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Monthly Archives: March 2014

Florida Distributes $9 Million in Research and Development Credits in One Day by Karen A. Lake

Posted on March 31, 2014 by Karen Lake

It took just eight hours for the Florida Department of Revenue to allocate the entirety of $9 million in available research and development tax credits to Florida businesses on March 20, 2014.


Each year, the Department of Revenue selects one day to activate a first-come-first-serve online application for state-based businesses to apply for research and development credits to use against corporations’ prior year returns. The credit is equal to 10 percent of qualified R&D expenses that businesses in select industries incur to develop new products, secure new patents, and employ new methods, processes and software.


Businesses located in the Florida should speak with their accountants after the second quarter of this calendar year to determine their eligibility for the research and development credit and begin preparing accordingly to apply as soon as the application becomes available. If the federal government authorizes the R&D credit for 2014, Florida will open the application process on March 20, 2015.


About the Author: Karen A. Lake, CPA, is an associate director in Berkowitz Pollack Brant’s Tax Services group. For more information call 305-379-7000 or email


When Estate Planners Work with Business Valuators, Clients Benefit by Sharon Foote

Posted on March 27, 2014 by Scott Bouchner

Business owners who underrate the importance of formally valuing their businesses during estate planning are doing themselves and their beneficiaries a disservice. Rather, business owners should look to their estate planners to involve business valuators early on in the process to improve the effectiveness and efficiency of their estate plans. Oftentimes, the dollars at risk far outweigh the fees involved in a business valuation.

Choosing a Valuation Professional. Experience and professional credentials are important factors to consider when choosing a business valuator. While valuation credentials are no guarantee that a business owner will receive a well-done valuation report, they do support a level of professionalism required to achieve and maintain those credentials.

A Team Concept. Making the valuator a part of an estate-planning team early on can provide an added perspective on important components of the involved agreements, including how the IRS and Tax Court view the terms of those agreements and how those terms could result in a more advantageous valuation for the client.

Engagement Parameters. For the valuator to plan the valuation engagement and provide an accurate fee estimate, he or she must first receive some basic facts. These include the specific ownership interest to be appraised, including the number and type of shares of stock of a corporation or units of ownership in a limited liability company or partnership. Additionally, the valuator should know the purpose of the appraisal and how it will be used so that the appropriate standard and premise of value is chosen.

Standard and Premise of Value. The standards by which a business is valued vary depending on circumstances and jurisdictions. For example, tax-compliance valuations rely on the “fair market value” standard. Some jurisdictions require “fair value” be used in dissenters’ rights and minority oppression actions, whereas “liquidation value” may be more appropriate in other cases. Most valuators appraise a business using a premise that the subject entity is a “going concern” in which business assets are used in an operating business as opposed to a “forced” or “orderly” liquidation with a sale of the individual assets.

Engagement Deadlines. Business owners rarely have all of the information readily available for valuators to begin their work. As a result, it may take the valuator several weeks to tailor his or her work product to the particular business and provide to the client a complete report with the best possible result.

Business Valuation, Real Estate Appraisal or Both? Frequently, a measure of earnings is a meaningful valuation for an operating business. However, because of the nature of some businesses, their value is defined more accurately by the value of their underlying assets rather than the ongoing earnings stream. This is true for asset-holding entities, such as family limited partnerships and limited liability companies, as well as family businesses with minimal income but real property that has greatly appreciated since its acquisition. Most business valuators are not real estate appraisers and, therefore, may need to obtain a separate real estate appraisal(s) as part of the business valuation.

Business Valuation Methodologies. Valuators employ a number of valuation methods, listed below, to treat the distinctive elements of each engagement appropriately and ensure their findings meet clients’ expectation of a defensible independent opinion of value.

• The adjusted net asset value method reflects estimations of the fair market value of a company’s assets and liabilities.

• The capitalized cash flows method or discounted cash flows method relies on an estimation of future cash flows discounted and/or capitalized at an appropriate rate of return.

• The guideline company method utilizes comparable publicly-traded companies to derive an appropriate multiple of income.

