Tag Archive for Tax Blog

The Smart Attorneys Best Friend: A Tax Professional – Part 2

Divorce

Alimony

Alimony or separate maintenance is a payment ordered by court decree (not an agreement – unsanctioned by the court – between parties) made from one party in a divorce proceeding to the other, in order for the receiving party to maintain a standard of living (Cod. Sec. 215). We see both sides of this situation all the time, so we must be able to determine if the payments are deductible to the payer and/or taxable to the payee. There are conditions that must be known for the tax treatment of the payments to be determined: Read More

Written by | Posted in Tax Tips

Foreign Entities Subject to Reporting Rules On Financial Accounts of U.S. Persons

The IRS has instated some very aggressive rules to force Foreign Financial Institutions and Non-Financial Foreign Entities to enter into FATCA agreements and fully comply with new strict reporting requirements on the assets and financial accounts of US persons. While the rules and strategies in this area of tax law have undergone a number of changes in the past few years, this is an area of tax law that I have been working in since the 1980’s under various offshore voluntary disclosure programs and initiatives as a San Diego tax attorney.

Under the rules governing the international tax reporting obligations of foreign entities with financial accounts of U.S. person, a “withholding agent” paying U.S. source interest, dividends, rents, royalties or making a “withholdable payment” in any other form to a Read More

Written by | Posted in FATCA • FBAR • International • IRS

S Corporation Pitfalls to Avoid

When a business operates as a sole proprietorship or as a partnership, there are few legal and tax regulations that must be followed. However, if that business converts to a corporation, a number of things change and the owner(s) must adhere to these new expectations or run the risk of having the corporate form of organization legally disregarded. When a corporation is legally disregarded, the law treats it as though it does not exist. In a worst-case scenario, this means that the limited liability protection provided by a corporation is lost, and the owners can be held liable for the debts and acts of the corporation.

Keep in mind that a corporation, whether an S corporation or a C corporation, is a legal entity separate and distinct from its owners. This is unlike the situation with a Read More

Written by | Posted in Corporate • Partnership

The Basics of Canadian “Departure Tax”

When an individual, who was resident in Canada for tax purposes, ceases to be resident in Canada, there is generally a deemed disposition of assets owned by that individual at their fair market value. Any resulting deemed gain must be reported on the final tax return filed as a resident.

This is commonly called “departure tax”. However, unlike the kind of “departure tax” that is levied at some airports, there is no tax official in Canada waiting to collect it when the Canadian expat leaves. Rather, it is calculated and payable as part of the normal income tax filing.

This article will provide an outline of the key points in relation to the “Departure Tax”. Read More

Written by | Posted in Expatriate • Individual • International • North America • Real Estate

The Smart Attorney’s Best Friend: A Tax Professional – Part 1

Introduction

How often do Tax Professionals see clients after a legal proceeding and have to help them deal with the aftermath of the decisions that are already in place? If we had been in on the case before the judgments were made we could have helped them avoid a big tax mess.

Our goal today is to learn how to establish a liaison with the local Bar Association and/or individual Attorneys to consult on tax implications of various legal matters before judgments or court orders are issued.

Let’s address the pros and cons of this situation. Read More

Written by | Posted in Tax Tips

Tips for Surviving The Dreaded Eggshell Audit – Introduction

You wake up out of a sound sleep. You look over at your clock. It’s three o’clock in the morning. Your heart is pounding. Your entire body is trembling. Beads of sweat are rolling down your forehead, and it has nothing to do with the ambient temperature inside. You know this feeling. You’ve felt it before.

Your mind begins to race. Before you know it, you’re now daydreaming back to that day three months ago – the day when you got that dreaded call. For you, it was a day that will live in infamy. That one call, barely a minute long, has single-handedly caused an untold amount of anxiety and countless sleepless nights. It’s funny how the mind works – always reliving the past, as if it can somehow be altered. And while it is of course possible to learn from past mistakes, all that this exercise has succeeded in doing is conjuring up Read More

Written by | Posted in Audit • Tax Tips

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.6)

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 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.6 LEGITIMATE EXPECTATIONS Read More

Written by | Posted in Africa • Audit

Canada-US Cross-Border Tax Issues When Winding-Up a Subsidiary

Canadian corporations form US Subsidiaries, and US Corporations form Canadian Subsidiaries, all the time.

What are the cross-border tax implications when those subsidiaries are wound-up? This article will provide an overview of those implications.

Winding-up a US Subsidiary (“USco”) of a Canadian Corporation (“Canco”)

For US tax purposes, proceeds received on the wind-up of USco are generally not treated as a dividend, and hence no U.S. withholding tax should apply.

Rather, such amounts would generally represent proceeds from the shares which should Read More

Written by | Posted in Capital Gains • Corporate • International • North America • Real Estate

Taxes And Divorce – Part 5

Help Your Client Help Themselves

If you as a tax professional get the opportunity to advise your client before all the I’s are dotted and T’s crossed at the courthouse, here are some things you can do to help:

1. Based on the desired outcome for child custody, have a Form 8332 already prepared for you clients attorney to present for signature at the time of the court appearance.
2. If there will be a distribution from a qualified retirement account, make sure the QDRO is drawn up in the most tax beneficial manner.
3. If there is to be separate maintenance or support make sure the order is drawn up in the most tax beneficial manner for your client. Read More

Written by | Posted in Individual

Australian Tax Office To Publish Tax Data For Large Companies

The recent addition of §3C to Australia’s Taxation Administration Act 1953 mandates that the Taxation Office publish “as soon as practicable after the end of the income year” the following tax information relating to all companies with reported total income of $100 million or more-

1. Company name and Australian Business Number
2. Total income of the year
3. Taxable income for the year
4. Income tax payable for the year

Both publicly listed and large family companies will be affected by this “tax transparency” Read More

Written by | Posted in Australia/Oceania • Corporate

Masterpieces On Loan – Love of Art or Sales Tax Savings?

Museums are often able to keep their collections diverse because of the wealthy art collectors that are willing to loan their pieces to them. On the surface, this seems like a very honorable act, but what many don’t know is there is a hefty tax incentive for these collectors. There is an increasing amount of art collectors that are employing this sales and use tax savings tactic when purchasing expensive art. As brought to the forefront in a recent NY Times article, they are using clever legal planning to get around paying a substantial sales (or use) tax bill on a multi-million dollar piece of art.

In the state and local tax (“SALT”) community, many art collectors are taking advantage of the Read More

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