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The Long-Term View

Among its core functions, federal tax policy seeks to encourage those behaviors among businesses that, in the long run, will have a lasting positive effect upon the nation’s economy as a whole.[i]

Implicit in this approach toward tax legislation is the enactment of a set of relatively constant and long-lasting rules on which businesses[ii] may rely when planning for the future.

Under this long-term view of tax policy, a provision that is drafted to be short-lived probably should not be adopted unless Congress reasonably determines the provision will generate benefits that endure well beyond its expiration.  

Continue Reading Nothing Lasts Forever –Expiring Tax Provisions
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Related Party Transactions

Few individual owners of a closely held business would be surprised if you explained to them that the IRS and the Federal courts generally will subject many transactions between certain “related” persons to heightened scrutiny (a) to ensure that the related persons have not structured a transaction to gain a tax advantage without also having a bona fide business purpose, or (b) to ascertain whether the intended economic consequences of the transaction are consistent with its form and with how it is reported by the parties for tax purposes.   

However, those same individuals may be taken aback if you described to them some of the measures that Congress has enacted over the years to prevent related persons from realizing certain tax benefits that Congress has determined would be inappropriate in the context of a transaction between related parties.  

Continue Reading Partnership Losses on Related Party Sales – The IRS Provides Some Clarification
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Hide and Seek

A national study released in 2015 reported that “nearly half the residential purchases of over $5 million were made by shell companies rather than named people.”[ii] Because shell companies could often be formed without disclosing the individuals that ultimately owned or controlled them (i.e., their beneficial owners), and could be used to conduct financial transactions without disclosing their true beneficial owners’ involvement, there was a concern that criminals were using such vehicles to launder money through the purchase of real estate and thereby hide, or at least obscure, the illicit origin of their funds. The report explained that many of these purchases were made in all-cash transactions; thus, no lender was involved and, so, the usual due diligence that accompanies a loan application was avoided.[iii]  

Continue Reading NY’s LLC Transparency Act and NYC Real Estate – Albany Wants to Know the Secrets that You Keep[i]
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This is The End[i]  

I have dreaded the year end for as long as I can remember. As a teenager and then as a young adult I associated the final quarter of the year, and especially the period beginning on Thanksgiving and ending on New Year’s Eve, with completing final exams and papers.[ii] After graduating from law school, but being inexperienced with the business of business, I naively hoped that the blues and the anxiety that I had experienced every year during that time of year were finally behind me. Not so.

Continue Reading Taxes and the 2024 Election: ‘Tis the Season to Plan and Act
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Outmigration

The Office of the New York State Comptroller just released a new report that examines taxpayer migration trends during the pandemic.[i] The report, which builds on an earlier analysis of pre-pandemic taxpayer migration trends, reveals there was much more movement out of the State than was thought initially.

During that period, on a net basis, out-migration from New York skyrocketed, due largely to those leaving New York City; over one in every 100 resident filers left the State. By the end of the period, out-migration rates for families remained much higher than pre-pandemic levels, with married filers leaving at substantially higher rates. The total number of New York’s personal income tax filers declined for the first time since the Great Recession.

Continue Reading New York Can Be Stingy Giving Credit – Resident Tax Credit, That Is
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Mixing Holidays With Business

Hope you had a good Thanksgiving Holiday. Some of us probably feel we ate or drank either too much or not enough, watched too much or not enough football, or spent too much time discussing politics and the state of the Dis-Union with family or friends. Then there were some who, having overheard in the midst of the merrymaking how someone else had implemented what sounded like a wonderful tax-saving strategy, resolved to do the same themselves for 2024.[i]

Continue Reading The Family Business – Compensating Family-Employees
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Our Holiday

Thanksgiving has been a national holiday in the U.S. since 1870. During most of that period, at least until recently, it has also been a unifying force as immigrants to this country, eager to be assimilated to American society,[i] and recognizing the holiday’s universal message of gratitude,[ii] have adopted the day as their own.[iii]

In 1863, only months after the Battle of Gettysburg and the Siege of Vicksburg, and a few years before Thanksgiving officially became a national holiday, President Lincoln issued the following Proclamation:[iv]

Continue Reading This Thanksgiving, Give Thanks for Taxes . . . or Not
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NY Needs the Revenue

A couple of weeks ago, the Tax Foundation released its latest “State Business Tax Climate Index,”[i] which assesses a state’s tax system and compares it to that of other states. New York seems to be a perennial among the ten lowest-ranked states, at number 49.[ii]

According to another report recently issued by the Foundation, New York experienced the highest net loss of residents as a result of interstate migration as a share of its population.[iii]

Continue Reading N.Y. Sales Tax – Responsible Person Liability
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WTF

It appears that many of the country’s colleges and universities[i] believe they have not already contributed enough to the decline of American education and to the erosion of our society, generally.

These institutions of so-called higher learning are not satisfied with having introduced major studies in subjects that can only be described as laughable, diluted academic standards, misrepresented history, encouraged identity politics, adopted cancel culture, stifled free speech, vilified Judeo-Christian values, and demonized Western civilization.

Continue Reading Activities Contrary to Public Policy – Revoking the Tax Exempt Status of Universities
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It’s not enough for the founder of a closely held business to have successfully established the business. The business has to grow, not only to increase profits, but also to make it more competitive and to diversify its customer base. Such “smart” growth will attract talented employees to the business, facilitate borrowing, prepare the business to withstand economic downturns, and make it more attractive to potential buyers.

Continue Reading Disclaiming to Save Taxes