February, 2021 | TaxConnections

17 Feb 2021

Technology Company Wants Recently Retired Tax Partners

We have a great problem and we are searching for a solution we know Tax Partners can solve. If you are a Tax Partner currently with a firm, or newly retired one, who wants to benefit with business from our technology platform, please call to discuss your background. We have a great problem that is easily solved with current or former Tax Partners with a wide range of tax expertise. Perhaps you took early retirement…we want you at TaxConnections.

TaxConnections is also searching for actively involved Board Members to share in our growth and development. We have a great vision we want to share with you. You will benefit from the knowledge you have gained over many years as an active part of our team. Call Kat Jennings at 858.999.0053 X100 or email kat@taxconnections.com to arrange a time to learn more.

Written by Kat Jennings | Posted in Tax Jobs • Tax Partner Job • TaxConnections

17 Feb 2021

State And Local Tax: Controlling Interest Transfer Tax

Do you own an entity that holds real estate? Are you thinking about selling real estate? Are you considering selling the real estate asset or selling the entity that owns the real estate?

Generally, a real estate transfer tax is imposed on documents that convey an interest in real estate from one person to another person. The transfer tax, generally, is imposed on the recordation of a deed and is based on the consideration paid or the fair market value of the property (the “Real Estate Transfer Tax”).

Taxpayers utilized loopholes to avoid paying the Real Estate Transfer Tax, by selling the entity that owns the real estate instead of selling the real estate itself. Approximately 17 states have closed such loopholes.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State And Local Tax

17 Feb 2021

An Update of Taxation Of Remote Workers

When the U.S. began to feel the full brunt of the COVID-19 pandemic, businesses from every industry transitioned their employees to remote working. Nearly a year later, many of those employees are still working remotely.

In July, we shared a post discussing the tax implications of remote workers and whether they created nexus. The situation has continued to evolve since then, so we’d like to share an update on the tax implications of remote workers.

An Overview Of The Situation

When the pandemic first hit, many states were forced to consider whether remote workers would create “nexus,” which is the amount of contact from a company needed in order to be obligated to collect tax in a state. For many employers, this could create additional tax obligations in states where they previously did not have nexus. Additionally, questions arose regarding the taxation of employee’s income and which state would collect the tax.

Written by Monika Miles | Posted in Remote Workers

17 Feb 2021

Economic Impact Payments Issued; Eligible People Can Claim Recovery Rebate Credit

The IRS announced that, as required by law, all legally permitted first and second round of Economic Impact Payments have been issued and the IRS now turns its full attention to the 2021 filing season.

Beginning in April 2020, the IRS and Treasury Department began delivering the first round of Economic Impact Payments within two weeks of the legislation. The IRS issued more than 160 million EIPs to taxpayers across the country totaling over $270 billion, while simultaneously managing an extended filing season. In addition, since Congress enacted the COVID-related Tax Relief Act of 2020, the IRS has delivered more than 147 million EIPs in the second-round totaling over $142 billion.

Written by IRS | Posted in IRS Notice

16 Feb 2021

So You Made Money On GameStop, Now What? A Primer On Capital Gains

The GameStop stock saga will undoubtedly go down in history as one of the most mystifying market events Wall Street has ever seen. Indeed, the markets have seen a massive influx of new retail investors into the space. But many of these investors have not previously participated in the market.[1] As noted by CNBC:

There were 3.7 million downloads of Robinhood in January, according to app market intelligence firm SensorTower, even with the millennial-favored stock trading app’s unpopular decision to put trading restrictions on a handful of stocks during GameStop’s climb. After the GameStop drama in February, downloads are still tracking strongly with 1.8 million month-to-date.[2]

Written by Ryan Dean | Posted in Capital Gains • Freeman Law • Texas

16 Feb 2021

Recent Tax Court Decision: Economic Substance And The Step Transaction Doctrine

A recent Tax Court case illustrates the reach of the economic substance doctrine and the step transaction doctrine. For the benefit of our readers, we have briefed the case below:

Complex Media, Inc. v. Comm’r, T.C. Memo. 2021-14 | February 10, 2021 | Halpern, J. | Dkt. Nos. 13368-15 and 19898-17

Opinion

Short Summary: Taxpayer-corporation (Corp.) acquired the assets of a business from a third-party partnership (P’ship). In exchange for the transferred assets, Corp. issued approximately 5 million shares of common stock. Immediately thereafter, Corp. redeemed 1.875 million of the common shares held by P’ship in exchange for $2.7 million in cash and Corp’s obligation to make an additional payment of $300,000 a year later. P’ship paid the cash and assigned its right to the additional payment to one of its partners in redemption of that partner’s interest in P’ship. Corp. claimed an increased basis of $3 million in intangible assets it acquired from P’ship and amortized that additional basis under I.R.C. § 197(a). The IRS disallowed the deductions under I.R.C. § 197(a).

Written by Matthew Roberts | Posted in Freeman Law • IRC Section 197 • IRC Section 351 • Step Transaction Doctrine • Texas

16 Feb 2021

National Taxpayer Advocate 2021 Purple Book

The National Taxpayer Advocate is releasing the National Taxpayer Advocate 2021 Purple Book. In it, she presents a concise summary of 66 legislative recommendations that she believes will strengthen taxpayer rights and improve tax administration. Most of the recommendations have been made in detail in prior reports, but others are presented in this book for the first time. She believes that most of the recommendations presented in this volume are non-controversial, common sense reforms that the tax-writing committees and other Members of Congress may find useful.

