Archive for July 29, 2014

United States Taxation of Foreign Electronic Commerce

Introduction

United State taxation of electronic commerce from offshore is to be approached from two perspectives, the United States tax regime from an international perspective and bi-lateral treaties. This writing addresses the first consideration, the tax regime. As stated in a previous segment, international sourced based taxation poses particularly difficult legal risks. (1)

One risk is the electronic commerce and taxation implications. Those issues grapple with electronic commerce and taxation implications when melded with the notion of jurisdiction. Cross-border taxation issues of the authority of a source and resident country Read More

Written by | Posted in International • Tax Controversy

Cancellation of Debt, Foreclosures, And Bankruptcy – Part 6

Tax Consequences of Foreclosure

When a foreclosure or repossession is made there are tax consequences in addition to the legal and monetary issues. When a piece of collateral is seized in place of a debt, it is deemed a sale of the property and must be reported like any other sale, as we discussed in the previous section.

For recourse loans, the amount of the realized gain is:

• the lesser of the debt immediately before the seizure reduced by any amount of the loan the debtor remains liable for after the seizure
or Read More

Written by | Posted in Individual

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 5 – 5.2)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 5 – JUDICIAL REVIEW WITH REFERENCE TO SS 74A AND 74B –

5.2 WHAT IS MEANT BY REVIEW? Read More

Written by | Posted in Africa • Audit

How To Get The IRS To Fund Your Home Based Business

If you are looking for ways to fund your home based business, you likely have come to many road blocks. Borrowing from family and friends is difficult especially if they don’t buy in to your idea for your home based business. Bank regulations and lack of business credit also hinder making your dream of owning your own home based business a reality. If your goal is financial freedom, there is a way to fund your home based business which you may not be aware of.

This strategy assumes you are working at a J. O. B. Each pay period you have federal income taxes, social security and medicare taxes, and depending on what state you reside or work in, state income taxes. Social security and medicare taxes are withheld by law, the rate of which is set by government. While federal and state income tax rates are Read More

Written by | Posted in Income Tax • Individual • IRS • Small Business

Filing Qualified Amended Returns vs. Streamlined Filing Compliance Procedures: What Is My Best Option?

On June 18, 2014, the IRS announced major changes in its offshore voluntary compliance programs. The changes include an expansion of the streamlined filing compliance procedures and key modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP).

The expanded streamlined procedures are available to a wider population of U.S. taxpayers living outside the country and, for the first time, to certain U.S. taxpayers residing in the United States. The modifications to the existing OVDP program provide, in part, for an increased offshore penalty from 27.5% to 50% in certain circumstances.

Options for U.S. Taxpayers with Undisclosed Foreign Accounts

Read More

Written by | Posted in Individual • IRS • OVDP

Travel And Entertainment: Maximizing Tax Benefits

Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls “away from home.”

First, local travel expenses. You can deduct local transportation expenses incurred for business purposes such as the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, but you can deduct meals as an entertainment expense as long as certain conditions are met (see below).

Second, you can deduct away from home travel expenses-including meals and incidentals, but if your employer reimburses your travel expenses your deductions are Read More

Written by | Posted in Individual • Tax Tips

US Income Taxation of Nonresident Alien Individuals – What About Alimony Income?

A nonresident alien individual (NRA) is generally subject to US income tax on two types of income categories:

Income that is “effectively connected” with a trade or business in the United States (so-called “ECI”); Income from US sources that is “fixed, determinable, annual or periodical” (so-called “FDAP” income)

ECI versus FDAP

When income is “effectively connected” with a US trade or business, the income is taxed at graduated rates. These are the same rates that apply to US citizens and residents (the highest marginal rate is 39.6%). Such “effectively connected income” ECI, is to be Read More

Written by | Posted in Expatriate • Income Tax • Individual • International

Cancellation of Debt, Foreclosures, And Bankruptcy – Part 5

Procedural Flow of Foreclosure

The debtor has several options when faced with a foreclosure or repossession. The options have varying costs, time limits and consequences associated with them. Be aware that every state has differing rules and procedures for these actions and failure to abide by the rules in that jurisdiction can results in the loss of time, money and rights for both the lender and the debtor.

The debtor may voluntarily surrender a piece of collateral property to the creditor when the threat of foreclosure or repossession is imminent.

For Example: John purchased a new car in Jan 2013. By November 2013 John had lost Read More

Written by | Posted in Individual

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 5 – 5.1)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 5 – JUDICIAL REVIEW WITH REFERENCE TO SS 74A AND 74B –

5.1 INTRODUCTION Read More

Written by | Posted in Africa • Audit

The Unknown Tax Comic – Part 6

♦ Every year, I include a piece of chicken in the envelope with my taxes. Not as a bribe, but a treat for the guy at the IRS who opens it. – Jimmy Kimmel

♦ Regis Philbin is back in primetime, hosting 11 new episodes of ‘Who Wants To Be a Millionaire.’ But because of Obama’s tax plan, it’s been re-titled to ‘Who Wants To Win Just Under $250,000.’ – Jimmy Fallon

♦ The U.S. Senate is considering a bill that would tax Botox. When Botox users heard this, they were horrified. Well, I think they were horrified. It’s difficult to tell. – Craig Ferguson

♦ Abracadabra, thus we learn the more you create, the less you earn. The less you earn, the more you’re given, the less you lead, the more you’re driven, the more destroyed, the Read More

Written by | Posted in Tax Humor • TaxConnections

A Practical Guide To The New Circular 230 Amendments

Introduction

On June 12, 2014 the Department of Treasury and Internal Revenue Service (hereinafter the “Service”) issued final regulations that made noteworthy amendments to Circular 230. As a reminder, Circular 230 sets forth the requirements and responsibilities of tax professionals (e.g., Certified Public Accountants, Attorneys, Enrolled Agents, and Enrolled Actuaries) admitted to practice before the Service. The final regulations recognize that the Covered Opinion Rules are no longer necessary, and have been replaced with new standards for issuing written tax advice. As a consequence, the “Circular 230 Disclaimer” will no longer be required on written correspondence. The general consensus is that removal of the disclaimer is a positive step for tax professionals by reducing the Read More

Written by | Posted in IRS

How Harry Potter Can Help You Navigate The Labyrinth of Overlapping Rules Within OVDP

Nary a day goes by that I don’t talk to a client who is confused about one or more aspects of the OVDP program. Most of the time, it’s not the client’s fault. Usually, the confusion lies in the fact that the rules themselves are like a tangled web or labyrinth on the scale of what Harry Potter had to endure in the triwizard competition. So grab your broom. It’s time to navigate the labyrinth of overlapping rules within OVDP. The only difference is that your tour guide on this journey is not a famous teenage wizard who wears glasses, is an ace Quidditch player, has an impenetrable patronus, and speaks Parseltongue. Instead, it’s a very ordinary tax attorney who can no more get a snake to listen to him than he can his dog, Fido.

For as tedious as the rules can be, surprisingly that is not the primary source of Read More

Written by | Posted in IRS • OVDP
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