Want To Gain Expert Knowledge And Skills Converting An Existing S Corp To An LLC? Complimentary Webinar

Want To Gain Expert Knowledge And Skills Converting An Existing S Corp To An LLC? Complimentary Webinar

On Thursday, May 16th 2024, three leading experts are inviting you to a free webinar to learn cutting edge strategies on:

  • Converting an existing S corporation to an LLC on a tax-free basis to obtain “charging order” protection.
  • Simple business structuring to circumvent the $10k deduction limitation for the portion of state and local income taxes attributable to partnership/LLC and S corporation income.
  • How not to cause your client to be one of the estimated 500k+ LLCs that incorrectly thought it was going to be taxed as an S corporation but, because of certain language contained in its operating agreement, is not an S corporation.
  • Personal goodwill and the C corporation business sale – identifying situations in which double tax can be avoided.

Any one of these strategies could make the difference between you being a hero or creating a significant problem for your clients.

Please Register Here For This Complimentary Presentation filled with valuable information that will surely help your tax clients.

Read the blog previously posted about this amazing yet free learning opportunity from leading partnership experts.

 

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Secrets To Learn Working With A Retained Tax Recruiter Vs. Contingency

Secrets To Learn Working With A Retained Tax Recruiter Vs. Contingency

Learn How You Benefit Retaining A Tax Recruiter

There are many things that can go right in a tax search and there are many things that can go wrong during a tax search. There is a mile wide divide in how search firms operate on your behalf. This post is about things that can happen to you while recruiting for the best tax candidates for your tax organization or connecting with an organization who needs your tax expertise. Either way, you are smart to work with the best tax recruiter you can find who has a proven track record in tax professional search. You should first ask for a tax recruiters’ experience. We always show our client list of successes: https://www.taxconnections.com/tax-executive-search-services

One Question You Should Never Ask A Retained Tax Recruiter

Whenever an experienced recruiter hears this one question, they feel minimized. The question is “Can you go to your files and send me some resumes?” The hiring authority asks, as if it is easy, to find a technically skilled tax candidate from files of thousands of potential prospects. It is not easy to do this work since an expert in tax search must do a labor intensive job of researching thousands of potential candidates, calling tax candidates to present the client tax job description, obtaining permission from a candidate before presenting to a client, screen the tax candidate for hard skills( technical) and soft skills (interpersonal skills),help tax candidates to clean up their resume to highlight their technical knowledge, making an introduction between client and tax candidate and so much more. This is not a five-minute scan of resumes in your database, it could easily take an expert 5 hours, 5 days,  5 weeks or 5 months to identify and screen the right tax candidate(s).

An expert retained tax recruiter takes pride in doing a great job screening tax candidates for a company, they never just pull a random resume like it is a 5-minute job. The job of an expert in tax executive search is much more than that. So please do not ask an expert tax recruiter to just pull resumes from their database about top tax talent since the  search process is much more involved. The tax recruiter feels minimized when a hiring manager communicates they want to see resumes. Finding tax professionals with qualified technical skills, interpersonal skills and meets the needs of both parties is an important part of the tax search and screening process.

What A Good And Bad Tax Recruiter Will Do For You

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Legal Post: Texas Sales And Use Tax For Equipment Rentals

Legal Post: Texas Sales and Use Tax For Equipment Rentals

Many businesses in Texas involve the performance of services that require the use of machinery and equipment.  While these businesses may purchase the necessary equipment outright, others opt to rent equipment from third-party rental companies, or to completely outsource the equipment-related services to another service-provider.  These transactions seem simple on the surface, but may be more complex when determining how to treat them for Texas sales and use tax purposes.

General Sales Tax Treatment of Equipment Rental

In determining how equipment rental should be treated, the first place to look is whether the equipment is being rented by itself (on a “standalone” basis), or whether it’s being rented with an operator.

