Practice Areas

The attorneys at Sidney B. Margolis, Ltd. represent individuals and small and medium-sized businesses in the following practice areas: Income Tax Planning, Estate Planning, Income Tax Return Preparation, Probate Proceedings, IRS Audit Representation, and Lottery Winner’s Planning.

The goal of income tax planning is to minimize your federal and state income tax liabilities. You can achieve this in different ways. Typically, the attorneys at Sidney B. Margolis, Ltd. look at ways to reduce your taxable income by deferring your income, shifting income to family members, and converting income to the more favorably taxed long-term capital gain which might otherwise be considered ordinary income. This applies to individuals and businesses equally. Along with income tax planning, Mr. Margolis also considers deduction planning, investment tax planning, and year-end planning strategies to lower your overall income tax burden.

By deferring income to a later year, you may be able to minimize your current income tax liability and invest the money that you would have otherwise used to pay income taxes. And when you eventually report the income, you may be in a lower income tax bracket. As an example, this may be accomplished by contributing part of your salary to a 401(k) plan or a traditional IRA. When you contribute to one of these retirement plans, you take a deduction on your income tax return in the year of the contribution and are taxed when the money is withdrawn.

You can shift income to family members by hiring them in a family business and paying them wages. You can also gift them dividend-paying stocks, which income would be reported by the recipients of the stocks. However, you must be careful with giving such stock to minor children. There are special rules when minor children are recipients of such income-producing assets, which reduce or eliminate any income tax benefits.

In certain situations, real estate developers can convert ordinary income into long-term capital gain by structuring the transactions following certain guidelines.

Investment tax planning seeks to minimize your overall income tax burden through tax-conscious investment choices. Several potential strategies may be considered. These include the possible use of tax-exempt securities and intentionally timing the sale of capital assets for maximum tax benefit.

Whether you are just starting a business or have been in business for a number of years, you must realize that the legal entity which you operate your company through - sole proprietorship, partnership, c corporation, s corporation, limited liability company - greatly affects the income taxes you pay. The attorneys at Sidney B. Margolis, Ltd. will consider for you the best entity for your business.

The above-discussed strategies are just examples of what Mr. Margolis and his staff can do to help you improve your income tax planning. Call Mr. Margolis to make an appointment to discuss your situation, and he will advise you as to how you can best legally reduce your income taxes.


Estate Planning begins with a will or a living trust. A will provides your instructions as to who will receive your assets (beneficiaries), but it does not avoid probate. Any assets titled in your name or directed by your will (if the total value exceeds $100,000.00 in Illinois) must go through the probate process before they can be distributed to your beneficiaries. The process can become expensive with legal fees, executor fees, and court costs. It can also take anywhere from nine months to two years or longer. The probate files are open to the public and excluded beneficiaries are encouraged to come forward and seek a share of your estate. In short, the court system, not your family, controls the process.

Not everything you own will go through probate. Jointly-owned property and assets that let you name a beneficiary (for example, life insurance, IRAs, 401(k)s, annuities, etc.) are not controlled by your will and usually will transfer to the new owner or beneficiary without probate. But there are many potential problems with joint ownership, and avoidance of probate is not guaranteed.

For these reasons a revocable living trust is preferred by many families and professionals. It can avoid probate at death (including multiple probates if you own property in several states), prevent court control of assets at incapacity, bring all of your assets (even those with beneficiary designations) together into one plan, provide maximum privacy, is valid in every state, and can be changed by you at any time.

Unlike a will, a trust doesn't have to die with you. Assets can stay in your trust managed by the trustee you selected until your beneficiaries reach the age you want them to inherit. Your trust can continue longer to provide for a loved one with special needs or to protect the assets from beneficiaries' creditors, spouses, and irresponsible spending.

A living trust is more expensive initially than a will, but considering it can avoid court interference at incapacity and death, many people consider it a bargain.

Under the living trust, the attorneys at Sidney B. Margolis, Ltd. will skillfully and creatively draft sub-trusts which will eliminate or reduce federal and state estate (inheritance) taxes.

There are additional ways to eliminate or reduce estate taxes, including, but not limited to, (1) making annual tax-free gifts and (2) creating an irrevocable life insurance trust. Under current federal law you can give up to $14,000.00 ($28,000.00 if married) to as many people as you wish each year, thereby removing assets from your estate. You can remove the value of your life insurance from your estate by creating an irrevocable life insurance trust and making it the owner (and usually beneficiary) or the policies. As long as you live three years after the transfer of an existing policy, the benefits will not be included in your estate.

An estate plan with the attorneys at Sidney B . Margolis, Ltd. includes a consideration of the need for the following documents: (1) health care power of attorney; (2) property power of attorney; and (3) living will

The federal income tax code and regulations are technical, complicated, and often very difficult to understand and interpret. As a result, the forms and instructions written and distributed by the Internal Revenue Service (IRS) are often very complicated and very difficult to understand. The attorneys at Sidney B. Margolis, Ltd. have been dealing with the tax code, regulations and forms for over 35 years. They have a deep understanding of the law and the use of these forms; and have been preparing the most sophisticated and complicated income tax returns for individuals (form 1040), c corporations (form 1120), s corporations (form 1120 S), partnerships (form 1065), estates (form 1041), and trusts (form 1041).

Often the IRS instructions are not clear which sub-form should be used to report certain information; or there are alternative methods of reporting some transaction. In such circumstances, the attorneys at Sidney B. Margolis, Ltd. will report the information in a manner most favorable to you.

The attorneys at Sidney B. Margolis, Ltd. are aware of those deductions that the IRS is scrutinizing. If you are interested in taking one of those deductions we will advise of the strict requirements you will have to satisfy, and make you aware that you are increasing your exposure to an IRS audit.