• The market transactions method relies on comparable transaction data for a specific industry.

It is often said that business valuations are an art as well as a science. Yielding optimal results requires choosing skilled valuation professionals with experience and credentials. In addition to providing a well-thought-out valuation report, the valuator should have the ability to explain the rationality of his or her valuation conclusion in deposition or in court and exhibit the ability to respond appropriately to potentially intense cross-examination.

The licensed and certified professionals with Berkowitz Pollack Brant’s Forensic and Business Valuation Services practice have many years of experience working with estate planners, including those with our affiliated firm Provenance Wealth Advisors to provide individuals and business owners with appropriate and defensible business valuations.

About the Author: Sharon F. Foote, ASA CFE, is a manager in Berkowitz Pollack Brant’s Forensic and Business Valuation Services practice. For more information, call 305-379-7000 or e-mail

Will Your Expert Testimony Stand Up in Florida Courts? by Richard Pollack and Richard Fechter

Posted on March 24, 2014 by Richard Pollack


Florida’s July 2013 adoption of the federal Daubert standard governing the admissibility of expert testimony ushers in a new era for Florida Courts as well as a parade of challenges for the courts, legal counsel and the experts testifying on behalf of individuals and business clients.

Prior to the legislature’s adoption of Daubert, Florida was among a handful of states that still followed the Frye standard for the admissibility of expert testimony. The Frye standard was significantly less rigorous than Daubert in that it contained a Pure Opinion Exception (POE). The POE provided that if an expert eschews science entirely and relies only on his or her experience and training, the purported expert opinion comes in without any review, Frye or otherwise. This exception was so encompassing that Florida state courts infrequently heard challenges to the admissibility of expert testimony.

The Daubert Standard

The Daubert standard eliminates the POE exception and makes the introduction of expert testimony much more difficult. The Daubert standard contemplates the trial court as a “gatekeeper” that independently assesses the scientific validity and reliability of the reasoning, methodology and principles underlying proffered expert evidence.

Under the Daubert standard, a witness who qualifies as an expert by knowledge, skill, expertise, training or education may provide scientific, technical or specialized testimony or opinion only when:

1. The testimony is based on sufficient facts or data,

2. The testimony is the product of reliable methods and principles, and

3. The expert witness applied those principles and methods reliably to the facts of the case. (See 90.702, Fla. Stat.)


Moreover, under Daubert, judges play a larger role in determining whether purported expert testimony meets these standards. To satisfy this responsibility, judges must assess the reliability and relevance of expert testimony by looking at the general acceptance, testability and error rate of the methodologies on which expert testimony is based.

With this new standard, it is anticipated that Florida Courts (like the Federal Courts that have already implemented Daubert) will see an increase in challenges to the admissibility of expert testimony and corresponding exclusions of said experts, especially as it relates to financial and economic matters, such as lost profits and compensatory damages in commercial disputes.

A 2002 study titled “Changes in the Standards for Admitting Expert Evidence in Federal Civil Cases Since the Daubert Decision,” by RAND Institute for Civil Justice shows an increase in an exclusion of expert witness testimony post Daubert. Additionally, a study released by PricewaterhouseCoopers confirmed that in 2010, approximately 49 percent of expert witness challenges under Daubert were successful – in that they resulted in the striking of expert testimony in whole or in part.

The primary opponents of Florida’s switch from Frye to Daubert are expected to be plaintiffs’ attorneys – those charged with carrying the burden of proof – who are concerned that the new Daubert standard will lead to an up-tick in expert witness challenges and litigation costs. With the heightened thresholds of admissibility, plaintiffs face greater scrutiny in building the facts of their cases while defendants benefit from new opportunities to challenge the basis of those facts.

Florida’s new Daubert standard will equip defendants with a powerful tool to force plaintiffs to go through the time and expense of hiring experts that implement a sound approach and are able to effectively defend their methodology and demonstrate its applicability to the case. It should also be pointed out that plaintiffs’ attorneys may use the new Daubert standard to exclude defense experts who use flawed methodologies to rebut plaintiffs’ experts.

