Spotlight Interview: Chuck Levun On Educating CPAs And Attorneys On Partnership, LLC, and S Corporation Flow-Through Planning On Four Costly Business Mistakes They Make (Part 1)

Spotlight Interview: Chuck Levun On Educating CPAs And Attorneys On Partnership, LLC, and S Corporation Flow-Through Planning On Four Costly Business Mistakes They Make (Part 1)

Each year there is a must attend complimentary webinar hosted by Tax Forum educators Chuck Levun, Michael Cohen, and Scott Miller.  This is a special presentation for educating attorneys and CPAs on the four biggest and costly business mistakes they make and how to avoid them. Once you attend one of Tax Forums training sessions, you will appreciate why they are the leading trainers in the tax profession on partnership, LLC, and S corporation flow-through programs for tax professionals.

Please read through this special interview, Part 1 with Co-Founder of Tax Forum, Chuck Levun: Part 2 will be another spotlight interview with Michael Cohen. If you desire cutting edge training in partnership, LLC, and S corporation flow-through, you will want to Register For Their Complimentary Webinar. You will appreciate what you will learn spending time with these leading training experts.

Kat Jennings Question:
Please tell me about Tax Forum and its origin.

Chuck Levun Answer:
Back in 1985, I was engaged to be the consultant for the CCH Partnership Tax and Practice Guide. When the project was close to being finalized in the summer of 1987, I asked myself – “How can I help market this product?” I remember pitching the Tax Forum® concept to CCH and meeting with Dick Merrill, CCH’s CEO, who said to the 6 VPs present in the conference room, and I quote, “You guys make this work.”

The Tax Forum started in the fall of 1987 as a 1-1/2 day in-person program presented in four cities. After four years, CCH indicated that they no longer were interested in being in the seminar business (although for many years CCH remained a Tax Forum sponsor), and my partner, Michael Cohen, and I took over the entire concept and grew it to what it is today. At one point, we were presenting in-person in seven cities, as well as presenting private seminars to national CPA firms in another seven or so cities.
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Navigating A Sales Tax Audit: A Comprehensive Guide To Protecting Your Business

Navigating A Sales Tax Audit: A Comprehensive Guide To Protecting Your Business

If you’re reading this, you’ve probably received a letter of audit from a government entity. You’ve also likely now gotten over your initial anxiety and are looking for help with the next steps. You’re in the right place – we’re here to tell you that there’s no need to panic.

So, what exactly is a sales tax audit? And what can you expect?

Definition Of A Sales Tax Audit

A sales tax audit is a rigorous examination conducted by state taxing authorities to review a business’s sales tax returns, financial records, and transactions. The primary objective is to ensure compliance with applicable tax laws and regulations regarding the collection, reporting, and remittance of sales tax.

We know, sounds scary. But we can help you navigate the process successfully. In this guide, we’ll unpack various aspects of sales tax audits, including triggers for audits, documentation requirements, strategies for responding to audit findings, the role of tax professionals, and the possible consequences of an unsuccessful audit.

Here’s what you can discover:

  1. Understanding Sales Tax Audits
  • Triggers for a Sales Tax Audit
  • Types of Sales Tax Audits
  • Common Misconceptions about Sales Tax Audits
  1. Responding to Audit Findings
  • The Audit Process: From Notification to Resolution: Gain insights into the audit process, from receiving a notification to resolving discrepancies and finalizing outcomes.
  • How to Handle Audit Findings: Explore strategies for addressing audit findings effectively, including reviewing and collaborating with tax professionals.
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Citizens Against Government Waste: The Prime Cut Series (#5)

Citizens Against Government Waste: The Prime Cut Series (#5)

Eliminate Earmarks For The F-35 JSF Program
1-Year Savings: $1.5 billion
5-Year Savings: $7.5 billion

The many problems of the JSF make it impossible to justify Congress adding funding beyond that requested by the DOD. Total acquisition costs of the program now exceed $428 billion, 84 percent greater than the initial estimate of $233 billion, with projected lifetime operations and maintenance costs of $1.727 trillion.

In February 2014, then-Under Secretary of Defense for Acquisition, Technology, and Logistics and now Air Force Secretary Frank Kendall referred to the purchase of the F-35 as “acquisition malpractice.” On April 26, 2016, the late John McCain (R-Ariz.), who was then chairman of the Senate Armed Services Committee, called the JSF program “both a scandal and a tragedy with respect to cost, schedule, and performance.”

The JSF has been dragged down by an array of persistent issues, many of which were highlighted in the FY 2019 DOD Operational Test and Evaluation Annual Report, which revealed 873 unresolved deficiencies including 13 Category 1 items, involving the most serious flaws that could endanger crew and aircraft. While this was an overall reduction from the 917 unresolved deficiencies and 15 Category 1 items found in September 2018, the report stated that “although the program is working to fix deficiencies, new discoveries are still being made, resulting in only a minor decrease in the overall number of deficiencies.”

