Tag Archive for Tax Blog

Foreign Tax Credit For Individuals Living Abroad

As you know, the United States requires all citizens and permanent residents (Green Card holders) to report income via annual income tax filings regardless of where in the world the money was earned. As the name suggests, the Foreign Tax Credit for individuals is designed to reduce your U.S. tax burden on income that was earned and consequently taxed in a foreign country. In this way, you will not be subject to double taxation on that money.

In addition to foreign earned income (FEI), dividends, interest, and even rental income that come from foreign sources are eligible for consideration with the Foreign Tax Credit if they were taxed by a foreign entity. One benefit to using this credit is that it is available to all U.S. taxpayers who have foreign earned income or investment income from a foreign source. There are no stipulations regarding residency or time spent in a foreign country to take advantage of this reduction in taxes owed at home. Read More

Written by | Posted in Foreign Earned Income • Foreign Tax Credits • Tax Credit

Canada Tax: Capitalization Of Development Cost Under The Income Tax Act

During the development phase or period of construction, there are many costs that are incurred. The majority of these expenditures are added to the capital cost of property or to the cost of inventory.

Soft costs do not have to be capitalized once the construction is complete or on the day that the building is substantially (at least 90%) used for its intended purpose. An occupancy certificate or completion certificate issued by the municipal building department is sufficient evidence that construction is complete. Read More

Written by | Posted in Canada • International • Real Estate

Is Cancelling NAFTA Bad For Canada?

The spectre of NAFTA being cancelled is on many people’s minds since the election of President Donald Trump. Washington has pulled out of the Trans-Pacific Partnership (TPP) and wants a better deal for the U.S. in the NAFTA agreement. The recent possible tariffs coming from the Trump administration is also heightening trade concerns. Is cancelling NAFTA a bad thing for Canada? There are 2 ways to examine this question.

The Current State

The first approach is looking at how things currently are and what is likely to happen using this assumption. Canada is the U.S.’s second largest trading partner and the U.S. is Canada’s largest trading partner by a large margin; the U.S. is Canada’s closest trading partner by physical location. Read More

Written by | Posted in Canada • NAFTA • TPP • Trade

ALERT: Advance Pricing Arrangement And Mutual Agreement Program (Part II)

This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs) and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year 2000 through 2016 separately. This nineteenth report describes the experience, structure, and activities of the APMA Program during calendar year 2017. It does not provide guidance regarding the application of the arm’s length standard. Read More

Written by | Posted in Advance Pricing And Mutual Agreement Program • IRS • TaxConnections

ALERT: Advance Pricing Arrangement And Mutual Agreement Program (Part I)

Part I. The APMA Program – Structure, Composition, and Operation

[PUB. L. 106-170 § 521(b)(2)(A)]

In February 2012, the former APA Program was moved from the Office of Chief Counsel to the Office of Transfer Pricing Operations1 within the Large Business and International Division of the IRS and combined with the U.S. Competent Authority staff responsible for transfer pricing cases, thereby forming the APMA Program.
Read More

Written by | Posted in Advance Pricing And Mutual Agreement Program • IRS • TaxConnections

A Discussion Of Belated Alternatives To The Offshore Voluntary Disclosure Program And Recommendations For Further Improvements (Part 3 of 3)

In the first blog in this series we discussed how those who participate in amnesties also tend to be people who made inadvertent errors, that is, “benign” actors, rather than bad actors. We discussed how it can make sense to offer some form of amnesty before implementing a sudden increase in penalties or enforcement. Otherwise, the increase is more likely to be viewed as unfair and erode trust for the government. Moreover, a decline in trust can erode voluntary compliance.

In the second blog, we cited data showing that, consistent with the research on amnesties, IRS’s first amnesty alternative – the Offshore Voluntary Compliance Initiative (OVCI) – generally attracted people who failed to report offshore accounts but had paid their taxes or had under-reported small amounts. Read More

Written by | Posted in IRS • OVDP

The 2017 Tax Act And U.S. Real Estate: The Foreign Investor And Unusually Low Tax Rates

The boom in U.S. real estate caused by foreign investors is about to get bigger as a result of greatly reduced U.S. income taxes for nonresident aliens and foreign corporations.

Because of the new 2017 Tax Act, foreign investors could receive a 40% reduction in the U.S. income tax of their gains and income from their real estate investments. For those foreign investors who already were invested in U.S. real estate, their after-tax returns could now be 40% more valuable without their raising a finger. Read More

Written by | Posted in 2017 Tax Act • Income Tax • Real Estate • Tax Return • TaxConnections

FBAR Penalties Rise Again Due To Inflation

As with many numbers in the U.S. tax code (for example, the foreign earned income exclusion maximum amount), FBAR penalties increase periodically due to inflation.

Recently, the IRS announced that FBAR penalties for noncompliance would be increased for penalties assessed after January 15, 2017. A brief summary of the FBAR requirement and the new penalty amounts are the subjects of this blog.

The FBAR Requirement – A Quick Background Read More

Written by | Posted in FBAR • Foreign Earned Income Exclusion • Inflation • IRS • TaxConnections

How The New Tax Law Affects Small Business Owners

The Tax Cuts and Jobs Act (H.R. 1, “TCJA”) has is now law. The law contains many provisions affecting both individuals and small businesses. The main provisions affecting businesses are summarized below. Except where otherwise noted, these changes apply to after January 1, 2018. Thus, they do not apply to your 2017 taxes and your upcoming tax return.

What’s The New Corporate Tax Rate?

The cornerstone of the TCJA is a new lower rate for regular C corporations. C corporations are separate taxpaying entities with their own tax rates. Under the TCJA all C corporations are subject to single flat tax rate of 21 percent. The previous tax rates ranged from 15 percent to 35 percent. Read More

Written by | Posted in Small Business • Tax Cuts Jobs Act

Tax Advisor’s – Please Help Answer Tax Question Of The Week!

Tax Advisor’s – Your Thoughts On This Question Of The Week?

Could long term capital carryover loss eliminate or reduce depreciation recapture?
Sold during 2017 strip mall in 50% partnership after holding for 15 years.
Currently up against 4/17/2018 dead line with following tax issue.

Read More

Written by | Posted in Tax Questions

Corporate Tax Executives: Hiring Trends You Need To Know

When you have been searching for tax executives for 30+ years you see hiring trends long before tax organizations realize what is happening. For tax executives who have worked with me over many years to build their tax organizations, I am going to share what we are seeing in the market right now so you are better prepared.

There is an explosion of tax opportunities about to reach the market of the likes I have not seen since TRA 1986 under President Reagan. Read More

Written by | Posted in Hiring For Tax Department • Tax Executives

The Actual Expense Method Under The New Tax Law

When you use your car for business there are two ways to calculate your deduction: using the standard mileage rate or the actual expense method. The standard mileage rate method has remained the same and your miles are worth more in 2018. But, let’s go over how the actual expense method has changed.

Standard Mileage Rate Vs. Actual Expense Method

Most people use the standard mileage rate because it’s easier and simpler. All you do is keep track of your business mileage and deduct a set amount for each business mile. Read More

Written by | Posted in Depreciation • Mileage • MILEIQ
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