the new legislative landscape and beyond firma new orleans, la april 27, 2009 sally miller...
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The New Legislative The New Legislative Landscape and BeyondLandscape and Beyond
FIRMAFIRMANew Orleans, LANew Orleans, LA
April 27, 2009April 27, 2009
Sally [email protected]
Emergency Economic Emergency Economic Stabilization ActStabilization Act
$700 Billion to purchase $700 Billion to purchase troubled assets (Troubled troubled assets (Troubled Assets Relief Program)Assets Relief Program)
$150 Billion in tax cut $150 Billion in tax cut extensionsextensions
Emergency Economic Emergency Economic Stabilization ActStabilization Act
Fannie Mae/Freddie Mac losses Fannie Mae/Freddie Mac losses treated as ordinary losses for treated as ordinary losses for tax purposestax purposes
FDIC insurance coverage for FDIC insurance coverage for interest bearing accounts interest bearing accounts raised to $250,000raised to $250,000
Emergency Economic Emergency Economic Stabilization ActStabilization Act
Charitable IRAsCharitable IRAs
One-year AMT patchOne-year AMT patch
Cost basis reportingCost basis reporting
Other Emergency MeasuresOther Emergency Measures
PPIPPPIP
TGLPTGLP
TALFTALF
MMIFFMMIFF
●Common/ Collective FundsCommon/ Collective Funds
FDIC InsuranceFDIC Insurance
Premiums- 12-16 bpsPremiums- 12-16 bps
Special Assessment- 10-20 bpsSpecial Assessment- 10-20 bps
Impact on deposit insurance levelsImpact on deposit insurance levels
Sweep disclosuresSweep disclosures
American Recovery and American Recovery and Reinvestment ActReinvestment Act
Executive CompensationExecutive Compensation
Bonuses/ ClawbacksBonuses/ Clawbacks
Golden ParachutesGolden Parachutes
Say on PaySay on Pay
AccountingAccounting
Mark-to MarketMark-to Market
OTTIOTTI
Market IssuesMarket Issues
Naked Short Selling/Uptick RuleNaked Short Selling/Uptick Rule
Credit Rating AgenciesCredit Rating Agencies
CommoditiesCommodities
Safety of Trust and Custody AssetsSafety of Trust and Custody Assets
Segregated from bank assetsSegregated from bank assets
Custody assets on trust system: Custody assets on trust system: samesame
Deposit instruments of trustee Deposit instruments of trustee bank, collateralized over insured bank, collateralized over insured amountamount
Safety of Managed AssetsSafety of Managed Assets
Supervision/ExaminationSupervision/Examination
Segregation of DutiesSegregation of Duties
RecordkeepingRecordkeeping
AuditAudit
Regulatory RestructuringRegulatory Restructuring
Systemic RegulatorSystemic Regulator
Resolution Process for Non-Resolution Process for Non-BanksBanks
GAPsGAPs
●Regulatory GroupsRegulatory Groups
●Credit Default SwapsCredit Default Swaps
●Hedge FundsHedge Funds
Trust and Wealth Management Trust and Wealth Management IssuesIssues
TaxTax
Employee BenefitEmployee Benefit
SecuritiesSecurities
Deductibility of investment Deductibility of investment advisory feesadvisory fees
●Section 67(e)(1) exception to 2% floor: Section 67(e)(1) exception to 2% floor:
“ “costs which are paid or incurred in costs which are paid or incurred in connection with the administration of connection with the administration of the estate or trust and which would not the estate or trust and which would not have been incurred if the property have been incurred if the property were not held in such trust or estate.”were not held in such trust or estate.”
IRS ProposalIRS Proposal
IRS Proposal: Only costs that are IRS Proposal: Only costs that are “unique” are fully deductible; “unique” are fully deductible; “unique” if an individual could not “unique” if an individual could not have incurred the cost in have incurred the cost in connection with property held in connection with property held in trust/estate, e.g., accountings, trust/estate, e.g., accountings, fiduciary income tax filings, estate fiduciary income tax filings, estate tax returns, beneficiary tax returns, beneficiary communications, will or trust communications, will or trust contests or constructions, fiduciary contests or constructions, fiduciary bonds.bonds.
IRS ProposalIRS Proposal
Non-unique: custody, Non-unique: custody, management, investment advice, management, investment advice, gift tax returns, and property gift tax returns, and property management, thus subject to 2% management, thus subject to 2% floor.floor.
Unbundling of trustee fees required Unbundling of trustee fees required under proposal to identify under proposal to identify unique/non-unique portions.unique/non-unique portions.
Supreme Court DecisionSupreme Court Decision
Supreme Court decision: Supreme Court decision: Investment advisory fees subject to Investment advisory fees subject to 2% floor of Section 67(e).2% floor of Section 67(e).●Rejected taxpayer argument.Rejected taxpayer argument.
● Impact on IRS proposal?Impact on IRS proposal?
Practical ConsiderationsPractical Considerations
Practical Considerations as a Practical Considerations as a result of result of KnightKnight decision: decision:●KnightKnight does not require unbundling of does not require unbundling of
trustee fees for 2008 tax year.trustee fees for 2008 tax year.
●Impact on income beneficiariesImpact on income beneficiaries
●Next StepsNext Steps
Cost-basis ReportingCost-basis Reporting
Require brokers to report adjusted Require brokers to report adjusted cost basis, and acquisition or cost basis, and acquisition or disposition datesdisposition dates
Equity 1/1/11Equity 1/1/11
Mutual Funds: 1/1/12Mutual Funds: 1/1/12
Debt: 1/1/13Debt: 1/1/13
Treasury to issue proposed Treasury to issue proposed regulationsregulations
Estate Tax ReformEstate Tax Reform
Economic Growth and Tax Reconciliation Economic Growth and Tax Reconciliation Act of 2001 (EGTRA) Act of 2001 (EGTRA) ●Complete repeal of estate tax in 2010 with Complete repeal of estate tax in 2010 with
carryover basis; carryover basis;
●Reverts in 2011 to a 55% tax rate on that Reverts in 2011 to a 55% tax rate on that portion of an estate exceeding $1 million with portion of an estate exceeding $1 million with step-up basis. step-up basis.
Estate Tax ReformEstate Tax Reform
Administration Proposal – Administration Proposal – freezes in 2009 form - $3.5 freezes in 2009 form - $3.5 million exemption; top tax rate million exemption; top tax rate of 45%of 45%
Retroactivity?Retroactivity?
Tax Filing For TrustsTax Filing For Trusts
Auto. filing extension for K-1: Auto. filing extension for K-1: currently 10/15currently 10/15
IRS Regulations: shorten to IRS Regulations: shorten to 9/159/15
Possible compromise 9/30Possible compromise 9/30
Employee Benefit IssuesEmployee Benefit Issues
Fee disclosureFee disclosure
Collective fund educationCollective fund education
Investment adviceInvestment advice
Employee Benefit IssuesEmployee Benefit Issues
Defined benefit fundingDefined benefit funding
Required minimum Required minimum distributionsdistributions
Target date fundsTarget date funds
Call Report ChangesCall Report Changes
Confidential treatment Confidential treatment eliminatedeliminated
●Fiduciary Income, Expense & Fiduciary Income, Expense & Loss DataLoss Data
●Effective 3/31/09Effective 3/31/09
Other changes- 12/31/09Other changes- 12/31/09
Questions?Questions?