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Good Intentions

Many successful business owners attribute some part of their success to their community. For some of these owners, it is not enough to simply acknowledge this “debt”; they feel an obligation to share some of their financial success with the community. For example, the owner or business may contribute funds to a local charity. Another may solicit the voluntary assistance of their workforce to support a local charitable organization or event.

Although these endeavors are commendable, they are of an ad hoc nature, meaning they are of limited duration and are dependent, in no small part, upon the business owner, who acts as the catalyst for the charitable activities of the business.

Continue Reading Business Owner Borrows from Their Private Foundation – A Different Form of “For Profit Philanthropy”?
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My Steadfast Partner, The IRS

If you’ve worked with the owners of closely held businesses for even just a few years, you have realized they are only half joking when they complain about having the government as a partner. Consider how much federal, state, and local tax[i] a business and its owners may pay over to the tax authority of each jurisdiction during the course of a taxable year.

If the business is treated as a partnership for tax purposes,[ii] the IRS is generally authorized to collect from the partnership any income tax deficiency arising out of the partnership’s operations for a taxable year, even if the persons who were partners in the year to which the deficiency relates are no longer partners in the year that the deficiency is assessed.[iii] Stated differently, the partnership’s current-year partners will bear the economic burden of the tax liability even though the tax adjustments relate to a prior year in which the composition of the partnership may have been different, and even though they themselves have satisfied their own tax liabilities.

Continue Reading Not Aware of Your Business Partner’s Tax Situation? Maybe You Should Be
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Back to the Office

You are probably aware that many employers are discarding the fully flexible, remote work policies that were forced upon them – as “nonessential” businesses – during the COVID-19 pandemic[i] and which they retained as an accommodation to employees after the pandemic ended. Indeed, there is now a steadily increasing percentage of employers that are requiring their employees to return to the office or place of business.

Some employers are mandating that employees work in the office full-time.[ii] Many other businesses expect employees to be physically present at least three days per week.[iii] Often, employers are “taking attendance” to ensure compliance with their in-office policies.

Continue Reading Employer to Nonresident Employee: “You Cannot Work in New York”; New York to Employee: “We Will Tax You Anyway”
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Expiring Provisions

Just a few weeks ago, many individual taxpayers, driven by what they viewed as the relatively imminent expiration of the enhanced federal transfer tax[i] exemptions, sought advice on how to leverage their remaining exemption and thereby optimize the transfer of value to their beneficiaries while limiting the amount of tax incurred.

Even following the results of the November elections, and regardless of the President-Elect’s recent statements about further curbing the federal transfer taxes, many individuals continue to be concerned about the reduction of the “basic exclusion amount”[ii] that is scheduled to occur at the end of this year.[iii]

Continue Reading Expiring Federal Transfer Tax Benefits – Nothing is Certain or Lasts Forever
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Legitimate Interest

Few would argue that the federal government does not have a legitimate interest in preventing, detecting, and punishing tax fraud, money laundering, and other financial crimes. Likewise, I imagine few would disagree with the precept that the means by which the federal government chooses to perform these functions must not exceed its constitutionally enumerated powers.[i] Among Congress’s enumerated powers is the power to “regulate Commerce with foreign nations, and among the several States, . . .”[ii]

Continue Reading The Status of the Corporate Transparency Act – It’s Not Clear
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Holiday Gatherings

How was your Thanksgiving? I hope you celebrated the holiday in a pleasant setting with folks whose company you enjoyed, and with plenty of good food. I hope you participated in some interesting conversations or joined in some fun games. I hope your NFL team put on a decent show.[i] I hope you had – and will continue to have – many reasons for which to be thankful, that you acknowledged them, and will continue to do so.  

At some point during our family’s celebration of this uniquely American holiday,[ii] I almost always find myself apart from the rest of the group, observing how others are interacting with one another, sometimes recalling how they may have handled certain challenges during the year,[iii] and often wondering what sort of future awaited them.[iv]

Continue Reading The Holidays – A Time for Family, Reflection and. . . GST Tax Planning?
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Another “Departure”

During the weeks leading up to the Presidential election, the media carried stories about wealthy supporters from each Party who had announced their intention to leave the country if the other Party’s candidate became President.

Of course, none of these individuals stated they would be giving up their U.S. citizenship or green card,[i] probably because they were aware that such a move (pun intended) would trigger an onerous exit tax.[ii]

Continue Reading Abandoning N.Y. Domicile – Must the Business Owner Abandon Their N.Y. Business?
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Decisions, Decisions

The owners of a closely held U.S. business will have to make many difficult decisions during the life of the business. Among the earliest of these is the so-called choice of business entity, the economic (including tax) consequences of which will be felt by the business and its owners for years to come.

Continue Reading Choice of Entity for a U.S. Business- Passthrough Status Matters Beyond the U.S. Border
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Enforcement

Earlier this year the IRS announced that, as part of its larger compliance efforts begun last fall under the Inflation Reduction Act,[i] the agency’s stepped-up enforcement activity with respect to high wealth, high income individuals had generated more than $1 billion in collections of past-due taxes.

One would be hard-pressed to seriously dispute that every taxpayer must pay the correct amount of income tax; no more, no less. That means a taxpayer has the right to pay only the amount of tax that is legally due and the right to have the IRS apply all tax payments properly.[ii]

Continue Reading Challenge to Collection Due Process? Will Supreme Court Affirm IRS’s Offset of Valid Refund With Disputed Tax Liability?
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As we will see shortly, it is often “better to give than to receive,”[i] though this statement begs the obvious question[ii] of whether it is better to do so during one’s lifetime or upon one’s death.

Many well-to-do individuals are seriously deliberating this question[iii] as they contemplate the impending federal elections and consider how the outcome of these contests may influence their plans for the disposition of various assets, including the transfer of such assets, or the value they represent, among members of such individuals’ families.

Continue Reading Thinking About Making Taxable Gifts Before the 2026 Sunset?