Many of the problems with the F-35 program can be traced to the decision to develop and procure the aircraft simultaneously. Whenever problems have been identified, contractors needed to go back and make changes to planes that were already assembled, adding to overall costs. Speaking at the Aspen Security Forum on July 24, 2015, then-Air Force Secretary Deborah Lee James stated, “The biggest lesson I have learned from the F-35 is never again should we be flying an aircraft while we’re building it.”

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How To Receive Your R&D Payroll Tax Credit

How To Receive Your R&D Payroll Tax Credit

The Research and Development payroll tax credit, also known as the R&D payroll tax credit is a tax incentive designed for qualified businesses to offset their payroll tax. It is designed for new companies that perform research and technology development activities to be able to apply up to $500,000 of research credit against payroll tax liability. These R&D credits can be carried forward for up to 20 years.

Which Businesses Qualify for the R&D Payroll Tax Credit?

In order to qualify for the tax credit, a business must meet each of the following criteria:

  • Have 5 years or less in revenue
  • Have less than $5 million in revenue in the current year
  • Have conducted qualifying research activities and expenditures
Documentation Needed to Claim the R&D Payroll Tax Credit

Documentation is extremely important to defending any R&D tax credit claims. This includes having a permitted purpose, technological uncertainty, the process of experimentation, and being technological in nature.

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IRS Form 8938 (Statement of Specified Foreign Financial Assets): Reporting Requirements Overview

IRS Form 8938: Reporting Requirements Overview

Living abroad brings its own set of adventures and challenges, especially when it comes to navigating U.S. tax obligations. If you’re an expat with a financial footprint across borders, you’ll need to familiarize yourself with IRS Form 8938, a key component of the Foreign Account Tax Compliance Act (FATCA).

WHAT IS FORM 8938?

Form 8938, titled “Statement of Specified Foreign Financial Assets” is a tax form required by the U.S. Internal Revenue Service (IRS) for taxpayers to report their specified foreign financial assets if the total value of those such foreign bank assets exceeds certain thresholds. It was introduced as part of the Foreign Account Tax Compliance Act (FATCA) to combat tax evasion and ensure U.S. persons are reporting their foreign income.

The form is filed along with the taxpayer’s annual income tax return, and the reporting thresholds vary depending on the taxpayer’s filing status and whether they live in the U.S. or abroad.

WHO NEEDS TO FILE IRS FORM 8938?

IRS Form 8938 must be filed by U.S. taxpayers (citizens, residents, and certain nonresidents) who have specified foreign financial assets exceeding certain thresholds. These thresholds depend on the taxpayer’s filing status and residency:

  • U.S. Residents:
    • Single or married filing separately: Assets over $50,000 on the last day of the tax year or over $75,000 at any time during the year.
    • Married filing jointly: Assets over $100,000 on the last day of the tax year or over $150,000 at any time during the year.
  • Non-U.S. Residents:
    • Single or married filing separately: Assets over $200,000 on the last day of the tax year or over $300,000 at any time during the year.
    • Married filing jointly: Assets over $400,000 on the last day of the tax year or over $600,000 at any time during the year.

    Even if the reporting thresholds are met, Form 8938 is only required if the taxpayer is required to file a U.S. tax return.

WHAT ARE FOREIGN FINANCIAL ASSETS?

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TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

The Treasury Inspector General for Tax Administration (“TITGA”) recently has released a report on the status of efforts by the Internal Revenue Service (“IRS”) to develop the digital asset monitoring and compliance strategy mandated by Congress with the Inflation Reduction Act of 2022.

For purposes of federal taxation, a “digital asset” is defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”[1] This includes non-fungible tokens and virtual currencies.

As part of the Infrastructure Investment and Jobs Act of 2021, Congress had amended sections 6045 and 6050I to require reports from digital asset brokers and from any person engaged in non-financial trades or business who receives more than $10,000 at least in part in digital assets.[2]

TITGA noted that the IRS has created the Digital Asset Advisory Committee (“DAAC”) in February 2022 to provide service-wide collaboration, planning, and information sharing with respect to digital assets. The DAAC has the following goals:

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The Day After April 15th: How To Find A Tax Job When Your Firm Downsizes