To adapt, both plaintiffs and defendants must follow new evidentiary rules to support their damage cases. Often, the result is a flurry of pre-trial objections and motions to exclude unreliable or irrelevant expert testimony as well as increased fees for the parties involved. As a result, a growing number of plaintiffs are wining trials on liability but losing on damages. In jurisdictions that apply the Daubert standard, plaintiffs are finding it more difficult to recoup damages or include the value of certain assets in their damage awards. In extreme cases, a dismissal of a plaintiff’s expert testimony will result in a dismissal of the entire case. Addressing these challenges requires a through education of the Daubert standard and its application in a variety of legal settings.

Retain a Qualified Economic Expert

Qualified economic experts are independent and objective evaluators of evidence that possess technical competence, adhere to professional standards and rely on proven and tested methods to develop and ultimately defend their calculations. They must not only understand the facts of the case, but they must also be able to communicate their conclusions, and those of opposing experts, knowledgably and convincingly to legal counsel, clients and the courts.


Often, economic damage experts are CPAs, forensics specialists, economists and valuation professionals with experience applying the appropriate calculation method to align lost profits with the facts of a particular case. Ironically, according to the results of a 2010 study, accountants and economists are the most frequently challenged financial experts, with 45 percent of financial expert challenges resulting in successful exclusions from trial. One of the most common reasons for exclusion is lack of relevance, which includes testimony that is beyond the scope of the expert’s role or that deviates from the pre-trial order.


Support Arguments with Proof of Reasonable Certainty


Meeting the Daubert standard is a fact-intensive undertaking. Experts must interview involved parties and apply professionally accepted and tested methods to verify damages calculations, which may conflict with those assumed by counsel and client.


Another area of testimony that risks attack from opposing counsel arises when experts do not use objective evidence or reliable data. This may include overly ambitious projections of future profits and losses, ignorance of fixed and avoided costs, failure to calculate an appropriate discount rate and exclusion of changing market conditions as well as other internal and external factors that may influence damages calculations. These and other unfounded assumptions lead to speculation, which the courts consider unreliable and inadmissible testimony. It is important for experts to conduct their own research and review information such as market studies, historical data and industry projections, in order to confirm that the data they use in their models is reliable and therefore admissible.


By joining the majority of the nation in adopting the Daubert standard, Florida now faces a significant shift in its scrutiny of evidence relating to expert testimony. Plaintiffs, defendants and legal counsel will need to rethink how they rely on expert witnesses to support damages claims and how the courts will test the credibility and testimony of those experts.


The Forensics and Litigation practice with Berkowitz Pollack Brant works with legal counsel to defend and challenge lost profits cases and its team of professionals have authored practice aids and led industry conferences and seminars on these topics.

About the Authors: Richard A. Pollack, CPA, is director in charge and Richard S. Fechter, JD, CAMS, is an associate director in Berkowitz Pollack Brant’s Forensic and Business Valuation Services practice. For more information, call 305-379-7000 or email

Accounting Today – Taxpayers Warned of ‘Largest Ever’ Phone Fraud Scam from IRS Impostors

Posted on March 21, 2014 by Richard Berkowitz, JD, CPA



The Treasury Inspector General for Tax Administration is warning taxpayers to beware of phone calls from individuals who claim to represent the Internal Revenue Service, but in reality are trying to defraud them, in what it is saying is the largest ever scam it has seen to date.

“This is the largest scam of its kind that we have ever seen,” said TIGTA Inspector General J. Russell George in a statement. He noted that TIGTA has received reports of over 20,000 contacts and has become aware of thousands of victims who have collectively paid over $1 million as a result of the scam, in which individuals make unsolicited calls to taxpayers fraudulently claiming to be IRS officials.

“The increasing number of people receiving these unsolicited calls from individuals who fraudulently claim to represent the IRS is alarming,” said George. “At all times, and particularly during the tax filing season, we want to make sure that innocent taxpayers are alert to this scam so they are not harmed by these criminals. Do not become a victim.”