  • Standalone Basis – Comptroller Rule 3.294(c)(1) states that “receipts from the lease of tangible personal property without an operator are taxable.” [1]
  • With an Operator – Comptroller Rule 3.294(c)(2) states that “[t]he furnishing of tangible personal property with an operator for which a single charge is made to the customer shall be presumed to be the performance of a service…” [2]

An “operator,” in turn, is defined as a “person who actively guides, drives, pilots, or steers tangible personal property” and does not include one who merely provides maintenance, repair, or supervision. [3]

Under Rule 3.294(c)(2), the rental of equipment with an operator, billed as a single charge, is treated as the performance of a service.  The taxability of this service, in turn, will depend on the nature of the service itself.  Additionally, if equipment is rented with an operator, but there are separate charges for the equipment and operator, each charge will be treated differently for tax purposes – one as a rental of equipment on a “standalone” basis under Rule 3.294(c)(1), and one as a charge for the provision of services by the operator.

Additional Rules and Complications

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Biden Proposes Highest Capital Gains Tax in Over 100 YEARS

Biden Proposes Highest Capital Gains Tax in Over 100 YEARS

Bidens 2025 budget proposal raises the top marginal rate on long term capital gains and qualified dividends to 44.6 percent.

The Biden administration has proposed the highest top capital gains tax in over a century.

According to Biden’s 2025 budget proposal the top marginal rate on long-term capital gains and qualified dividends would rise to 44.6%.

The proposal, which marks the highest tax increase since the creation of the capital gains tax in 1922, could significantly curtail the financial returns of investors in stocks and crypto.

“For example, a taxpayer with $1,100,000 in taxable income of which $200,000 is preferential capital income would have $100,000 of capital income taxed at the preferential rate and $100,000 taxed at ordinary rates,” the proposal states.

Additionally, the proposal when combined with state capital gains tax would exceed 50% in many (mostly blue) states and would not account for inflation’s erosion of purchasing power.

From Americans for Tax Reform:

Under the Biden proposal, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 59%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%.

Worse, capital gains are not indexed to inflation. So Americans already get stuck paying tax on some “gains” that are not real. It is a tax on inflation, something created by Washington and then taxed by Washington. Biden’s high inflation makes this especially painful.

Many hard working couples who started a small business at age 25 who now wish to sell the business at age 65 will face the Biden proposed 44.6% top rate, plus state capital gains taxes. And much of that “gain” isn’t real due to inflation. But they’ll owe tax on it.

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Canada Just Passed Law Increasing Exclusion Rate For Capital Gains To 66.6%

Canada's Trudeau Wants To Raise Capital Gains Taxes To 66.6 %

Here is word for word a copy of an email sent to my inbox recently.  Beware of all the swearing in case you may be offended. These are the types of emails I receive.

“My home and native land has officially gone to hell… And in this case, I mean it literally.

Canada just passed a new budget act upping the exclusion rate for capital gains to 66.6%

“By increasing the capital gains inclusion rate, we will tackle one of the most regressive elements in Canada’s tax system,” the government said in the budget document. The current 50% inclusion rate on capital gains disproportionately benefits the wealthy, who earn relatively more income from capital gains compared to the middle class, the government said.

It’s incredible they think that a “50% tax” is the wealthy getting off easy, and that they needed to fix the situation by raising it to 66.6%.

My inbox has exploded with private client work over this, and of my 8 consulting calls yesterday, 7 of them discussed this (even my American clients are looking to protect themselves if something like this comes to the US.)

Quickly, I want to say that if you are sitting on large capital gains in Canada, you should consider realizing those capital gains before June 25th, 2024; basically before this goes into effect.

And while you’re at it, I would tell these Satan worshippers to go fu8k themselves and move your money offshore.”

What do you think?

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What Is The BEAT For MNEs?

What Is The BEAT For MNEs?

According to Senior Economist, Alan Cole at the Tax Foundation, BEAT is the acronym for Base Erosion and Anti-abuse Tax.

“Base erosion is the loss of corporate income tax revenues from global companies due to profit shifting. BEAT is intended to address a legitimate problem, and there are virtues to BEAT’s overall strategic approach; however, its execution leaves room for improvement.