How To Find A Tax Job

The Day After April 15th: How To Find A Tax Job When Your Firm Downsizes

With wars spreading throughout the world, tax and accounting professionals must build a backup business plan to protect their tax careers from unwanted interruptions. Unless you are not paying attention, (doubtful since tax professionals are highly educated), world events are quickly unfolding that will affect the tax and accounting profession, too. Previous wars are a good indicator of future actions, with generations having lived their lives through the Vietnam War(1969-1973); Persian Gulf War(1993); Afghanistan War( 2001-2014); Iraq War( 2003-2011, we know wars create a fast track to downsizing firms. While the government is funding wars in Ukraine, Russia, Israel with Iran; U.S. taxpayers are increasingly taxed to the max. We know from years of experience that large firms downsize to reduce overhead costs after April 15th . They now call downsizings, a rightsizing which is an oxymoron. A firm rightsizing is the process of restructuring an organization by cutting costs, reducing employees, or reforming upper management. For tax and accounting professionals caught in these rightsizings, it is devastating. However, this time it is different, as we built a safety net to protect tax professionals.

What action should you take now to support and protect your tax career?

A tax career is smart choice, if you manage it properly, and this means taking personal responsibility for marketing yourself. Every firm’s marketing budget focus is on the firms’ name and brand, not your name. What most tax staff do not realize is that the Tax Partners who are knocking it out of the ballpark for their firms are privately investing their own money in marketing themselves. You need not wait to make Tax Partner to realize what really happens. Years ago, a Tax Partner privately confided in me, they would rather get a root canal than go in and ask management at the firm for money to market themselves. They told me the answer would be a hard no! The firm’s marketing budget is spent on a firm’s name, not individual names. This makes good business sense since the turnover rate is 25%-30% in the Big Four. Most do not realize that the Tax Partners who are doing well in large firms invest in marketing themselves out of their own pocket. Once you learn this lesson, you learn to start early in taking personal responsibility to market your tax expertise.

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What Happened To Bitcoin?

What Happened To Bitcoin?

Those who involved themselves in Bitcoin markets after 2017 encountered a different operation and ideal than those who came before. Today, no one much cares about what came before, speaking of 2010-2016. They are only watching the upward price momentum and are thrilled for the increase in the asset valuation of their portfolio.

Gone is the talk of separating money and state, of a market-based means of exchange, of genuine revolution that would extend from money to the whole of politics the world over. And gone is the talk of changing the operation of money as a means of changing the prospects for freedom itself. The enthusiasts around Bitcoin have different goals in mind.

And during this entire period, the exact time when this digital asset might have protected multitudes of users and businesses from rapacious inflation growing out of the worst and most globalized experience of corporatist statism in modern history, made possible due to the money monopoly of central banks that funded the operation, the original asset that carries the symbol BTC was systematically diverted from its original purpose.

The ideal was nicely articulated by F.A. Hayek in 1974. Much of his career as an economist was spent arguing for sound monetary policies. At every important turning point, he faced the same problem: governments and the institutions they serve did not want sound money. They wanted to manipulate the currency system to benefit elites, not the public. Finally, he refined his argument. He concluded that the only real answer was a complete divorce of money and power.

“Nothing can be more welcome than depriving government of its power over money and so stopping the apparently irresistible trend towards an accelerating increase of the share of the national income it is able to claim,” he wrote in 1976 (two years after his Nobel Prize). “If allowed to continue, this trend would in a few years bring us to a state in which governments would claim 100 per cent of all resources—and would in consequence become literally ‘totalitarian’.”

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The Life Of A Tax Advisor In The Israel War Zone Today

The Life Of A Tax Advisor In The Israel War Zone Today

Over the weekend, I reached out to a Tax Advisor in Israel to learn what was is happening on the ground there. Here is what this Israel/US Tax Advisor (who we will keep anonymous) communicated in his letter to me. To protect this Tax Advisor, we are providing portions of his communication. If you believe you have had a tough tax season, you will appreciate learning what it is like for a US/Israel Tax Advisor in Jerusalem today!

To protect his identity, we will call him David. If you would like to support David and his family, providing your commentary through this site will get to him. Few Americans realize what it is really like for the people living in Israel today.

For the record, TaxConnections does not support war of any kind. We support world peace. Pray for peace for all people.

Hi Kat,

THANK YOU FOR REACHING OUT!!!!!    As you know, most of the world does NOT care and/or is brain dead.

We had a very scary night. We already received reports that the Iranian attack was due to hit us between 2 to 4:30 AM.

We prepared our war room, a room that newer buildings have that is specially reinforced to offer some protection in case.

Scuds (remember Sadam Hussein who shot scuds at Israel a few years ago!) landed and exploded nearby.  The war room is NOT strong enough to resist a direct hit, however.   We stocked water bottles, lights, airbeds, and face masks and flashlights for emergency use.

Then, at 1:30 or 1:35 AM,  we heard several huge explosions near us. Our building shook and rattled, but we could not see anything outside of our windows.   We live on the 7th floor of an apartment building in southern Jerusalem.  We are surrounded by Arab Muslim villages who have perpetrated many terrorist attacks against us, so we are ALWAYS concerned about another October 7th massacre emanating from these hostile villages.   Talk about close proximity to your enemy who is a couple of blocks away ( 1/4 mile?).