George urged taxpayers to heed warnings about the sophisticated phone scam targeting taxpayers, noting that the scam has hit taxpayers in nearly every state in the country. Callers claiming to be from the IRS tell intended victims they owe taxes and must pay using a pre-paid debit card or wire transfer. The scammers threaten those who refuse to pay with arrest, deportation or loss of a business or driver’s license.

The truth, TIGTA pointed out, is the IRS usually first contacts people by mail—not by phone—about unpaid taxes. The IRS also won’t ask for payment using a pre-paid debit card or wire transfer, and the agency won’t ask for a credit card number over the phone.

“If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you don’t pay immediately, that is a sign that it really isn’t the IRS calling,” said George.

The callers who commit this fraud typically use common names and fake IRS badge numbers, TIGTA noted. The scammers also frequently know the last four digits of the victim’s Social Security Number make the caller ID information appear as if the IRS is calling, making the scam even more convincing. In addition, they tend to send bogus IRS e-mails to support their scam, and call a second time claiming to be the policy or department of motor vehicles, and the caller ID again supports their claim.

TIGTA said that if you receive a call from someone claiming to be with the IRS asking for a payment, here’s what to do. If you owe federal taxes, or think you may owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions. If you don’t owe taxes, call and report the incident to TIGTA at 800-366-4484. You can also file a complaint with the Federal Trade Commission at Add “IRS Telephone Scam” to the comments in your complaint.

TIGTA and the IRS are encouraging taxpayers to be alert for phone and e-mail scams that use the IRS name. The IRS said it will never request personal or financial information by email, texting or any social media. Taxpayers who received scam e-mails should forward them to, but they should not open any attachments or click on any links in those emails.

Taxpayers also should be aware that there are other unrelated scams (such as a lottery sweepstakes winner) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.

For more information about tax scams, visit

Is Your Estate “Divorce-Proof”? by Sandi Perez

Posted on March 20, 2014 by Sandra Perez

Proper estate planning requires more than allocating money and other assets to beneficiaries in the event of one’s death. It also demands ongoing planning and thorough analysis of a series of “what-if” scenarios that address potential life events, such as marriage, divorce, childbirth and death, that can affect the way in which one’s wishes are carried out.

In today’s sophisticated world, an estate plan is a must, and the majority of individuals will have some form of trust to protect assets, intended for future generations, from creditors. However, many do not think of their spouses as potential future creditors.

The reality is that the majority of marriages end in divorce and therefore must be a consideration during the estate planning process, as unspeakable as it may seem at the time. When trusts are drafted, if little thought has been given to the effect a potential divorce or separation may have on these “protected assets,” rest assured they will become subject to attack and on the table for equal division between the parties. Vulnerabilities will be explored, exploited and used as leverage in settlement negotiations.

To plan properly, grantors creating trusts should consider the following scenarios during the estate planning process.

What if the grantor gets divorced? Will the assets of the trust be subject to equitable distribution? How will the appreciation and income earned on those assets be treated? Florida case law has very specific rules in relation to whether or not asset appreciation is included for distribution in a marital dissolution.

Similarly, what happens in the event one of the grantor’s children, a named beneficiary, gets a divorce? Will the grantor’s ex-son-in-law or ex-daughter-in-law get a piece of a family business that was meant to be protected under the trust?

When a grantor names his or her spouse as trustee and they later separate and begin the divorce process, are there provisions in the trust to remove the spouse as trustee, either automatically or otherwise? If not, will the trustee/spouse have full discretion to control and manage the assets, income and distributions, during and potentially after the divorce?

If the grantor remarries, could the trust provisions, if not revisited, allow the new spouse to benefit before the children of the first marriage? Could the children of the new spouse be entitled to benefit from the trust and potentially dilute the interests of the grantor’s children?

As in any legal proceeding, these are not clear-cut black and white issue. However, to answer these questions and eliminate any gray areas that may arise as consequences of unintended or unplanned life events, grantors should get in the habit of reviewing their estate plans on a regular basis of every two to five years. Best practices dictate that grantors hire board certified family lawyers to review the trust and estate language from a family law perspective and work together to ensure that they address any unintended scenarios. With these efforts, grantors can maintain consistency across all of their estate planning tools, maximize the power of their trust instruments and ensure that the leave behind the legacy they intend.

