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Independence & Taxes

Last week the United States celebrated the 249th anniversary of its declaration of independence from Great Britain.[i] In celebration of the occasion, President Trump signed into law the One Big Beautiful Act which, among other things, extended the tax cuts enacted during the first year of his first term in the White House.[ii]

As most of us are aware, the debates preceding the enactment of this legislation – whether they occurred in a House or Senate committee, on the floor of either Chamber, in public assemblies, with members of the media, or on city streets – often devolved into what may fairly be described as exercises in divining economic collapse, promoting class warfare, accusing others of demagoguery, etc.[iii]

Continue Reading Taxes: An American Obsession?
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Related Party Loans

If you’ve been around closely held businesses long enough, you know that a transfer of money between a business and its owner, or between two related businesses, is sometimes characterized by the parties as a loan (“related party loans”).

However, in order for such a transaction to be respected as a bona fide loan for purposes of the income tax, it will not suffice for the related putative borrower and lender to merely label the transfer of value between them as an obligation to be repaid.[i]

Continue Reading Writing Off A Loan – Simultaneous COD Income and Bad Debt Deduction? Not Necessarily
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An Agency Under Siege

The mission statement of the IRS reminds taxpayers that it is their responsibility to understand and meet their tax obligations, while it is the role of the IRS to “enforce the [tax] law with integrity and fairness to all” to ensure that those obligations are satisfied.

The IRA

In 2023, following the $80 billion of funding authorized for the agency by the Inflation Reduction Act (the “IRA”),[i] the IRS announced it was going to increase its enforcement efforts with regard to wealthy and high-earning taxpayers, and the complex partnerships they employ,[ii] to ensure these taxpayers were held accountable for the full amount of taxes they owed.

Continue Reading The Limited Partner Exclusion From Self-Employment Tax – But Who Is A Limited Partner?
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Remember Taxes

Every conveyance of property or of an interest in property from one person to another is prompted, or at least influenced, by economic considerations. The parties to the transaction may swap properties, or one party may transfer a property to another in exchange for money[i] or for the services of the other party. In these instances, there has been a conscious or deliberate exchange of value between the parties – each party has determined that the exchange will improve their own position.[ii]

Continue Reading Terminating a Trust? Don’t Forget to Consider This Tax Issue
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Two Camps

Last month, Bloomberg carried an article about a “small but growing trend” of states that are either cutting their individual income taxes or phasing them out entirely.[i]

According to the article, the states adopting these measures have determined that, by reducing income taxes, they will enhance their ability to attract and retain people and businesses.[ii]

Continue Reading State Taxation of a Nonresident’s Gain from the Sale of Stock –The Shot Heard Round the Country?
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Legal Laissez-Faire?

Few provisions of the Code have a single, clear meaning that leaves no room for interpretation. Even many of those that, on the surface, appear fairly straightforward, are usually open to alternative “understandings.”

In the absence of continuous monitoring, implementation (as in the form of regulations),[i] and enforcement, there are taxpayers that may slant a particular provision of the Code to capture a more favorable result than Congress may have intended, especially when a taxpayer is facing financial pressures, whether attributable to the broader economy, their region or industry, or something else.

Continue Reading Observations on Charities, Taxes, and Cash Flow
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Intrafamily Transfer

A parent will sometimes transfer money to a child to enable the child to make an investment that the child could not otherwise make on their own.

For example, the child may have identified an attractive business opportunity but does not have sufficient assets or liquidity with which to make an investment therein, is unwilling or unable to sell other assets to raise the funds, and has not been able to borrow the necessary amount on acceptable terms from an unrelated lender because the market rate of interest may be too high, the repayment schedule may be too short, or the collateral requirements may be difficult to satisfy.

Continue Reading “Hey Mom, Can I Have A Few Bucks?” Is It A Loan? A Gift? A Little of Each?
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Do This But Not That

Charitable organizations are dependent, in no small part, upon the financial support of many successful business owners. The generosity of these individuals and their organizations may be a manifestation of several factors including, for example, their gratitude to the communities in which they have thrived, a willingness to share their good fortune for the benefit of others, and – less altruistically – a desire for public recognition[i] and the “incidental” benefits arising therefrom.[ii]

Continue Reading Transferring the Family Business To A Private Foundation? Are You Sure About That?
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NYC Transfer Tax

According to the New York City Comptroller, the City collected approximately $1.13 billion in Real Property Transfer Tax (“RPTT”) in the FY 2024. The Comptroller’s Office has forecast that $1.21 billion of RPTT will be collected in FY 2025.[i] Impressive figures by most measures, but just a drop in the proverbial bucket compared to the City’s total tax revenue for FY 2024 of almost $75 billion,[ii] and of its estimated tax revenue of more than $77 billion for FY 2025.[iii]

Still, the RPTT is no laughing matter when one considers that the tax is imposed at a rate of 2.625% of the purchase price for the “transfer” of commercial “real property,” or of an “economic interest” in such property,[iv] located within the City, where the value of the property is more than $500,000.[v]

Continue Reading NYC Transfer Tax, Charities, and Single Purpose LLCs – Are Lenders Beneficiaries?
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Tax Receipts

Late last year, the Office of the State Comptroller (the “OSC”) estimated that sales and use tax receipts would increase by 2.3% in the SFY 2024-2025.[i]

The OSC also projected that collections from sales and use taxes would increase by 3.5 percent for SFY 2025-2026.[ii]

Part of this increase is undoubtedly attributable to the efforts of the Department of Taxation and Finance to identify taxpayers who failed to collect and/or remit the correct amount of sales tax.[iii]

Continue Reading New York Sales Tax: When a Responsible Person Acts Irresponsibly