Tag Archive for Tax Blog

Foreign Trusts and Installment Sales

Introduction

A United States Settlor of an irrevocable Foreign Trust having a United States beneficiary is deemed to be the owner of the Foreign Trust. Subject to statutory exceptions, the Settlor is the taxable party regardless of whether the Settlor has released all dominion and control of the trust assets by an irrevocable transfer and the right to alter, amend, or modify the trust document. This is the income tax treatment of a United States Settlor by Section 679 of the Code. (1) Because the Settlor is treated as the owner of the trust assets, the transfer of appreciated assets to a Foreign Trust does not occasion a taxable event as contemplated by Section 684 of the Code. Read More

Written by | Posted in Estate Planning Tax • Gift Tax • Income Tax • Tax Provision/Tax Reporting

IRS Reminds Those with Foreign Assets of U.S. Tax Obligations

Nonresident aliens who received income from United States sources in 2013 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be April 15 or June 16 depending on sources of income. See Taxation of Nonresident Aliens on IRS.gov.

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return. Certain taxpayers may also have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets. Read More

Written by | Posted in FBAR • IRS

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

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

ABSTRACT

This thesis deals with the relevant law up to 30 September 2012. This thesis analyses the inter-relationship in particular between ss 1(c), 33, 41(1), 195(1) and 237 of the Read More

Written by | Posted in Africa • Audit

Trends In Employment Law And Employment Tax

Among our business tax clients, we are seeing a rise in wage and hour litigation, either ancillary to, or independent of, their tax issues. In fact, recently I was giving a presentation to a group of business owners regarding this very issue, and one of the attendees told me that his business headquarters had been visited by the Department of Labor, Wage and Hour Division (DOL/WHD) that very day with a demand for records. What we are seeing at our law office could be coincidental; but, I believe it is the product of both an enhanced enforcement environment at both the federal and state levels, and a highly aggressive labor and employment law plaintiff’s bar. As the former Secretary of Labor, Hilda Solis, said in 2009, “Make no mistake, the DOL is back in the enforcement business.” Solis has since been replaced by Thomas E. Perez, but there is no indication that the DOL is easing its Read More

Written by | Posted in Corporate • Individual • IRS

A Collection… The Humorous Side of Tax… (15)

To cheer up the accountants after this busy week, here are some lawyer jokes:

♦ A doctor, a tax lawyer, a little boy and a rabbi were out for a Sunday afternoon flight on a small private plane. Suddenly, the plane developed engine trouble. In spite of the best efforts of the pilot the plane started to go down. Finally the pilot grabbed a parachute, yelled to the passengers that they had better jump, and bailed out.

Unfortunately, there were only three parachutes remaining. The doctor grabbed one and said, “I’m a doctor, I save lives, so I must live” and jumped out.

The tax lawyer then said, “I am the smartest man in the world, I deserve to live!” He grabbed a parachute and jumped. Read More

Written by | Posted in Tax Humor

Investing In A Roth 401(K) And Tax Free Rollovers

Roth 401(K)

Employees should consider making contributions to a Roth 401(K) if their employer allows them to do so. The account is funded by after tax contributions. Since there are no income limitations on making contributions to a Roth 401(K), these provide a good way for high income taxpayers to invest in a Roth IRA without converting a traditional IRA. For 2014, you may contribute up to $17,500 to a Roth 401(K) a traditional 401(K), or a combination of the two. If you are 50 or older, the contribution limit is $23,000 annually If the employer matches the employee contribution, it goes into the traditional 401(K) as a pretax contribution.

Both withdrawals from a Roth IRA and a Roth 401(K) are tax-free if the account has been Read More

Written by | Posted in Individual

Tax Professionals Step Into The Future

Behind the scenes at TaxConnections, we are witness to many exciting breakthroughs effecting a tax professionals future! We are now experiencing changes that are shifting the futures of tax professionals right before our eyes. The most obvious change comes from our ability to drive new business to the tax professionals who have ventured to the TaxConnections site. From our members own words to your eyes you can see what happens.  See TaxConnections Member Testimonials. TaxConnections is shaping the futures of tax professionals and those that need their expertise.

This morning I picked up a phone call to help a tax professional in New York get on our site, our conversation turned from a help call to a lot of questions regarding what we are doing for tax professionals and ended in an Investor call. That was a surprise to both of us! More Read More

Written by | Posted in TaxConnections

California “Goes Criminal” With Revenue Recovery And Collaborative Enforcement Team

California Governor Jerry Brown signed Assembly Bill 576 into law on October 7, 2013, authorizing a pilot program to create the “Revenue Recovery and Collaborative Enforcement Team” (RRCET) consisting of an alliance primarily between the California Department of Justice (DOJ), the Franchise Tax Board (FTB), the State Board of Equalization (BOE), and the Employment Development Department (EDD) in an effort to combat “criminal tax evasion associated with the underground economy.”

In addition to the agencies listed above, the following agencies may participate in the pilot program in an advisory capacity to the team:

• California Health and Human Services Agency. Read More

Written by | Posted in North America • Tax Fraud/Evasion/Crimes • Tax Policy

Tax Day – April 15, 2014 – It Can Be Easier

The complexity of completing one’s federal and state income tax returns is not necessarily tied to one’s income level. One of the more complex federal tax rules is the Earned Income Tax Credit (EITC) for low-income workers. Could the individual income tax be simpler? Yes. Here are some ideas.

• Make all income you received subject to tax. What is income? Let’s say it is anything that increases your wealth. So, it would be any payment from the government, debt forgiveness, gross wages, employer-provided health insurance, scholarships, gains from selling assets, etc. What would not be income? Borrowing money (it does not increase your wealth because you have an offsetting liability). Receipt of expense reimbursements from your employer (it makes you whole for what you, in essence loaned to your employer Read More

Written by | Posted in Income Tax

Who Should Form A Captive Insurance Company?

In conjunction with the great people at TaxConnections, we’ve published a new eBook on captive insurance titled: “Who Should Form a Captive Insurance Company?”. You can buy a copy HERE. Cost: $4.98.

To help potential captive owners determine if they should form a captive, I’ve written the “10 questions,” one of which is:

Can I negotiate the coverage terms with my current insurance carrier, or, do they hand me a policy to sign?

Read More

Written by | Posted in Tax Risk Management

A Collection… The Humorous Side of Tax… (14)

♦ Each year on tax day I like to remember a Charles Schultz quote from the Peanuts comic strip: “No problem is so big or so complicated it can’t be run away from.”

♦ When it comes to finances, remember that there are no withholding taxes on the wages of sin. Mae West

♦ Every year around April 15 Americans have a rendezvous with debt.

♦ The client went to the tax preparer and said, I filed my taxes electronically to speed things up, and it worked. I got an audit letter in half the normal time.

♦ On April 15th you count your blessings . . . and then send them to Washington. Read More

Written by | Posted in Tax Humor
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