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Opting Out of Social Security For A Minister

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One of the tax options given to a minister is the ability to opt out of social security. This is a step that should be taken after a great deal of deliberation, as the decision is irrevocable. In order to opt out, the minister must file Form 4361 and certify that he or she opposes, either conscientiously or because of religious principles, the acceptance of any public insurance (with respect to services performed as a minister), including social security and Medicare coverage. Note that the objection is to the use of ministerial earnings for public insurance. Economic considerations or other non-religious reasons are not valid factors for opting out. Unfortunately, many likely opt out for economic reasons. Some faith groups actively promote opting out for their ministers.

The minister opts out only in relation to ministerial earnings. If he or she is employed in a Read More

Tax Dodgers Beware

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In an effort to crack down on tax evasion the OECD developed what it calls a “New single global standard for the automatic exchange of information between key authorities worldwide.” The standard was approved by the OECD council on 15 July 2014 and is expected to result in an elimination of the secrecy surrounding some banking transactions as it relates to tax matters.
The new standard has been endorsed by more than 60 countries or jurisdictions including the United States, United Kingdom, European Union and Canada and other major jurisdictions already committed to implementation.

The standard requires detailed account information to be provided to governments by financial institutions. The information obtained from the financial institutions will be Read More

Capital Gains Exemption – What You Need to Know

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Tax Saving of Claiming Capital Gains Exemption

A Canadian business owner who carries on an active business through a corporation may be eligible for an $800,000 lifetime capital gains exemption (indexed for inflation after 2014) on the sale of his/her corporation shares or on the deemed disposition of his/her corporation shares immediately before his/her passing. For a Canadian business owner in the top marginal tax bracket, the claim of the $800,000 lifetime capital gains exemption will result in a tax saving ranging from $156,000 to $200,000, depending on the province in which the business owner is a resident. Read More

Corporate Tax Shelters – Are The Risks Worth The Hype?

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The majority of tax shelters are in full compliance with the tax laws, but an increasing number of these shelters have crossed the boundaries whereas they are being viewed as illegal, abusive tax shelters. So what’s the difference between a true business loss and a tax shelter loss? The substance of the event that gives rise to the loss is the key element which distinguishes a tax shelter loss from a true business loss.

Three elements are usually found in tax shelters, either separately or in combination.

• Leverage is obtained through various financing arrangements.
• Taxes are deferred to later years.
• Ordinary gains (100% taxable) are converted to capital gains (40% taxable), or capital Read More

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 7.6)

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Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution of The Republic of South Africa



Internet Tax Freedom Act Extended

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The Internet Tax Freedom Act (ITFA), originally enacted in 1998 (P.L. 105-277, 10/21/98) and renewed twice, was set to expire on November 1, 2014. Its original expiration date was October 21, 2001 and then November 1, 2007. The ITFA prohibits state and local governments from imposing taxes on Internet access fees (unless already imposed and enforced before 10/1/98) or imposing any multiple or discriminatory taxes on electronic commerce.

H.J. Res 124, Continuing Appropriations Resolution 2015, was signed into law on 9/19/14 (P.L. 113-164). It provides funding to keep the government running until 12/11/14 and extends the ITFA to that date as well. This resolution was passed in the House on 9/17/14 (319-108) and in the Senate on 9/18/14 (78-22). Read More

Expatriation: Divorcing The Government Has Tax Consequences

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As someone who moved around a lot with my parents in my childhood, any kind of displacement conjures up vivid images of huge wooden crates, packers and sad goodbyes. But life is no longer as simple as crates, packers and going-away gifts, many US citizens who had relocated and moved abroad are deciding to renounce their US citizenship. 2013 was a record-breaking year that saw an alarming increase (221%-according to the Treasury Department of US) of Americans renouncing their citizenship. Why such a drastic move? A big reason is the global tax reporting requirement and FATCA.

I read this somewhere, that “expatriation is like divorcing a government”. As heart-wrenching and final as that may sound, it is made even more complex by the tax provisions under Internal Revenue Code (IRC) sections 877 and 877A. So if you decide Read More

Exclusion of Gains In Excess of Passive Losses On Sale of Rental Property

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If a taxpayer converts a personal residence to rental property, he can deduct expenses against rental income. The basis for depreciation is the lesser of the adjusted basis or fair market value at the date it is converted to rental property. If the taxpayer does not materially participate in and actively manage the property, the losses from rentals are treated as passive losses and cannot be deducted in the current year. They are suspended and carried forward and can offset rental income of future years but any resulting loss is not deductible and is carried forward.

If a taxpayer continues to have non deductible passive losses, they accumulate and can be offset against the gain on the sale of the property. If the gain on the sale exceeds the cumulative non deductible losses, a question arises as to whether the gain is taxable and Read More

The Unknown Tax Comic – Part 9

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♦ America is the land of opportunity. Everybody can become a taxpayer.

♦ It’s hard to believe America was founded to avoid high taxation.

♦ Golf is a lot like taxes. You drive hard to get to the green and then wind up in the hole.

♦ The fourth of July, 1776 – that’s when we declared our freedom from unfair British taxation. Then, in 1777, we started our own system of unfair taxation.

♦ When you do a good deed, get a receipt in case Heaven is like the IRS.

♦ The best things in life are free – plus tax, of course. Read More

“Jersey Shore’s” Mike ‘The Situation’ Sorrentino Indicted on Charges of Federal Tax Evasion – Pleads Not Guilty

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Hold onto your seats! As if Mike Sorrentino, the former “Jersey Shore” cast member’s legal woes couldn’t get any worse, they just did. Mr. Sorrentino pleaded not guilty on Wednesday, September 24, 2014 to failing to pay taxes on nearly $9 million in income. According to the indictment, Mr. Sorrentino earned this income trading off the name he made for himself on the now-defunct reality TV show, “Jersey Shore.”

Mr. Sorrentino and his brother, Marc, have been charged with conspiring to defraud the U.S. and filing false tax returns for tax years 2010 through 2012.

Appearing in U.S. District Court, Mike Sorrentino entered a not guilty plea and was released on a $250,000 bond. Read More