Archive for September 30, 2014

Corporate Tax Shelters – Are The Risks Worth The Hype?

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

Written by | Posted in Corporate

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

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

CHAPTER 7 – CONCLUSION

7.6 ‘JUST CAUSE’ SHOWN DEFENCE40 Read More

Written by | Posted in Africa • Audit

Internet Tax Freedom Act Extended

The Internet Tax Freedom Act (ITFA), originally enacted in 1998 (P.L. 105-277, 10/21/98) and renewed twice, was set to expire on November 1, 2014.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

Written by | Posted in Sales/Use Tax • State And Local Tax (SALT)

Expatriation: Divorcing The Government Has Tax Consequences

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

Written by | Posted in Expatriate • FATCA • FBAR

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

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

Written by | Posted in Real Estate • Tax Deductions

The Unknown Tax Comic – Part 9

♦ 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

Written by | Posted in Tax Humor • TaxConnections

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

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

Written by | Posted in Income Tax • Individual • Tax Fraud/Evasion/Crimes

New Law On Australian “Thin Cap” Rules

The new law in brief

An important Bill affecting foreign investors into Australia was passed by the Australian Parliament, 25 September 2014, – the ‘Tax and Superannuation Laws Amendment (2014 Measures No. 4) Bill 2014’.

It affects two areas of taxation in Australia – tax deductibility of financing expenses in an international context, and the taxation of dividends in Australia received from abroad.

This note deals with the tax deductibility of financing expenses – the so-called ‘thin cap’ rules. (It does not deal with the thin cap rules applicable to financial entities and banks). Read More

Written by | Posted in Australia/Oceania

Don’t Mess With The Seminoles – Indians Win Sales Tax Case In Florida

As a Florida state and local tax attorney I live in the world of strange. Few attorneys or tax professionals are even aware of our peculiar area of the law. Even fewer attorneys or tax professionals have heard of, let alone practiced in the even stranger area of Native American Taxation. During my travels and while earning my LL.M. at NYU, I was one of the few fortunate souls to be exposed to this spin off of state and local tax. In fact, there are only two courses offered in the United States at the LL.M. level on this subject. Native American Taxation is poorly developed, the rules are unclear, and the cases make no sense whatsoever. While this is common for Florida attorneys like me who live in a world with no clear answers, living in this gray area of the law is uncomfortable for most lawyers and professionals. Read More

Written by | Posted in State And Local Tax (SALT)

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 7.5)

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

CHAPTER 7 – CONCLUSION

7.5 REVIEW IN TERMS OF SS 6, 7 and 8 OF PAJA OR THE PRINCIPLE OF LEGALITY Read More

Written by | Posted in Africa • Audit

Australian Tax Office’s Scammer Video

The Australian Taxation Office has a webpage dedicated to tax related scams. Their latest video advising taxpayer’s how to protect themselves against scam attempts can be seen below.

This is the Transcript of the ATO Video that can be seen below:

Your personal information, like your identity — is unique. You use it to verify who you are and to access things like bank accounts, loans and tax returns.

Protecting your personal information is important. But do you know what to protect?

Personal information includes your name, address, date of birth, credit card details, myGov details, tax file number and driver’s licence details. Read More

Written by | Posted in Australia/Oceania • Income Tax • Individual • Tax Controversy • Tax Education • Tax Fraud/Evasion/Crimes • Tax Tips
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