It’s Complicated
The Code includes a number of complex rules that are aimed at those overseas business and investment activities of U.S. taxpayers that Congress has determined may result in the improper deferral or avoidance of U.S. income tax.
Continue Reading Enough Already – Eliminate Downward Attribution and Accidental CFCs
Independence
Earlier this week, the United States celebrated the 247th anniversary of its declaration of independence from the United Kingdom of Great Britain,[i] though the latter did not formally recognize the independence of its thirteen former colonies until the Revolutionary War ended, seven years later, with the signing of the Treaty of Paris on September 3, 1783.
Another Change
Last week BDO confirmed that it was going to convert from an entity organized as a limited liability partnership under state law to one organized as a corporation.
With that, BDO became the latest in a growing list of highly regarded accounting firms to announce that it was going to change, or was considering a change in, its legal structure.
Continue Reading Pre-Consolidation Conversions in the Accounting World – Tax Considerations
Decisions
It is often the case that the optimal form of legal entity through which a business should operate, at least for income tax purposes, will depend in part upon the stage of its life cycle[i] in which the business finds itself.
For example, a start-up that is expected to generate losses during its initial years of operation may want to pass those losses along to those of its owners who have made significant capital contributions to the business.
Continue Reading Some Observations On Recent Conversions of Partnerships to “C” Corporations
One of the reasons often given for eliminating the estate tax is the substantial economic burden it places upon the estate of a deceased business owner and upon the business itself. Specifically, within nine months of the owner’s death, their estate is required to satisfy its federal estate tax liability, which is determined by applying a 40 percent tax rate to the date of death value of the decedent’s assets, including their interest in the business.[i]
Continue Reading Corporate-Owned Life Insurance, a Redemption, and The Value of a Decedent’s Stock
Something’s Wrong
Of late, a not insignificant number of the business owners with whom I’ve been working have raised some concern over whether they are financially prepared for the next stage of their lives.
Continue Reading Tax Planning for Business Owners Who Shortchange Themselves
The Supremes
The Constitution has figured prominently in the news of late. In the days preceding the initial discussions among members of the Administration and the Congressional leadership regarding the debt ceiling, several prominent Democrats stated that the President has the authority under the 14th Amendment to the Constitution[i] to unilaterally raise the debt ceiling. Last Sunday, the President himself told reporters he believes he has this authority, though “he acknowledged potential legal challenges could still lead the nation to default if he went that route.”[ii]
Continue Reading Supreme Court Upholds IRS Collections Summons Without Notice
Hasta La Vista N.Y.
Wealthy individuals continue to leave New York[i] for tax friendlier jurisdictions.
Be Prepared[ii]
Some of these taxpayers take a very methodical approach toward planning for their departure. They consult their tax advisers many months, if not a few years, in advance of any move.[iii] They educate themselves in the rules that New York will apply to determine their tax residence. Then they formulate a plan and implement it in a very deliberate way.
Solace in the Mundane?
At war with Russia in eastern Europe, a nascent competing world order, mass shootings and bank failures at home, questionable audit practices by the Big 4 . . . everywhere, debt ceilings and the risk of default, inflation, tighter credit, recession, crypto-nonsense, recreational cannabis, legalized gambling, men competing in women’s sports, a nation divided over all too many things, the Knicks down to the Heat 3 games to 2,[i] the prospect of Biden vs Trump II,[ii]. . . , the list goes on.[iii]
Continue Reading Indirectly Held Profits Interests and Rev. Proc. 93-27
Charitable Giving Update
According to a recent report on charitable giving, the number of donors at every level of giving dropped during the first three quarters of 2022.[i] The number of new donors was down by over 19 percent and the number of “newly retained” donors was down by almost 25 percent. The number of individual donors was down 7 percent.
That said, the amount donated was up 4.7 percent. According to the report, however, “the amount of goods and services that money could purchase was down,” citing the rate of inflation.
Continue Reading Selling Your Business? Careful of Pre-Sale Contributions of Stock to Charity