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Archive for Larry Stolberg, CPA, CA

Increase In Rate Of Withholding Of Tax On Dispositions Of US Real Property Interests

Larry Stolberg

On December 18th, President Obama signed H.R. 2029, using the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.

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Canadians Selling U.S. Real Estate

Larry Stolberg

As you may be aware of there is a federal tax withholding requirement on the sale of U.S. real estate by non-U.S. persons. This does not exempt the vendor from filing a U.S. tax return to report the sale and paying any tax payable or requesting a refund for excess federal tax withholding.

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Small Business Inter-Corporate Dividends

Larry Stolberg

Revisions to Section 55 of the Income Tax Act (“ITA”) may prevent the tax-free payment of inter-corporate dividends within a related corporate group.

With the exception of Part IV tax where applicable, the related party exemption per S55(3)(a) will no longer be available to allow cash dividends say paid from Opco to Holdco unless there is safe income in the payor corporation at the time of the dividend payment.

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Extended Filing Requirements For IRS Form 5472

L S 8.4

On May 23, 2016, Internal Revenue Bulletin 2016-21 was released which proposes amendments to the regulations governing IRC 6038A.

The regulations are proposed to be applicable for taxable years ending on or after the date that is 12 months after the date these regulations are published as final regulations in the Federal Register.

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Income From Business Or Property

Larry Stolberg

The taxation of corporate income from the rental of storage facilities appear to be a common business under regular review just like the motel/hotel and rental management business.

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CRA Forms Overlooked By Canadians Investing In U.S. Real Estate

Larry Stolberg

The T1134 and T1135 are a sample of Canadian foreign information returns such as the U.S. 8938, 5471, or 8865.

A number of Canadians are investing in the U.S. real estate market with a U.S. limited partnership, whose limited partners are solely Canadian residents and the general partner is a U.S. C corporation, whose shareholders are also Canadian residents.

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FBARs Blindsiding Canadians Present In The United States

Larry Stolberg

FINCEN114 due June 30th for the 2015 taxation year, reporting beneficial interest or signature authority in non-U.S. financial accounts where the annual aggregate highest balance is greater than $10K U.S., may have to be filed by Canadian taxpayers.

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U.S. Expatriates RESP Reporting Issues in Canada

Larry Stolberg

U.S. citizens (or even green cardholders) resident in Canada who are contributors (or a joint contributor) to their children’s RESP (Registered Educational Savings Plan) may have U.S. reporting issues.

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IRS Increases Tangible Property Expensing Threshold

Larry Stolberg

Last fall, the IRS announced the increase in the expensing limit with respect to the safe harbor limit contained in Regulation 1.263(a)-1(f) from $500 to $2,500 per substantiated invoice. The increase commences in 2016. The election basically allows taxpayers without an applicable financial statement (AFS) audited by a CPA, to expense items that would otherwise be required to be capitalized and depreciated. There is no change to the $5,000 limit where an AFS is available. Read more

Sending Non-Canadian Resident Employees To Canada

Larry Stolberg

Regulation 102 of the Income Tax Act (ITA) requires payroll withholding on income derived by virtue of employment. This applies to, say, a U.S. employer sending its employee to Canada to work on an assignment. Withholding would include income tax and contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI).

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IRS Changes The ITIN Process

Larry Stolberg

On August 4, 2016, the IRS released Notice 2016-48 outlining the renewal procedures pertaining to the implementation of the changes to the ITIN process as required by the PATH ACT, passed in December 2015. There were also changes to requirements for dependents.

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Canadian Court Case Showcases CRA Incompetence

Larry Stolberg

The Canadian Income Tax Act provides a time period in which one may appeal a Notice of Assessment (NOA) or Reassessment. It is not unusual for a taxpayer not to have received the NOA. Although the taxpayer should advise Canada Revenue Agency of any change in addresses or to correct an incorrect address on file, this case was decided on the premise of the lack of communication to the taxpayer of CRA’s assessment of tax payable for a taxation year.

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