There were 6 -8 rockets, missiles, and/or drone that struck near us and put the real fear of G-d into us…. our poor dog was howling and scared out her mind also…….and the Home Front Command Air Raid Sirens went off for 10-15 minutes.

Then, there were continuous smaller booms and explosions, but we still could not see anything.  We have clear views to the north, to the east into Jordan, and to the south.   We have the privilege to see the Temple Mount, much of Jerusalem, Jordan, and the Dead Sea from our windows and porch.

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Impact Of Sales And Use Tax On Mergers And Acquisitions

Impact Of Sales And Use Tax On Mergers And Acquisitions

Mergers and acquisitions (M&A) involve complex transactions that require careful planning and execution. One aspect that is often overlooked is the impact of sales and use tax on the transaction. Failure to properly account for sales and use tax can have a significant impact on the deal, including increased costs, potential legal issues, and decreased profitability.

One of the main reasons why sales and use tax can be a challenge in M&A due diligence is that it varies by state. Each state has its own rules and regulations regarding sales and use tax, and these rules can change frequently. This means that companies involved in M&A transactions need to be aware of the specific sales and use tax laws in each state where they operate or plan to operate.

When performing a due diligence review, it is important to address the target company’s sales and use tax exposure by reviewing nexus, previously filed tax returns, payment history, and any audits or assessments. This will help identify any potential liabilities, such as underpayment or non-payment of sales and use taxes.

It is also important to assess the target company’s sales and use tax compliance processes, including the accuracy of tax calculations, the appropriate use of exemptions and credits, and the maintenance of proper documentation.

Another important consideration in a due diligence review is the potential impact of sales and use tax on the transaction itself. In some cases, the buyer may be responsible for any unpaid sales and use tax liabilities of the target company. This can significantly increase the cost of the transaction and impact the profitability of the deal.

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TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

The Treasury Inspector General for Tax Administration (“TITGA”) recently has released a report on the status of efforts by the Internal Revenue Service (“IRS”) to develop the digital asset monitoring and compliance strategy mandated by Congress with the Inflation Reduction Act of 2022.

For purposes of federal taxation, a “digital asset” is defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”[1] This includes non-fungible tokens and virtual currencies.

As part of the Infrastructure Investment and Jobs Act of 2021, Congress had amended sections 6045 and 6050I to require reports from digital asset brokers and from any person engaged in non-financial trades or business who receives more than $10,000 at least in part in digital assets.[2]

TITGA noted that the IRS has created the Digital Asset Advisory Committee (“DAAC”) in February 2022 to provide service-wide collaboration, planning, and information sharing with respect to digital assets. The DAAC has the following goals:

  • Coordinating collaboration, planning, information sharing, and executive leadership over the IRS’s digital asset strategy related to its compliance programs.
  • Identifying and monitoring the management of digital asset programs and resources to ensure accountability, transparency, and consistency.
  • Recommending funding and investment opportunities for digital asset technology and operational needs such as tracing software, or basis computational tools.
  • Reviewing digital asset related activities, as needed.

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IRS: High-Income Filers Vulnerable To Illegal Tax Schemes

IRS: High-Income Filers Vulnerable To Illegal Tax Schemes

As part of the Dirty Dozen campaign, the Internal Revenue Service warned wealthy individuals about three tax traps designed for them by dishonest promoters and shady tax practitioners.

For those with high incomes, they can be tempting targets for a variety of schemes and aggressive tax strategies designed to reduce taxes. These can take many different forms, ranging from inflated art donation deductions to aggressive charitable remainder annuity trusts and detailed shelters that maneuver to delay paying gains on property.

“High-income taxpayers can be vulnerable to being pulled into these aggressive schemes and scams,” said IRS Commissioner Danny Werfel. “Taxpayers should be extra careful on tax maneuvers that seem too good to be true. Beware of advertisements for seemingly ideal tax structures that distort tax laws and leave victims with civil or criminal tax penalties.”

“There’s growing risk for taxpayers pulled into aggressive schemes as the IRS continues to accelerate and expand our compliance work involving high-income individuals,” Werfel added. “The IRS reminds taxpayers that relying on an independent tax or legal professional can help avoid problems with aggressive promoters.”

This marks the tenth day of the special Dirty Dozen series. The annual Dirty Dozen list comprises a list of scams and schemes that can put taxpayers and tax professionals at risk. The list is not a legal document nor a formal enforcement priority. The education effort is designed to raise awareness and protect taxpayers and tax pros from common tax scams and schemes.

Improper Art Donation Deductions

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