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Treasury And IRS Issue Proposed Regulations On Disguised Sales And Partnership Liability Allocations

U.S.Treasury To Insure Money Market Mutual Funds
Summary

On January 30, 2014, Treasury and the IRS issued Proposed Regulations with respect to the disguised sale rules and the rules for allocating partnership liabilities (REG-119305-11). A major driving force behind these Proposed Regulations was the IRS’s victory in Canal Corporation and Subsidiaries, formerly Chesapeake Corporation and Subsidiaries v. Commissioner, 135 T.C. No. 9. (2010). In Canal, the Tax Court shot down a leveraged partnership structure by concluding that the contributing partner did not have a payment obligation with respect to the partner’s indemnity in large part because the terms of the indemnity were not commercially reasonable. Read More

Trick or Treat: The IRS Releases New Administrative Authority Governing 2015 Tax Rate and Deduction Levels

Spooky Halloween background

The Internal Revenue Service (hereinafter the “Service”) released today new administrative authority for calendar year 2015 within Revenue Procedure 2014-61 that makes adjustments to more than 40 tax provisions, including the tax rate schedules, deduction levels, and many other tax provisions. It should be duly noted that Revenue Procedure 2014-61, is scheduled to be published in the Internal Revenue Bulletin 2014-47 on Monday, November 17, 2014 and can be cited here.

The primary adjustments included within this new administrative authority include, but are certainly not limited to:

• The tax rate of 39.6% affects singles whose income exceeds $413,200 (i.e., $464,850 for Read More

Why Is Halloween So Scary? – 2015 Tax Planning Will Be Hugely Complicated And Profoundly Significant For Most ALL Taxpayers

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Once again another year is almost behind us and right after the new year income taxes are coming. The forthcoming tax environment is extraordinarily unusual and can subsequently be very scary. Basically what you need to know is that ALL Americans will be seeing changes on their tax returns many of which congress ONCE AGAIN still hasn’t been able to work out as of yet. While the pusillanimous reprobates in federally elected positions of authority continue to ‘discuss’ last minute income tax bills you can be assured that I make a concerted effort to stay abreast of all the latest changes as they occur.

So have fun this weekend celebrating all hallows eve – may favorite of all the ‘holidays’ – but prepared to reach out to a knowledgeable and reputable Enrolled Agent to do some Read More

How To Make Your Clothing, Uniforms and Costumes Tax Deductible

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Now when I think of Halloween, I look forward to seeing all of the different costumes that people wear. Some are very extravagant and I am sure pricey. And for some they would like to know how that can be deductible. Since costumes fall under the category of clothing or uniforms, you need to be aware of what the tax law requires.

The tax law requires the following three elements for clothing useful only in the business environment to be deductible:

1. The clothing is required or essential in the taxpayer’s employment;

2. The clothing is not suitable for general or personal wear; and Read More

The Unknown Tax Comic – Halloween Edition

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♦ It’s Halloween and when the man answers his door, there’s a well-dressed young boy there wearing a suit and matching tie, who says “Trick or treat”. The man’s a bit confused so he asks the boy what he’s dressed up as. “I’m an IRS agent”, says the boy, and with that, he snatches 40% of the candy, and leaves without saying thank you.

♦ Tax Accountant to his trick or treating child:

“If I’m going to take you all over the neighborhood begging for candy, then yes, I’m going to take half… it’s called a “Candy Tax”.

♦ Tax Payer to the Grim Reaper: Read More

2015 Tax Benefits Increase Due to Inflation Adjustments!

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For tax year 2015, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.
The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts -

• The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure. Read More

Swiss Banks Unite And Fire Back At The Department of Justice

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Neutrality is Switzerland’s unwritten motto. This devotion to conflict avoidance kept the Swiss out of two World Wars. The Swiss are known for their diplomacy, hospitality, and the ability to keep a secret. So, it came as a shock when 73 Swiss banks joined ranks to inform the U.S. Department of Justice and the IRS, politely but firmly, that they would not be signing a proposed amnesty deal under FATCA.

The Basic Facts of FATCA

In March of 2010, the Department of Justice and the IRS were given a new enforcement weapon. The Foreign Account Tax Compliance Act (FATCA) has three primary objectives regarding foreign financial institutions: Read More

What Is The Best Business Structure To Form? If Any…

businessman looking to horizont

What I love most about Colorado, more than the 300+ days of sun every year and the glorious rocky mountains, are the people. For the most Coloradans are risk taking job creators, starting new businesses from scratch out of their garages and turning passions for a hobby into a business with a profit motive.

Of course I surround myself with these people that live and play outside their comfort zone and quite often I am asked about the nuanced tax law implications of starting a new business. Specifically what might be the most appropriate business structure to form, if any, so I’ve decided to draft a post about this topic for general edification. Hopefully you find these words helpful. Read More

Wake Up And Smell The Coffee! More Taxes – Time After Time

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Wake up and smell the coffee! Its political season again and unfortunately it appears most candidates for State Governors and Congress are advocating a “tax the other guy” approach.

• “We need more money for the schools!”-Tax the Rich.
• “We need more money for the poor!” – Tax the oil companies.
• “We need more money for the seniors!”-Increase sales tax.
• “We need to fight Ebola!”-Tax the pharmaceutical companies.

We need money for good causes so therefore we need to increase taxes? Does that really makes sense? When a politician advocates increasing taxes they always try to Read More

Self-Directed ERISA Plan Prohibited Transaction Chinese Walls

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Two 2013 United States Tax Court decisions, Peek[1]and Ellis,[2] evince a clear mandate for taxpayers seeking protection from the plan asset look-through rule’s operating company exception: STOP THE CONSTRUCTIVE OWNERSHIP DISQUALIFIED PERSON ENTITY CHAIN!!!!! In Peek, the self-directed Peek IRA and the self-directed Fleck IRA each owned 50% capital equity interest of the fire extinguisher sales operating company. In Ellis, the taxpayer’s self-directed IRA owned 98% of the used car sales operating company.

In both cases, the Tax Court’s holdings distill the proposition operating company section 4975(e)(2)(G) disqualified person status preempts the operating company exception to the plan asset look-through rule.[3] My paper, “Changes in Form 5498 Reporting And Read More

Starting And Maintaining A Non-Profit Organization

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Each year, more than 50,000 organizations apply to the IRS for tax exempt status. There are several steps involved in becoming tax exempt. Many do not realize that there is a difference in a non-profit organization and one that is tax exempt. Not all non-profit organizations hold tax-exempt status. According to IRS statistics, there were slightly over 189,000 returns filed in 2011 by tax-exempt organizations. However, the National Center for Charitable Statistics lists a total of 1,427,807 non-profit organizations. Obviously, many non-profits are not tax exempt, or at least, are failing to file a return.

Forming a Non-Profit Organization

The first step in forming a non-profit organization is to form a non-profit corporation. This involves filing an application with an appropriate official in the state in which the Read More

Why Section 530 of the Revenue Act of 1978 Applies to the States

Washington Monument and the U.S. Capitol Building

Section 530 of the Revenue Act of 1978 may already apply to the states, the Affordable Care Act, and title 29 issues. Don’t be surprised if state unemployment agencies and DOL are rabid in pursuing independent contractor misclassification issues in your business or your clients’ businesses. But don’t give up the section 530 issue when those agencies claim it is limited to subtitle C employment taxes.

The Department of Labor and the Internal Revenue Service entered into a Memorandum of Understanding (MOU) on September 19, 2011. The next day, six states joined the MOU melee. Now, a few years later, the tale of the tape is in.

The Obama administration undertook a strategy to attack Section 530 of Revenue Act of Read More

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