If you start a business, one key to success is to know about your federal tax obligations. You may need to know not only about income taxes but also about payroll taxes. Here are five basic tax tips that can help get your business off to a good start.
1. Business Structure. Prior to start up, you’ll need to choose the structure of your business. Some common types include sole proprietorship (Form 1040), partnership (Form 1065) and corporation (Form 1120). You may also choose to be an S corporation (Form 1120-S) or Limited Liability Company. You’ll report your business activity using the IRS forms which are right for your business type. A Limited Liability Company (created by state statute) may be taxed as a sole proprietorship (single member), a partnership (multiple members), or other taxable entity. Read More
How Do I Know if My Client Has CODI?
As with any information for your clients, the key is a thorough interview. Lending institutions are notorious for sending out reporting documents late or, in the case of the client moving, never.
The courts and the IRS have been very specific about what triggers a forgiveness of debt by a lender. They set forth examples and used them as precedence in the IRC and recent Bankruptcy Court cases. These are called “identifiable events” and are defined as follows:
In general. An identifiable event is– Read More
Each year, the Supreme Court punts on dozens of cases. Included in the dozens of cases which the court elects not to hear each year are sales tax cases. They are uninteresting to the majority of the population and just not the type of cases the justices want to hear. In fact, despite having a significant affect in most multi-state businesses, the Supreme Court has not heard a sales tax nexus case since Quill in 1992.
If there was ever a case to hear, it was Amazon and Orbitz versus New York. At issue was the two large online retailers versus the mighty state of New York. To the dismay of many State and Local Tax (“SALT”) critics, the Supreme Court decided to punt on this case at the end of 2013. Perhaps, it thought Congress was going to shock the world and actually do something. Or, perhaps, it just really didn’t care about sales tax nexus. Read More
Non-U.S. persons must pay U.S. tax on certain kinds of income they receive from U.S. sources. Typically, the income is taxed at a flat rate of 30%. The only way for this tax to be alleviated is if an income tax treaty exists between the U.S. and another country and that treaty authorizes a lower rate of tax.
You might be wondering how the United States collects this tax. For example, the non-U.S. person might decide not to pay it, thus thumbing his nose at the government. In that case, does the U.S. government dispatch secret service agents to all four corners of the globe to track down the tax evader, who may owe only a small amount of tax? Of course not. The U.S. knows all too well that it would be a waste of time and resources to take on the role of a bounty hunter. Read More
What is Cancellation of Debt?
Cancellation of debt is the release from collection activity on a debt by a lender without consideration from the debtor. In other words, the person or institution you borrowed money from releases you from the responsibility to repay that debt. Normally, if you have the use of money, that you are now not obligated to repay, it must be treated as income. There are lots of exceptions and exclusions to that statement and we will review many of them.
As with most things in taxes, you must move through this subject in a specific order and not jump around. You must make certain determinations in a specific order to see how Read More
On June 18, 2014, IRS Commissioner John Koskinen disclosed that the 2009, 2011, and ongoing 2012 offshore voluntary disclosure programs have resulted in more than 45,000 disclosures and the collection of about $6.5 billion in taxes, interest, and penalties. On its face, the OVDIs appear to be bringing into the government’s coiffures an average of approximately 9,000 taxpayers a year with approximately $1.3 billion in revenue.
However, the last six months paint a very different picture. That period is marked by anemic growth. Indeed, there were only 2,000 additional disclosures and $500 million in additional revenue. That may lead one to speculate that the OVDI, at least for high net Read More
On Monday, July 21 of 2014, the Department of Treasury and Internal Revenue Service (hereinafter the “Service”) issued Final Treasury Regulations under T.D. 9680 to amend the definition of research and experimental expenditures pursuant to I.R.C. § 174. These Final Treasury Regulations finalized and replaced the previously issued Proposed Treasury Regulations that were published on September 6, 2013. As a reminder, Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Department of Treasury and have the force and effect of law. The most common forms of Treasury Regulations include: Read More
Over the years in executive search, I had the pleasure to meet extraordinarily talented tax professionals all over the world in corporations, public accounting firms, law firms, independent tax services firms, academia and government. During this time, I learned how highly educated tax professionals are and continue to be throughout their tax careers. What I also discovered is that many of the very finest tax technicians enjoyed looking through the tax code to “ figure out the tax problem and solve it like a puzzle”. These great tax technicians are masters at solving tax problems yet many are shy about promoting themselves. Four years ago, I decided to develop a platform that would bring tax professionals out from behind the scenes and make them visible to the people who are searching for them. In order to ensure the most success for tax professionals, we decided Read More
If you are late to the party, Colorado has fully legalized marijuana and in the first five months of legal retail sales, Colorado has sold a staggering $90 million worth of marijuana. We thought you may find it interesting to discover there are plenty of taxes attached to these sales. We recently received this receipt to our offices outlining all the taxes on the purchase of marijuana in Colorado. The Colorado Department of Revenue announced that the state earned $35 million in taxes, licensing and other fees from July 1, 2013 to June 30, 2014. The state collected nearly $5 million in taxes this June, an increase from the previous month. Governor John Hickenlooper expects sales to reach $1 Billion in the first fiscal year of legal marijuana. He also expects around $114 Million in taxes during this year. Colorado is proof that marijuana sales can benefit the state and generate revenue. We would greatly appreciate your comments regarding the taxes associated with this purchase.