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Goodrich securities). When Tonia died LINE
in 2006, she left her interest in some of ITEMS
the community property to the couple’s
three children, subject to a usufruct in
favor of Henry. During his life, Henry
sold $857,914 worth of the Goodrich Click these headlines for the full stories. And for the
securities. One-half of that amount latest tax news, visit journalofaccountancy.com and
belonged to Henry outright and the thetaxadviser.com.
other half to the children but held in
usufruct by Henry. IRS to fast-track 10,000 hirings to address
Henry died in 2014, owing over backlog
$560,000 in income taxes for 2012, Direct-hire authority will allow the IRS to more quickly
2013, and 2014. His executor opened a reinforce its return processing and account manage-
bank account for the estate and placed ment functions.
estate funds in it. The IRS placed a levy
on the account, and the bank remitted National taxpayer advocate to CPAs: Tell us
the remaining funds, almost $240,000, where the challenges are
to the Service. After that, with penalties CPAs and other tax professionals can help the Taxpayer
and interest, a combined outstanding tax Advocate Service identify the most acute problems within
balance of $472,000 remained. the IRS, National Taxpayer Advocate Erin Collins said in
The children sued, claiming that the an online AICPA Town Hall meeting.
IRS had wrongfully levied the funds
under Sec. 7426(a)(1) and claiming that Proposed regulations update RMDs for
they were owners of nearly $500,000 of SECURE Act changes
Goodrich securities that Henry had held Proposed rules would update existing regulations for
subject to their usufruct. A magistrate required minimum distributions (RMDs) from quali-
judge held that the IRS’s claims took fied retirement plans and annuity contracts and related
priority over the children’s claim because matters, largely to conform with a number of statu-
the children were essentially “unsecured tory changes.
creditors” of the disputed funds in
Henry’s succession. The children ap- IRS offers alternative to facial recognition
pealed the decision to the Fifth Circuit. Taxpayers signing up for and using IRS online services
Issues: Because Henry held the securi- are now able to authenticate their identities with a new
ties in usufruct, the issue was whether alternative to uploading a “selfie” photo, and if they do use
Louisiana law assigned to the Goodrich facial recognition or have done so in the past, their photos
children a primary interest in the securities will be deleted, the IRS announced.
as owners or a secondary interest as credi-
tors. Under Louisiana Civil Code Article
535, a usufruct is “a real right of limited
duration on the property of another.”
Under Article 538, “If the things subject usufruct. Applying Louisiana case law and so the Fifth Circuit affirmed the
to the usufruct are consumables [includ- (Succession of Catching, 35 So. 3d 449 (La. magistrate judge’s grant of summary
ing money], the usufructuary becomes Ct. App. 2010)) the court found that judgment in favor of the IRS.
■
owner of them. … At the termination of the children had a claim against Henry’s 1/25/22)
Goodrich, No. 20-30422 (5th Cir.
the usufruct he is bound either to pay the
estate in connection with the securities,
IMAGES BY YURIY ALTUKHOV/ISTOCK at the commencement of the usufruct or to owners of the securities when he died. — Alistair M. Nevius, J.D., is the JofA’s
but they did not immediately become
naked owner the value that the things had
Therefore, they were unsecured creditors
deliver to him things of the same quantity
editor-in-chief, tax.
with respect to the claim, and thus they
and quality.”
To comment on Tax Matters or to suggest an
did not legally own the property at the
Holding: The Fifth Circuit found
idea for an item, contact Alistair M. Nevius
time the IRS seized it. Under Sec. 6323,
that the Goodrich children were the
naked owners of consumables held in
May 2022 | 37
journalofaccountancy.com the IRS has priority over other creditors, at Alistair.Nevius@aicpa-cima.com. ■