BEAT concerns the tax treatment of cross-border tax payments made by a multinational enterprise (MNE) to related companies abroad. Now, since the companies are related—that is, they have the same ownership—it does not change the total income of the group. A loss for one part of the MNE is a gain for another. But it does have tax implications: cross-border payments create a deductible expense in one country and income in another, reducing taxable income in the first country and increasing it in the second. The practice of accounting for cross-border transactions is known as transfer pricing.

While transfer pricing is a necessary part of doing business, and deductibility is a normal feature of traditional income tax systems, MNEs have an incentive to use transfer pricing to create deductions in the U.S. and income in the low-tax jurisdiction. This functionally shifts the profits to that low-tax jurisdiction, reducing the overall tax burden for the company and “eroding” the U.S. tax base.

An MNE cannot simply arbitrarily shift profits around with any payment it desires. Regulations for transfer pricing require that cross-border payments follow an “arm’s length principle”—that is, they must be priced as if the two related parties were independent and negotiating based on their own interests, hopefully resulting in accounting that reflects economic substance.

In practice, though, certain categories of transactions are quite subjective, leaving MNEs some wiggle room to shift profits. For example, payments for commodities are relatively objective, while royalties—payments for unique intellectual property—are much less objective, allowing the wiggle room to shift profits. As a result, base erosion is associated with certain categories of expense far more often than others.”

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Event Waivers And Releases

Event Waivers And Releases

Written waivers and releases (generally, here, a “Release”) have become ubiquitous in the American way of life – axe throws, bounce houses, rock climbing parks, mechanical bulls, little league registration, school activities, soccer clubs, trampoline parks, church events, etc.  Americans sign Releases all the time and few who sign likely take the time to actually read, much less appreciate, what it is they are signing.

For the event organizer, it is usually better to have a well-crafted Release and not need it, than to need one and not have it.  Whether to include and administer a Release for an event or other business activity is a business decision.

For the entity desiring to install a Release into an activity’s execution, the Release should be carefully tailored to address the specific activity and risks involved. For example, if the Release contains an assumption of risk, the risks should be – from a best practices perspective – updated on a case-by-case basis to reflect the actual activity made the basis of the Release.

For sports activities (for example), common risks include falling, collision with other players or objects, exposure to temperature extremes or inclement weather, fatigue, dehydration, failing to play safely or within the limitations of one’s abilities, negligence of participants or others. Other activities, such as mechanical bulls or rock climbing, may have other or different risks to disclose.

The actual release provision is important. Some Releases purport to release certain individuals from their own negligence or even gross negligence or willful misconduct. The greater the scope of the release provision, the greater the scrutiny that may be applied when it is sought for enforcement. Also, many times a Release provides that the signer is releasing or waiving claims of or for another, but in reality, it is someone else, such as the signer’s minor child, who is the actual participant in the activity.

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Learn IRS Site Publications On Tax Credits That Are Not Easy To Find

Learn IRS Site Publications On Tax Credits That Are Not Easy To Find
Earth Day was April 22, 2024, TaxConnections takes responsibility for the delay in publishing..oops! Professor Annette Nellen at San Jose State University published this post originally on her 21st Century Taxation blog site. She starts the post with this statement:
Earth Day started in 1970 and one of the co-founders was Gaylord Nelson, who served as a Senator from and Governor of Wisconsin. He was also an alum of San Jose State University.
How about some individual tax credits to help reduce fossil fuel use? The Inflation Reduction Act of 2022 added a used clean vehicle tax credit and modified credits for new clean vehicles and residential improvements. See this 8/21/22 post for some information on the IRA and track changes to IRC Sections 25C, 25D, 25E, and 30D to learn more about these changes.
A helpful item I’ll share here are some IRS publications on these credits that are difficult to find (they are not listed at the main IRS websites for each of these credits, which I have linked below).
Section 25C, Energy Efficient Home Improvement Credit AND Section 25D, Residential Clean Energy – Publication 5797.  This has a brief summary of each credit and a QR code to get more information. Also see main IRS website on these credits.
Section 30D, Clean Vehicle Credit – Publication 5866, which is a helpful checklist of qualifications.
Section 25E, Previously-Owned Clean Vehicles – Publication 5866-A, also a helpful checklist of qualifications.
Also see the main IRS website on clean vehicle credits (new and used).
And a publication on each of the energy credits for individuals – Publication 5886-A.
Finally, an Earth Day reminder from the Social Security Administration – Opt Out of Paper Notices.
Your commentary is appreciated below.  Post contributed by Professor Annette Nellen, San Jose State University. San Jose State University has a great tax program.
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Spotlight Interview: Chuck Levun and Michael Cohen On Educating CPAs, Attorneys and Other Tax Planning Professionals, Part 1

