.

Year-End Planning Opportunities

Before the end of the year, some individuals may still be able to take advantage of some last minute planning opportunities.

  • Pay your fourth quarter state estimated taxes before December 31, 2017. The Act specifically prohibits taking a deduction for 2018 taxes paid in 2017; therefore, there is no advantage to making payments in excess of your 2017 tax liability.
  • There is no such limitation on prepayment of 2018 real estate taxes. Consider prepaying your 2018 real estate taxes before December 31, 2017. If you pay your real estate taxes through your mortgage company make sure to call and let them know you already paid 2018.
  • Consider paying other outstanding items, such as your tax preparer invoices or employee business expenses.
  • Prepaying state taxes and expenses may not be a benefit to all taxpayers because of the alternative minimum tax.

Future Planning Opportunities

As more detail and regulations come out consider ongoing planning opportunities:

  • With the change in income tax rates and the increased estate tax exemptions, closely held business owners should assess whether their company’s current structure and ownership is best from both an income and estate planning perspective.
  • For business taxpayers allowed a deduction of up to 20% qualified business income, the provisions for this deduction are complicated and limited for many businesses. Business owners should consult with an attorney.

We will continue to monitor updates to the Tax Law and will provide a more detailed alert on the new business income tax provisions and future planning strategies for businesses.

U.S. Senate Passes the Tax Overhaul Bill: U.S. Senate Passes the Tax Overhaul Bill: What’s Next and How to Plan for 2018

In the early hours of December 2nd, the U.S. US Senate passed the tax overhaul bill in a vote of 51-49 mostly along party lines.

Tax Planning in December 2017

In planning for the final tax bill to become effective for 2018, there are many opportunities to delay recognition of income now that may be subject to lower tax rates and accelerate payment of expenses that will qualify for the itemized deduction. These include:

  • Self-employed individuals should send invoices typically received in December in January.
  • Homeowners with mortgages in excess of $500,000 should consider paying any January 2018 mortgage payments now because such a payment includes December interest.
  • Taxpayers whose real estate taxes are in excess of $10,000 should consider prepay real estate taxes due in the first quarter before the end of this year.
  • Individuals who make estimated tax payments should pay fourth quarter state income tax before the end of 2017 rather than in January when due.Individuals who make large donations to charity should make any 2018 donations in 2017.
  • If you are moving shortly, try to pay all of your moving-related expenses before the end of 2017.
  • For businesses, if you own any rental properties, consider placing these properties into an LLC or other pass-through entity.

What to Expect Next

The next steps will be the House and Senate reconciling these differences and another full vote by each. Some provisions of the Senate bill are permanent, such as the change to the corporate tax rate; however, many are set to expire as early as the end of 2025.

Proposed Changes to the Tax Structure: How the Senate and the House Bills Compare

Individual Taxes

  • Income Tax Brackets for Individuals: The Senate bill has seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%. The House includes only four: 12%, 25%, 35%, and 39.6%.  Personal Exemption: Both bills also eliminate the personal exemption.
  • Standard Deduction: The Senate bill increases it to $12,000 for individuals and the House increases it to $12,200.
  • Child Care Tax Credit: The Senate bill increases it to $2,000 per child (the second $1,000 will not be refundable) and provides a $500 credit for non- dependent children. The House bill increases it to $1600.
  • Itemized Deductions: Both bills allows for a property tax deduction up to $10,000. The Senate bill allows an interest deduction on mortgage debt up to $1,000,000, while the House version caps the loan limit at $500,000 for new mortgages. The Senate bill keeps the medical and dental expense deduction but temporarily lowers the 10% threshold to 7.5% for 2017 and 2018. The House bill eliminates it. The charitable donation deduction remains the same in both bills. The Senate bill eliminates some above the line deductions, such as moving expenses. However, it also increases the deduction for education expenses for teachers from $250 to $500. Both bills eliminate all other itemized deductions.
  • Alternative Minimum Tax (AMT): The Senate keeps the AMT with marginal increases to the threshold amounts, while the House eliminates it.
  • Estate, Gift and GST Tax: While the House bill repeals the estate tax, the Senate bill allows for an exemption amount up to $10,000,000 per person.
  • Estates and Trusts Income Tax Rate: The Senate increases the threshold at which Estates and Trusts reach the maximum tax rate from $7,500 to $12,500.
  • 529 Plan Expansion: The Senate bill allows up to $10,000 per year of federal savings accounts for educational purposes to be used for tuition at elementary and secondary schools and expenses for home-schooled students in addition to the post-secondary schools.
  • Sale of Principal Residence: The Senate bill increases the timing that the $250,000 ($500,000 for married couples) exclusion of gain on the sale of your principal residence can be applied to property used and owned to five out of the last eight years.

