James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comKey Contacts
Back
The Madoff scandal is no longer the lead story on the evening news; however, the ripple effect of the scandal remains with us even today.
In Estate of Warshaw v. Director, the Superior Court of New Jersey Appellate Division (“Appellate Division”) reversed the decision of the Tax Court of New Jersey that granted the estate a tax refund. The descendent died in 2006 and his executors filed a New Jersey Estate Tax Return in July 2007 paying tax on the value of an IRA that was managed by Bernard L. Madoff Securities LLC. The value of the IRA was provided to the estate by the custodian, an entity controlled by Mr. Bernard Madoff. You may recall that Mr. Madoff was arrested in December 2008 and he pled guilty to various charges on March 12, 2009.
In January 2009, the estate filed a claim for refund of estate taxes because the IRA was always worthless, even before death. The Division of Taxation (the “Division”) denied the refund claim and the estate sued in Tax Court. The Tax Court decision ordered the Division to pay the refund. The Division appealed and won a reversal in the Appellate Division. The Appellate Division held that no one had knowledge of the Ponzi scheme at the date of death; therefore, the value of the IRA for New Jersey estate tax purposes was the overstated value reported by the custodian.
The Warshaw case is an example of when and to what extent post-death events are considered in valuing assets for estate tax purposes. This area is unsettled and taxpayers may not find consistency between state and federal decisions.
- Practices: Tax and Trusts & Estates, Estate & Trust Litigation, Real Property Tax Strategies, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Author: Patrick T. Conlon
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
Author: Bryce S. Robins
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Author: Jesse M. Dimitro
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.