Spotlight Interview: Chuck Levun and Michael Cohen on Educating CPAs, Attorneys and Other Tax Planning Professionals

Spotlight Interview Part 1:

Chuck Levun and Michael Cohen on Educating CPAs, Attorneys and Other Tax Planning Professionals – As Well as Their Seasoned Advice for Tax Professionals New and Old

For more than thirty-seven years, Charles R. Levun and Michael J. Cohen (the founders of Tax Forum) have been creating and presenting the preeminent seminars on flow-through taxation. The two flagship Tax Forum programs are Fundamentals of Flow-Through® and Tax Planning Forum®.  In addition, Tax Forum is expanding its programs to include self-study (on-demand) training, as well as working on an additional course, which they will share with us soon.

Please read Part 1 of this special interview for Chuck’s and Michael’s descriptions of these programs and education in the flow-through taxation arena. Part 2 will focus on significant tax planning challenges that partnerships face … and the biggest mistakes Chuck and Michael have seen, that they will help you avoid.

Speaking of avoiding potential big mistakes, take a moment to register for Tax Forum’s complimentary webinar:

Avoiding Costly Mistakes: Four Essential Tax Concepts for the Non-Tax Business Attorney or CPA taking place on Thursday, May 16th at Noon CDT

You will appreciate what you will learn by spending time with these leading tax experts/educators.

Kat Jennings’ Question:

First of all, tell us about your favorite career accomplishments?

Chuck Levun’s Answer:

I’ve had many. However, perhaps my favorite is to have developed the Tax Planning Forum and the Fundamentals of Flow-Through tax programs with my partner, Michael Cohen. We’re in our 38th year of presenting these partnership, LLC and S corporation flow-through programs for tax professionals, and I feel that we have assisted several decades of tax professionals to be better educated and better able to assist their clients in closely held business matters.

Michael and I have also been very fortunate to have served as the editors-in-chief of the Journal of Passthrough Entities during its entire 20-year publication, and to have written 400 monthly Partner’s Perspective columns for the Wolters Kluwer (CCH) Partnership Tax Planning and Practice Guide. These vehicles enabled us to learn and assist others to learn at the same time.

But maybe, the most rewarding aspect of all this is the opportunity we have had to not only educate other professionals but also to assist them in growing their practices and retaining clients who are in need of creative business structuring. I also have been involved in mentoring other professionals, both officially and unofficially. More recently, I have been involved with both the Chicago Bar Association and the ABA Tax Section in their mentoring and diversity programs. These mentoring relationships have turned into friendships, and it’s been amazing watching young professionals blossom and grow.

Kat Jennings’ Question:

What is Tax Forum and what is its origin?

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Sales And Use Tax 101 – You Don’t Know What You Don’t Know

Sales And Use Tax 101 – You Don’t Know What You Don’t Know

Sales and use tax compliance can be daunting. Regulations vary by state and jurisdiction making them difficult to navigate, and to make matters even more complex, the rules are ever-changing.

For many people, the concept of sales tax is just a charge you see on your receipt. Expanding your knowledge base to understand the compliance side of sales tax is far from your idea of fun, however, it’s an essential aspect of conducting business.

The following is a basic outline of compliance, Sales and Use Tax 101, if you will, because, let’s face it, ‘You don’t know what you don’t know.’