Business Taxes

  • Corporate Tax Rate: Both alter the corporate tax rate to 20%.
  • Pass-Through Business Income Tax Rate: The House bill drops the top income rate to 25% and 9% for businesses earning less than $75,000. The Senate bill includes a 23% income rate however the deduction would only be available to anyone in a service business earning less than $250,000 for an individual and $500,000 for a married couple. The new House proposal taxes pass through entities at a flat 25% and not at the property owner’s income bracket. In the Senate bill, landlords earning more than $700,000 annually would stay at a top rate of 38.5% unless the rental properties or a management company pays out significant w-2 wages. These provisions under both the House and Senate bills are not applicable to service professionals.
  • Multinational Corporations: US companies currently pay taxes on worldwide profits, no matter where such income is earned. The Senate proposal makes the US a territorial system, allowing companies to pay taxes on income earned only within the US. Both bills also include a repatriation tax ranging from 7 – 14% to encourage US businesses to bring assets back to the US.

Gibney is continuing to monitor these developments. For questions about the tax proposals or planning for 2018, please contact:

Gerald Dunworth

Meredith Mazzola

The New Tax Proposals

The Senate issued its version of the tax proposal on Thursday, the same day that the House Ways and Means committee approved their version.

How Are They Similar?
The Senate and House proposals share many similarities. Both plans reduce the corporate income tax rate, eliminate most itemized deductions, eliminate personal exemptions and increase the child tax credit, repeal the alternative minimum tax, and provide full expensing of certain capital expenditures.

How Do the Plans Differ?
There are certain key items that differ between the proposals that will require further deliberations. Key differences are that the House plan allows itemized deductions for state and local taxes up to $10,000 while the Senate’s plan completely eliminates this deduction. The Senate’s plan has seven individual tax brackets from 10%-38.5% but the House consolidates these into just four. The House plan doubles the estate tax and eliminates it by 2023 while the Senate’s plan also doubles the estate tax but does not phase it out.

What’s Next
The Senate Finance Committee is scheduled to start considering the Senate’s tax plan on Monday. The House is scheduled to vote on its tax bill next week as well.

Gibney Attorneys Author Article on Executive Transfers to the United States

Gerald J. Dunworth, Meredith M. Mazzola  and Shai Dayan co-authored the article “Executive transfers to the United States: planning and avoiding pitfalls.” The article looks at the main considerations when an executive is transferred to the US, including global compensation packages, securing visas for executives and their spouses, tax planning, retirement benefits, housing costs, expat protection, permanent residence and repatriation. The article appears in Practical Law’s Private Client Guide.

IRS Revenue Procedure 2014-18 Extends Taxpayer Deadline to File Portability Elections

Beginning in 2011, the surviving spouse was able to inherit the portion of the deceased spouse’s unused estate tax exemption.  This was called portability of the exemption.  In order to qualify for portability the executor of the estate of a deceased spouse was required to timely file an Estate Tax return (Form 706) even though no estate tax was due and the estate tax return was not otherwise required. Many surviving spouses were not familiar with this rule and missed the filing deadline.  A new Revenue Procedure released by the IRS in January, extends the deadline for filing Form 706 for the purpose of electing portability until December 31, 2014. The deceased spouse must have died after December 31, 2010 and before December 31, 2013 in order to be eligible for this extension.

This Revenue Procedure has direct consequences for same sex couples whose marriages were recognized by the 2013 Supreme Court decision, United States v. Windsor. If the first spouse died during the aforementioned period, the spouse’s estate may file the Form 706 to elect portability to the surviving spouse.

Gibney Presents Immigration Briefing at Private Asset Management Magazine Breakfast Series

On February 6, 2014, Gibney led a panel discussion at a briefing as part of PAM Magazine’s monthly breakfast series. There panel was titled  “What advisors to HNW foreign investors should know about investment-related immigration and tax issues in the U.S.” Gibney Partner and Head of the Business Immigration Practice group, Stephen J.O. Maltby, head of the Immigration Group, served as moderator. Panelists included Gibney attorneys Shai E. Dayan and Meredith M. Mazzola.