• Recent Case: IRS Loses Case on Intra-Family Loans vs. Gifts

    The Tax Court’s recent decision in Estate of Galli v. Commissioner, issued March 5, 2025, addresses the treatment of intra-family loans and gift tax. The case involved a $2.3 million transfer from a mother to her son, documented with a promissory note at the applicable federal rate (AFR). The IRS argued that the loan lacked common commercial safeguards and suggested that part of the original transfer should be treated as a gift. However, the court sided with the taxpayer, holding that the loan met the requirements of IRC § 7872 and was therefore not a gift.

    This case reinforces the idea that AFR-compliant loans are generally treated as loans, not gifts, though the IRS sometimes challenges intra-family transactions based on facts and circumstances. The case serves as a reminder that proper documentation, interest payments, and consistent reporting are important in avoiding potential gift tax issues.

  • Book Review: Sapiens by Yuval Noah Harari

    Despite hearing about this book for years, I am finally getting around to reading Sapiens: A Brief History of Humankind by Yuval Noah Harari. Sapiens is interesting so far, but it has not yet changed how I previously thought about these topics. That said, I can see why it has been influential—Harari presents a broad, sweeping narrative of human history in an easy to read way. I’ll reserve final judgment until I finish, but for now, it’s an engaging read.

  • Book Review: The Hot Hand by Ben Cohen

    Ben Cohen’s book The Hot Hand: The Mystery and Science of Streaks revisits the long debated question of whether momentum exists in performance. Amos Tversky and his coauthors famously argued in the 1980s that the hot hand in basketball is a cognitive illusion. Past success does not influence future outcomes. Yet, more recent studies suggest otherwise. Cohen explores hot streaks across different fields, from Shakespeare and Van Gogh to Steph Curry. The consensus now is that the hot hand is real, though perhaps smaller than many believe. I wonder how many other so called “cognitive fallacies” might actually hold truth.

  • Book Review: Mine! by Michael Heller and James Salzman

    Just finished reading Mine! How the Hidden Rules of Ownership Control Our Lives by Michael Heller and James Salzman. The book argues that six core rules shape our subconscious beliefs about ownership—like First Possession (whoever claims something first owns it) and Labor Creates Ownership (if you transform something, you own it).

    Interesting read, but I’m skeptical that these six rules fully explain ownership. The book covers everything from airplane seat disputes to VIP passes at Disney to organ markets. A recent example is the CBS Sunday Morning segment on Nazi-looted art highlights similar ownership dilemmas—should art sold under duress be returned?

    Worth reading.

  • Recent Case: In re Estate of Johnathan Matthew Bozeman (No. COA24-322, N.C. Ct. App. 2024)

    Summary

    An important recent decision from the North Carolina Court of Appeals clarifies spousal abandonment under N.C.G.S. § 31A-1(a)(3). The case involved a dispute between the decedent’s mother and his surviving wife over whether the wife was barred from inheriting due to abandonment.

    Under North Carolina law, a surviving spouse loses the right to inherit intestate if they willfully and without just cause abandon and refuse to live with the other spouse and are not living with the other spouse at the time of death. In this case, the couple never established a marital home. The decedent lived in North Carolina, while his wife remained in Florida. The wife argued that she was willing to live with him if he became sober, but his ongoing substance abuse issues and abusive behavior made cohabitation impossible.

    The decedent’s mother, seeking to bar the wife from inheriting, had the burden of proving abandonment. The court found that she failed to show the wife left without just cause. Given the evidence of the decedent’s behavior, the court ruled that the wife had justification for living apart and was therefore entitled to inherit.

    Key Takeaways

    The phrase “without just cause” carries significant weight in abandonment cases, particularly in situations involving spousal abuse or substance-related issues. This case highlights the difficulty of proving abandonment when a spouse’s separation is linked to the other spouse’s actions.

    The court also clarified that a formal marital home is not required to establish abandonment. Even in marriages where spouses live apart, one spouse can still be deemed to have abandoned the other. However, proving abandonment requires more than mere separation. The party asserting abandonment has the burden of proof, and in this case, the mother failed to meet that burden. As a result, the wife remained eligible to inherit from the decedent’s estate.

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