What Is Sales Tax?

Sales tax is a tax imposed on the sale of goods and services, which is generally calculated as a percentage of the sale price. It is generally collected by the seller at the time of purchase and remitted to the state or local government.

Sales tax is a jurisdictional tax, which means that each state or jurisdiction has its own set of sales tax rates and rules. The amount of sales tax collected is based on the sales tax rate in the jurisdiction where the sale was made, or where the customer is located.

There are four types of Sales Tax: Sellers Privilege, Consumer Levy, Gross Receipts, and Transaction Tax, and each type is imposed differently, whether on the Seller or Purchaser or on the transaction itself.

What Is Use Tax?

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IRS Releases 2023 Data Book Describing Agency’s Transformation Through Statistics

IRS Releases 2023 Data Book Describing Agency’s Transformation Through Statistics

The Internal Revenue Service today issued its annual Data Book detailing the agency’s activities during fiscal year 2023 (Oct. 1, 2022 – Sept. 30, 2023), including revenue collected and tax returns processed.

For FY 2023, the IRS collected approximately $4.7 trillion, or about 96 percent of the funding that supports the federal government’s operations — to fund everything from education to national defense.

During FY 2023, the IRS processed more than 271.4 million tax returns and other forms, including more than 163.1 million individual income tax returns.

Beyond statistics, the 2023 Data Book reflects the initial impacts of the historic long-term funding provided under the Inflation Reduction Act (IRA) of 2022 to transform the IRS and modernize how the agency serves the American people.

“This once-in-a-generation funding opportunity provided by the IRA is an investment in the transformation of the IRS and an investment in the financial future of our nation,” IRS Commissioner Danny Werfel wrote in the Data Book introduction. “The effects of this IRA funding — to hire more IRS employees and modernize the agency’s technology and systems to provide better service to the American people — started showing up in the 2023 tax season. And that progress has accelerated into 2024.”

In FY 2023, with new phone assistors hired through IRA funding, IRS employees answered nearly 27.3 million phone calls — a 25% increase from FY 2022. The IRS opened or reopened more than 50 taxpayer assistance centers in FY 2023 that were closed during the pandemic. The IRS had more than 1.6 million contacts at 363 centers across the nation in FY 2023 to provide more in-person help to taxpayers – up 18% from FY 2022.

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Avoiding Costly Mistakes: Four Essential Tax Concepts For Attorneys And CPAs (Complimentary 1-Hour Webinar Thursday, May 16th)

Avoiding Costly Mistakes: Four Essential Tax Concepts For Attorneys And CPAs

Avoiding Costly Mistakes: Four Essential Tax Concepts For Attorneys And CPAs (Complimentary 1-Hour Webinar Thursday, May 16th)

Register For Complimentary Webinar

Even smaller matters might have big traps and significant tax implications – leading to unexpected tax liabilities for your clients and potential malpractice claims for the professionals.

During this one-hour webinar, the Tax Forum team of Chuck Levun, Michael Cohen, and Scott Miller will provide a top-level look at …

  • Converting an existing S corporation to an LLC on a tax-free basis to obtain “charging order” protection
  • Simple business structuring to circumvent the $10k deduction limitation for the portion of state and local income taxes attributable to partnership/LLC and S corporation income
  • How not to cause your client to be one of the estimated 500k+ LLCs that incorrectly thought it was going to be taxed as an S corporation but, because of certain language contained in its operating agreement, is not an S corporation
  • Personal goodwill and the C corporation business sale – identifying situations in which double tax can be avoided

Any one of these could make the difference between you being a hero or creating a significant problem for your clients.

This webinar is geared for attorneys and CPAs who handle matters (even on a limited basis) involving closely-held businesses and smaller mid-market companies.

Please bring your questions, as the presentation will include a live Q&A session.

About Tax Forum:

Tax Forum presents flow-through tax programs that are considered the preeminent training seminars for professionals who handle partnership, LLC and S corporation tax and business planning.

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