Every individual and business fears receiving a letter from the IRS stating that he/she/it will be subjected to an audit by the IRS. You are required to respond to the inquiries being made by the government agency responsible for collecting the taxes for the federal government.

No matter how accurately you feel the return was prepared, you fear that the IRS is about to extract additional money from you. You have heard about the experiences that other people have had with the IRS, and you are intimidated by the thought of appearing before and IRS auditor.

You do not have to personally appear before the auditor (in most situations).

You have the right to retain the experienced and knowledgeable attorneys at Sidney B. Margolis, Ltd., who can deal exclusively with the IRS. They will meet personally with the agent, without you being present, and will respond to all reasonable and appropriate requests for documents and information. Our attorneys will act as a buffer between you and the IRS. If an unexpected request for documents and/or information is made by the auditor, our attorneys will not have to give an immediate response. They will advise the auditor that they will obtain the requested information, which will be provided at a future time. Our attorneys will then consult with you about an appropriate response.

Our experienced attorneys will not inadvertently volunteer information to the auditor, which will lead to the assessment of additional tax. If you represented yourself, your emotional involvement and inexperience might cause you to volunteer damaging information. Once you state something to the auditor that is damaging to your tax position, it is difficult to retract it.

The attorneys at Sidney B. Margolis, Ltd. have worked as IRS auditors. They are familiar with the IRS procedures, and know how to present your case in the most favorable light. In addition, our attorneys, with over 35 years of experience in dealing with the IRS, are well-schooled in the Internal Revenue Code and the regulations thereunder. We will vigorously represent you.

If the decedent died having executed a will, the probate process begins with the admission of the will to probate. This means that the will is given legal effect by the court. The court's decision that the will was validly executed under state law gives the administrator the power to perform his or her duties under the provisions of the will. If the decedent died without a will, the estate will be administered pursuant to the state's law of distribution.

The administrator takes legal title to the assets in the probate estate. The assets of the estate must be found and may have to be collected.

The administrator is legally responsible for filing necessary tax returns, and paying the taxes due from the estate. Tax returns that will need to be filed can include the estate's federal and state income tax returns, the federal and state estate tax returns, and the decedent's final federal and state income tax returns.

The claims of the estate's creditors must be paid. Sometimes a claim must be litigated to determine if it is valid. All estate administration expenses, such as attorneys' fees and accountants' fees, must also be paid.

After the taxes, debts, and administration expenses have been paid, the administrator will distribute the remaining assets to the beneficiaries under the decedent's will, if there is one; or if there is no will, to the decedent's heirs.

The administrator in a probate proceeding has a lot of responsibility, and can be held legally liable if he acts improperly. The attorneys at Sidney B. Margolis, Ltd. have had many years of experience in this process, and will guide you through every step making certain that you comply with the law and the rules of the probate court. Matters will be handled promptly and accurately with an eye toward keeping attorneys fees as reasonable as possible.


After shock and disbelief wears off, you have to decide what to do first. Should you run to the state's lottery claims office to notify the department that you have won? Call a financial adviser to help you decide how to invest your winnings? Call all of your relatives and friends to inform them of your good fortune?


You should call the attorneys at Sidney B. Margolis, Ltd. Before you contact the state's lottery claims office and seek advice about investing, you must make two critical decisions, which are irreversible after you file your claim. The first is whether you are going to claim the lottery prize as an individual or as a member of a group, which will then reduce the arrangement to a written partnership agreement. The members of the group can be your relatives or other people to whom you are giving financial support. Because of the graduated U.S income tax rates, your overall income tax burden will be reduced by making the prize money taxable to the members of the partnership. The more partners, the greater the potential savings on income tax.

The second critical decision is whether to receive your prize as a lump sum payment or in annual installment payments. If you elect the lump sum, you will receive approximately one-half of the advertised price after reducing it: (1) to the present value of the annuity, and (2) by the U.S. and state income taxes required to be withheld. By receiving the lump sum in one year most of your prize will probably be taxed at the highest marginal U.S. income tax rate. If you elect installment payments, you will be receiving payments each year thereby reducing the marginal tax rates on your prize money and your overall tax burden.

If you elect to receive installment payments, you will be receiving a modest rate of return on your unpaid installments. In seeking your business, most financial advisers would counsel you to take the lump sum because they will tell you that they would be able to invest it in a manner which would earn a substantially larger rate of return. However, that is speculative; markets can be tricky and there is no way of knowing how successful the financial adviser will be. Furthermore, by taking the lump sum you will be giving up the opportunity of substantial income tax savings which installment payments offer you.

In addition to the tax and investment strategies discussed above, there is another important concern in deciding whether to take a lump sum or installment payments. That is the "sudden wealth syndrome". Many lottery winners who had never had much money and who took the lump sum have found themselves broke after a few years. This happens for many reasons, including but not limited to: (1) buying lavish and expensive houses, cars, vacations, etc.; (2) making bad investments; and (3) being very generous in giving gifts to friends, relatives and organizations. In short, if you have not dealt with wealth, a lump sum could easily disappear.

If you elect to receive installment payments, there is a restraint on your ability to quickly deplete your lottery winnings. You will only be able to spend, invest, and give away unwisely only the money you have received in your installments. If you handle your initial installments unwisely, you still have the future installments to use wisely.

There are critical decisions to be made before you file your claim with the state's lottery office or determine how you are going to invest your prize money. Talk to the attorneys at Sidney B. Margolis, Ltd. first. With over 35 years of helping and advising lottery winners, they will be able to guide you in making the right decisions for your situation.