Interest recharacterization rules under Regs. Sec. 1.1411-4(g)(5) can minimize clients’ exposure to the net investment income tax.
In a recent tax court decision, an individual was as determined for tax purposes to be the owner of assets in segregated asset accounts held for the benefit of private placement variable life insurance policies.
The Tax Court held that taxpayers who purchased a residence with the intention to treat part of the tract as investment property could not deduct any of the interest on indebtedness as investment interest.
The IRS issued interim guidance on registration of foreign-targeted bonds and provided transitional relief for withholding agents on the related portfolio interest exception.