The Family Law Services practice of Berkowitz Pollack Brant has extensive experience working with families, attorneys and the courts to defend and challenge trusts and estate plans.

About the Author: Sandi Perez, CPA/ABV/CFF CFE, is director of the Family Law Forensic Services practice with Berkowitz Pollack Brant. For more information, call (954) 712-7000 or email

Bitcoin: A Viable Economic System or a Path to Fraud? By Gabriel Campos

Posted on March 18, 2014 by Martin Prinsloo

Bitcoin, the digital unit of currency created in 2009, has garnered a lot of media attention over the past year. In fact, MarketWatch dubbed 2013 “the year of the bitcoin,” as more merchants began accepting the virtual currency, and buyers and sellers cashed in on its rising value. However, by the end of last year, bitcoin’s valuation fell 50 percent as hackers raided the largest online bitcoin exchange. Most recently, the trust on which the bitcoin system is based has been shaken as trading website Mt.Gox shuttered, filed for bankruptcy protection and put hundreds of millions of investor dollars at risk.

With its roller coaster ride of the past few years as well as its use for legitimate and fraudulent transactions, bitcoin today faces an uncertain future.

What are Bitcoins?

Bitcoins are electronic or virtual currency that is “mined”, or generated by open-source computer programs. Users make digital purchases and send bitcoin payment directly from one user to another without a middleman, such as a bank. Similar to finding larger and larger prime numbers, the work computers need to do before finding a valid bitcoin increases. As a result, bitcoin users commonly trade the digital currency, like dollars, hoping that its value will rise.

How Much are Bitcoins Worth?

Because bitcoins are unconnected to any government-regulated currency, its value fluctuates based on supply and demand among users. As a result, some may find bitcoins to be a highly speculative and volatile investment option. Yet, many early adopters did yield high returns when bitcoin values rose from $10 to $1,200, only to see these values drop below $400 in a matter of months.

How Does One Use Bitcoins?

Bitcoin exchanges, such as Mt.Gox, allow users to buy and sell bitcoins. Users store the virtual currency in digital wallets on their computers or in the cloud, similar to an online bank account. They may conduct transactions from their digital wallets to purchase products and services from a growing list of others across a global exchange that links network addresses rather than individuals. Transactions, which are free of fees commonly associated with credit card purchases, are recorded in a public register, called the blockchain, which keeps the names and identities of buyers and sellers private. As a result of this anonymity, it is difficult for law enforcement and regulatory agencies to track bitcoin transactions, which, subsequently, has made the “crypto-currency” a favorite among fraudsters.

What are Some Other Benefits of Using Bitcoins?

Because there is a finite number of bitcoins available, there is a lower risk of inflation than that of other currencies. Moreover, users can transfer bitcoins anonymously and without incurring the added costs of bank fees, which are associated with the electronic movement of traditional currency. Unlike cash or gold, bitcoins are easy to carry and can be “backed up” in the same way that people back up their digital photos.

What’s the Risk of Using Bitcoins?

The buzz surrounding bitcoins has masked the digital currency’s lack of oversight and rampant use in fraudulent activities. In fact, the very foundation of openness, trust and anonymity on which the bitcoin exchange was built provides an easy avenue for con artists to hijack bitcoin accounts or use them to commit financial frauds.

For example, in August 2013, a Federal judge ruled that bitcoin’s crypto-based value system is “a currency or form of money,” and subsequently allowed the Securities and Exchange Commission to sue Trendon T. Shavers for running a ponzi scheme based on bitcoin speculation. Later that year, the FBI shut down Silk Road, the online black market that managed $1.2 billion in bitcoin transactions, charged its owner, Ross Ulbricht, with money laundering, drug trafficking, computer hacking and soliciting murder.

Stories like these have shined a bright spotlight on bitcoin’s darker side and the use of this new currency to commit old and established crimes. In turn, governments are taking a closer look at the crypto-currency’s use and looking at regulations that will leverage its beneficial uses for conducting legitimate transactions while curbing its use for illicit activities.