Among the 66 legislative recommendations for consideration by Congress are:

• Provide the IRS with sufficient funding to meet taxpayer needs and improve tax compliance. Since fiscal year (FY) 2010, the IRS’s budget has been reduced by about 20 percent after adjusting for inflation. As a result, the IRS has been unable to meet taxpayer needs (e.g., the IRS received over 100 million telephone calls in FY 2020, yet employees were only able to answer about 24 percent). IRS also has been unable to modernize its information technology (IT) systems. In FY 2020, the IRS collected about $3.5 trillion on a budget of about $11.51 billion, producing a remarkable return on investment of more than 300:1.

Written by National Taxpayer Advocate | Posted in National Taxpayer Advocate

16 Feb 2021

Access Sales Tax Exemptions For 50 States

Sales Tax Exemption Information For Your State

TaxConnections Member Aaron Giles of Agile Consulting has compiled state-specific research regarding the sales and use tax exemptions available in each state. You’ll also find helpful links to sales and use tax related content for each state revenue agency.

Sales Tax By State

Click on any state in the map below or from the column to the left of the map to see all relevant sales & use tax information available for that state.

Click Here To Access U.S. Map And Choose State

Written by Aaron Giles | Posted in Sales Tax Exemptions By State

12 Feb 2021

Abraham Lincoln’s Resume: A Powerful Inspiration

In honor of Presidents Month, we want to inspire each of you by posting the resume of President Abraham Lincoln. It serves as a powerful example everyone can learn from throughout their professional career.

ABRAHAM LINCOLN’S RESUME

1831 – Failed in business

1833 – Defeat for Legislature

1833 – Second failure in business

1836 – Suffered nervous breakdown

1838 – Defeated for Speaker

1840 – Defeated for Elector

Written by TaxConnections Admin | Posted in President Lincoln's Resume • TaxConnections

12 Feb 2021

Why State And Local Tax Due Diligence Is Important

Why is State and Local Tax (SALT) due diligence important in mergers and acquisitions? Someone else’s issues may be your headache and cost you a lot of money!

What is due diligence? Due diligence is the process of identifying and analyzing the risk associated with acquiring a business or selling a business. Tax risk, particularly state and local tax, is a key part of that analysis.

There are many different types of taxes that businesses should take into consideration when doing due diligence, such as property taxes; sales and use taxes; gross receipts taxes; income taxes; and franchise taxes. Each of these tax types have unique rules and implications, and state and local jurisdictions apply those taxes in different ways. It can get complex quickly based on where a company is doing business.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State And Local Tax Due Diligence • Texas

12 Feb 2021

Want To Be Hired For Job In The House Of Representatives? Here Is How To Apply

APPLY FOR JOB WITH U.S. HOUSE OF REPRESENTATIVES

The House is a not a single employing entity, but rather consists of several hundred individual employing offices. These offices include Members of Congress, Committees, House Officers, and the Inspector General, and carry out responsibilities ranging from representational duties on behalf of congressional districts, legislative activity, oversight of federal agencies, and the administration and operation of the processes and functions of the House. Currently, the total workforce is approximately 10,000 employees. While over half of the employees work in Washington, D.C., there are House employees working for Members in every state, Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, U.S. Virgin Islands and the District of Columbia.

Employing offices within the House are equal opportunity employers. As individual employing offices, Members of Congress and Committees create their own organizational structure, develop job descriptions, and set work schedules and compensation.

Written by TaxConnections Admin | Posted in APPLY FOR JOB • Corporate Tax Jobs • U.S. House Of Representatives Staff Jobs

12 Feb 2021

If You Didn’t Get Your Economic Impact Payment, Your Joint Tax Return May Be the Reason Why

ERIN COLLINS - NATIONAL TAXPAYER ADVOCATE

If you didn’t receive your Economic Impact Payments (EIPs) and a 2018 or 2019 joint return was filed in your name without your consent, you may be eligible to claim the Recovery Rebate Credit (RRC) on your 2020 tax return. Since the issuance of the first round of EIP, our office has been working with the IRS Office of Chief Counsel and the IRS to establish procedures to help a victim of domestic violence where their spouse filed a joint return without the victim’s consent, and kept the EIP that was based on that joint return. On November 16, 2020, the IRS updated its procedures specific to EIP when a joint return election is invalid, and therefore there is an invalid return as to one of the spouses.

Economic Impact Payments

The IRS issued EIPs by looking at taxpayers’ recent federal income tax returns, either 2018 or 2019 for the first round of EIP, and 2019 for the second round. But what if the EIP was based on a return with married filing jointly filing status that was not valid? What if one spouse signed a married filing joint return under duress? What if one spouse never intended to file a joint return and the other spouse forged his or her signature? What if the individuals were not legally married? These are just some of the questions that may point to a conclusion that the joint election was invalid, and the return was invalid as to the victim; it’s an issue that often comes up with victims of domestic violence. When the IRS concludes that a joint election was invalid, the IRS follows Internal Revenue Manual (IRM) procedures, found in IRM 21.6.1.5.7, for changing the taxpayers’ accounts from “married filing jointly” status to single, married filing separately, or head of household.

Written by National Taxpayer Advocate | Posted in National Taxpayer Advocate