CPA Blogs

The IRS and Treasury Department have identified what they believe may be a tax avoidance transaction involving charitable remainder trusts ("CRT"). In one variation of the transaction, Grantor creates a CRT and contributes appreciated assets ("Appreciated Assets") to the CRT. Grantor retains an annuity or unitrust interest ("term interest") in the CRT and designates a charitable organization described in IRC Sections 170(c), 2055(a) and 2522(a) ("Charity") as the remainder beneficiary. Charity may, but need not, be controlled by Grantor; Grantor may, but need not, reserve the right to change the Charity designated as the remainder beneficiary.

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Protection from creditors may involve the use of trusts, limited liability companies, and similar structures.  However, avoiding liability in the firs place is a major leg on which any solid protection plan stands.  The best planning thus involves planning to assure compliance with various rules the violation of which could create devastating liability, either criminal or civil.  Sometimes clients are reluctant to do such planning.  Here are some solid reasons why such planning is worthwhile and some ideas to make such planning more likely to succeed.

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Owners of pass through entities should be careful about the use of shareholder debt to capitalize a business because the failure of the company to repay or service the indebtedness can cause problems for both the owners and the company.  If the company is a pass through entity, one of these problems is cancellation of indebtedness (C.O.D.) income attributed to the company if the is debt forgiven or the company is dissolved without repaying the debt in accordance with section 61(a)(12) of the Internal Revenue Code of 1986 as amended (the "Code").  Section 108(a) of the Code provides an exemption from recognition of C.O.D. income to bankrupt debtors and to insolvent debtors to the extent of their insolvency; however, as described below, it does not provide complete protection, and there is a price to be paid for the protection that is provided.

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In 2005, the IRS issued Revenue Procedure 2005-27 allowing for the possibility of extending your 1031 Exchange deadlines when affected by Presidentially Declared Disaster areas. A taxpayer can benefit if:

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A domestic (household) worker such as a maid, sitter, health care provider, or gardener is generally considered an employee of the homeowner if the homeowner can control how the work is done. Whether the worker is full or part-time and how the worker is paid have little determination on whether the worker is an employee or independent contractor. Domestic employers are required to withhold and pay FICA tax on wages of $1,600 or more per year per employee ($1,700 in 2009).  However, they are not required to withhold federal income tax unless the employee requests that taxes be withheld.  If the employee does request withholding, the employee must complete Form W-4 so that the employer can determine how much tax to withhold.

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It's no secret many of us are currently experiencing a rough financial ride.

Some protective steps taken now may go a long way toward covering your downside.  The best time to engage in protecting your business and personal assets is long before you have problems.  The closer you are to trouble, the more likely it is that your protective tactics will be undone.

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In a down economic market many real estate investors and business owners will face calls on personal guarantees.  With some prudent planning, most of their personal assets can be safeguarded.

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Keep that CPA visor on for just a while longer! In my previous post, I explained the difference between the various types of accounts withing the asset section of the QuickBooks chart of accounts. This post will give you some additional insight on the liabilities and equity section.

Let's begin...

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The world of e-commerce sales tax has been active of late, complete with high profile legislation that could in the end impact the way sales tax is applied to online retailers across the country. Well, the situation continues to evolve. On May 8, 2008, The New York Department of Taxation and Finance issued TSB-M-08(3)S, which further explains the legislation enacted effective April 23, 2008, which provides a presumption that certain sellers of taxable tangible personal property or services are sales tax vendors and are required to register and collect sales tax.

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What exactly is a Qualified Intermediary in a Section 1031 Exchange and why do you need one? As replacement property specialists, the most common question we are asked is, "What is a Qualified Intermediary and why do I need one?" A Qualified Intermediary (QI) is required to successfully complete a Section 1031 Exchange.  According to IRS code, a qualified intermediary is a person or entity that facilitates a Code Section 1031 exchange and is defined as follows.

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Given the challenging conditions in the real estate market, some taxpayers may be faced with the prospect of foreclosure or a short sale arrangement with their lender. Taxpayers in this situation have a multitude of concerns ranging from a deteriorating credit rating to loss of their equity. Unfortunately, the taxpayer may have a significant tax liability that arises out of foreclosure or short sale.

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Economic analysis enters into a wide range of business and legal issues. Practicing economists often work in different forums.  This includes both the courtroom as well as the public policy arena.  What is often not recognized is that the analytical tools and expertise applied in litigation economics is well suited to questions concerning public policy and vice versa. Read More

Companies are placing a greater than ever emphasis on the effective use of resources and in most cases this means a reduction in personnel. One person is doing the job of two, three, or even more employees. Over the years we are seeing more companies gravitating to a “shared services” concept. For those of you who are unfamiliar with this concept what we mean is that companies that would have multiple internal service groups for example in the way of accounting, finance, purchasing, personnel, or legal would consolidate these individual groups. Read More

What new liabilities will my company face now? This question can haunt buyers of new businesses and keep them up nights. Understanding the legal theory of successor liability may help answer this question. Read More