About the Author: Gabriel Campos is a senior forensic technology analyst in Berkowitz Pollack Brant’s Forensic and Business Valuation Services practice. For more information, call 305-379-7000 or email

Berkowitz Pollack Brant Ranked on Accounting Today’s Top 100 List

Posted on March 14, 2014 by Richard Berkowitz, JD, CPA

Berkowitz Pollack Brant Ranked on Accounting Today’s Top 100 List

MIAMI, March 14, 2014 – Berkowitz Pollack Brant Advisors and Accountants, one of the largest firms in South Florida, was ranked by Accounting Today to the annual listing of top 100 firm in the United States based on revenue size.

The firm has been included on the list since 1995, when it became a goal of the then XX-person firm to grow organically and continually add services that was help clients expand their businesses.

“We are pleased to have made Accounting Today’s list again this year,” said Richard A. Berkowitz, CEO of Berkowitz Pollack Brant. “As we had into our 35th year, this type of national recognition gives us pride in the growth we have developed while maintaining long relationships with clients.”

Accounting Today surveys more than 400 CPAs firms across the country to create its annual ranking,

About Berkowitz Pollack Brant Advisors and Accountants

For nearly 35 years the advisors and accountants of Berkowitz Pollack Brant have solved problems, provided knowledge and helped their clients reach their goals. The firm and its affiliates Provenance Wealth Advisors and BayBridge Real Estate Group have offices in Miami, Ft. Lauderdale and Boca Raton, Florida.

Berkowitz Pollack Brant has been named one of the 50 Best of the Best firms in the country by Inside Public Accounting for 15 years. It is a top 100 firms in the U.S. as designated by both Accounting Today and INSIDE Public Accounting and was named one of the Best Places to Work by Florida Trend and Accounting Today.

One of the largest firms in South Florida, the firm is comprised of talented and resourceful professionals who provide consulting services with an entrepreneurial focus. Specialty areas include domestic and international tax planning and compliance, corporate and commercial audits, forensics and litigation support, business valuation, and wealth management and preservation.

Florida Businesses Should Prepare to Apply for the State‘s 2013 Research and Development Tax Credits by Karen Lake

Posted on March 13, 2014 by Karen Lake

Beginning on March 20, 2014, Florida businesses in specific target industries may begin applying for research and development tax credits against their 2013 corporate returns. The credit is equal to 10 percent of qualified R&D expenses that businesses located in the state incur to develop new products, secure new patents, and employ new methods, processes and software. Credits that remained unused during one calendar year may be carried forward for up to five years.

In addition to meeting the definitions of target-industry businesses and qualified research expenses, corporations must also recognize that the R&D credit, if granted, may not exceed 50 percent of their Florida corporate income tax liability after all other credit are applied.

The state of Florida places a $9 million cap on the total amount of tax credits it offers during a calendar year, and it allocates those credits on a first-come first-serve basis. In 2013, the state distributed the entire $9 million it set aside for the credit within 24 hours of opening the application process. As a result, businesses should not delay in speaking with their accounting advisors to determine their eligibility for and potential tax savings from the R&D credit in advance of the March 20 application filing start date.

About the Author: Karen A. Lake, CPA, is an associate director in Berkowitz Pollack Brant’s Tax Services practice. For more information call 305-379-7000 or email

IRS Issues Final Guidance for Medicare Tax Net Investment Income by Jack Winter

Posted on March 11, 2014 by Jack Winter

The IRS’s recent release of final instructions for the new 3.8 percent Medicare surtax on net investment income for individuals, estates and trusts, enables millions of high-income earning taxpayers and their preparers to begin filing returns with greater confidence.

The tax, which became effective on Jan. 1, 2013, is equal to 3.8 percent of the lesser of:

1) an individual’s net investment income, including portfolio income, trade or business income from passive activities and gains from the disposition of property, or

2) the amount in excess (if any) of the individual’s modified adjusted gross income for the tax year over a threshold amount.

For married taxpayers filing jointly, the threshold amount is $250,000, whereas single taxpayers face a $200,000 threshold. The regulations define “net investment income” as income derived from: 1) portfolio income, 2) trade or business income from passive activities and income from the business of trading in financial instruments and, 3) gains from the disposition of property.

The final guidance, issued on Feb. 26, 2014, clarifies what investment-related expenses taxpayers can deduct from gross incomes to arrive at “net income investment” and what characterizes “passive” from “active” income-generating activities.

The Tax and Estate Planning practices of Berkowitz Pollack Brant work with individuals, businesses and trust clients to structure investments and comply with related tax-reporting requirements.

About the Author: Jack Winter, CPA/PFS, CFP, is an associate director in Berkowitz Pollack Brant’s Tax Services practice. For more information, call 954-712-7000 or email

Is March the Last Month New Yorkers Can Make Tax-Free Gifts? by Jeff Mutnik

Posted on March 05, 2014 by Jeffrey Mutnik

New York residents and non-residents who have real or tangible property in the state face significant changes to New York Estate Tax laws, which may require prompt attention and action.

New York Governor Andrew Cuomo recently submitted a budget proposal that aims to raise the state’s estate-tax exemption from $1 million to the federal level of $5.34 million, reduce the top tax rate from 16 percent to 10 percent over four years, and include adjusted taxable gifts made after March 31, 2014, to augment the taxable estate. As a result, taxpayers residing or holding property in New York may consider making gifts to beneficiaries before April 1, 2014, in order to avoid adding them to one’s taxable estate and ultimately passing the tax liability onto beneficiaries.

Taxpayers affected by this potential change to New York’s estate tax should contact their accountants and estate-tax planning advisors to consider and create new flexible tax-planning strategies for 2014.

The Trust and Estate Planning practices of Berkowitz Pollack Brant have experience establishing, managing and consulting with trusts and estates to help preserve wealth and limit liabilities.

About the author: Jeffrey M. Mutnik , CPA/PFS, is a director of Berkowitz Pollack Brant’s Taxation and Financial Services practice. For more information, call (954) 712-7000 or email

Department of Justice Expands Equal Treatment of Same-Sex Married Couples by Ed Cooper

Posted on March 03, 2014 by Edward Cooper

On Feb. 10, U.S. Attorney General Eric Holder issued a policy memo detailing how the Department of Justice will implement the Supreme Court’s Windsor decision and extend to lawfully married same-sex couples the same full and equal recognition it provides to married couples of the opposite sex.

Among the broad privileges, protections and rights that will extend to same-sex couples, Attorney General Holder specified the following:

• The Department of Justice will include same-sex couples in its recognition of all terms relating to marital status, including “spouse,” “husband,” “wife.” “marriage,” “widow,” and “widower.”

• Assertions of marital privilege, including protection of confidential communication and the right to decline giving testimony against a spouse in civil and criminal cases, will apply to same-sex married spouses, even in states where same-sex marriages are not recognized.

• The United States Trustee Department will apply the Bankruptcy Code and Rules to same-sex married couples and interpret all references to marital status in the Code to cover lawfully married same-sex individuals. As a result, same-sex married couples may file jointly for bankruptcy, and same-sex spouses will be able to except certain debts from discharge.

• Same-sex spouses will receive the same public health benefits as heterosexual spouses.

• The Bureau of Prisons will apply all policies affected by inmates’ marital status, such as visitations and next-of-kin notifications, to same-sex couples, regardless of the laws of the state where the inmates are held and where his/her spouses reside.

• The Bureaus of Alcohol, Tobacco, Firearms and Explosives will treat same-sex surviving spouses in the same manner as opposite-sex couples when a deceased spouse operates a licensed firearm business.

With the federal government’s expanded treatment and recognition of these unions, lawfully married same-sex couples living in any of the 50 U.S. states, the District of Columbia, U.S. territories or foreign countries should complete their federal income tax returns using the married filing jointly or married filing separately filing status, regardless of where the couples married or presently reside.

About the Author: Edward N. Cooper CPA is a tax director and member of the LGBT Businesses and Families practice of Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail

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