Archive for Ronald Cappuccio

Father’s Day – What Happens When Dad Needs To Stop Working?

Lawyers call it “succession planning.” This simply means what do you need to do to organize your business to transfer to the next generation, retire, or simply sell the business. Even though more businesses are becoming woman-owned, most of my business owner clients are men.

What happens if the business owner gets sick? Is there a plan in place to take over the business? Who will run the business?

Suppose the owner suddenly dies? The same issues apply.

What if the owner wants to retire? Many times the most significant asset is the business and without selling it, a satisfactory retirement is not possible. What are the taxes to be paid and how can we plan to minimize the take of the various State and Federal governments?

I know thinking about death, disability and illness, old-age, and retirement can be difficult. Nevertheless, it is so much better to start planning when everything is okay rather than in the midst of a crisis.

Written by | Posted in TaxConnections

Will Government Help Small Businesses?

President Obama has been pushing for changes to the Internal Revenue Service Code that would limit the tax benefits of pass-through entities. Most small businesses are limited liability companies or S corporations and the profits and losses pass-through to the individual members or shareholders. These are merely preliminary proposals and most likely the House of Representatives will not let these proposals be pushed through Congress.

There is been a lot of recent talk about the lack of small business loans and it has been pointed out that the Small Business Administration is a good source for guaranteed business loans for the smallest of businesses. That is simply not true! Since 2005, the average size of the Small Business Administration loan under its loan guarantee program has gone from approximately $160,000 to approximately $342,000. In 2005, the government backed loans totaled almost 96,000. Last year, only 44,000 loans were guaranteed. Also, the smaller banks, that are many times the best choice for small business, seem to be getting out of the SBA loan guarantee programs in practice. Three large banks, including Wells Fargo, control over 20% of the market for SBA guaranteed loans.

The result is the bigger banks are making a larger percentage of loans in larger dollar amounts, but to less than half the number of businesses that they did in 2005. Read More

Written by | Posted in TaxConnections

First Drones… Now Robo Audits

In its continuing quest to collect more taxes, the IRS is targeting small business. For the past several years, individuals instead of being audited by a live human being, are being audited by computer and unresponsive mail audits. In order to get more money, the IRS is expanding this secret surveillance to audit small businesses. By using the Robo audits, the IRS can attack more small businesses, and attempt to collect more money.

The way this works is the IRS uses many of its matching computer information documents. For example, if you are a restaurant business and tips are put on credit card receipts, the IRS will track those tips, determine an average percentage and apply that as additional wages to your employees. This way they can collect more taxes from the employer in the form of 941 employment taxes, and they can also go after the employee to collect more income tax.

The problem with these audits is that there is no educated human being to speak to concerning the issues. Typically the IRS proposes an absurdly large amount of tax due by disallowing many of the proper deductions taken by the business and inflating the gross receipts. It sends a bill to the taxpayer and the taxpayer has a short period of time, 90 days, to file its case in US Tax Court. If not, the taxpayer is stuck having to try to come up with this huge amount of tax and infighting and expensive battle in the US Court of Federal Claims. Read More

Written by | Posted in TaxConnections

Happy Mother’s Day – Too Much Hype For and Against Living Trusts

A lifetime trust, also known as a living trust, can be the difference between people controlling their estate and being subject to the expense, confusion, and problems that sometimes affect unplanned estates.Nevertheless, a whole industry has grown around overselling living trusts when they are not really needed. Now, AARP and Kiplinger have gone in the other direction proclaiming that trusts are expensive and not needed. In the June 2013 Personal Finance issue, the newsletter gives really bad advice to avoid trusts.Frequently, as a tax attorney, I get a call from clients saying “what can we do with Mom’s assets? She has dementia, and is being influenced by an acquaintance or family member to give them chunks of money.” Unfortunately, it is too late. Unless the family wants to go to court with an expensive and embarrassing lawsuit to prove that their mom is incompetent, there is not much that can be done. Read More
Written by | Posted in TaxConnections

Bitcoin – Not for Avoiding Taxes

Bitcoin has become the rage in the past few months by the so-called asset protection industry. There have been claims that this cryptocurrency cannot be detected by governments and transactions are not taxable. Not true! 


Under the Internal Revenue Code, gross income means all income from whatever source. Trading Bitcoin currency for services or goods is clearly income for US Tax purposes. There is no argument. Just like bartering transactions, the question becomes “what is the value of the Bitcoin transferred?”  With Bitcoin, the answer is online.

If you want to transact business in Bitcoin that is your option. But, the transactions must be included in gross income or you will be committing tax fraud that can be easily proved by the government.

Anyone interested in tax planning and asset protection can get real results by consulting their tax lawyer.

Written by | Posted in TaxConnections

The Tax Miseducation Of Rock Star Lauryn Hill

Lauryn Hill has learned that being a rock star, although it exempts you from many of the burdens of life, does not exempt you from filing taxes. Just like famous actor (Wesley Snipes) and hotel heiress (Leona Helmsley), Lauryn Hill has felt the full wrath of the United States Government by being thrown into jail for failing to file her tax returns.

It seems, Miss Hill, through her bevy of tax and financial advisers, did not file tax returns for 2005, 2006 and 2007. Three years; that’s the magic number for the IRS to have a presumption of “willful” failure to file. Even though she had big tax losses in 2008 and 2009, her late filing and late paying of tax, means she is going to Federal Prison for 3 months.

Let’s look at the facts: Read More

Written by | Posted in TaxConnections

Nexus – When Are You “Doing Business” In A State Or A Country?

Google is one of the biggest collection of companies in the world. Wisely, Google has divided itself into many companies to deal with the different tax laws not only in the Fifty United States but in dealing with worldwide taxes. By using proper tax planning, Google is effectively avoiding taxes in many countries.

In order to be subject to taxation in a given country, a business must have “Nexus” in that country. The word Nexus comes from the same root as “connection”. Typically that means a company must have an actual physical presence in the country.

Google has been very wise in its tax planning. It has its main business in Bermuda, a low tax country, and in the Republic of Ireland, also a low tax country. Google has set up a separate entity in the United Kingdom as a “technology and marketing” company. The idea is that technical services are performed by the UK subsidiary as well Read More

Written by | Posted in TaxConnections

How Long Should You Keep Tax Records

Maybe it’s a good thing that the April 15th federal tax deadline coincides with the urge to spring clean. It feels good to throw out some of the financial records stuffing your filing cabinets. But before you head for the dumpster, make sure you’re not disposing of records you may need. You don’t want to be caught empty-handed if an IRS auditor contacts you.

In general, you must keep records that support items shown on your individual tax return until the statute of limitations runs out — generally, three years from the due date of the return or the date you filed, whichever is later. That means that now you can generally throw out records for the 2009 tax year, for which you filed a return in 2010.

In most cases, the IRS can audit your return for three years. You can also file an amended return on Form 1040X during this time period if you missed a deduction, overlooked a credit or misreported income.

So, does that mean you’re safe from an audit after three years? Not necessarily. There are exceptions. For example: Read More

Written by | Posted in Individual

IRS Closing For 5 Days In May-August

IRS To Furlough Employees On Five Days; Operations Will Shut Down Entirely

The IRS will be closed for business for five days falling between May 24 and August 30. As stated in an NTEU Press Release (4/19/13).

Late last week, the National Treasury Employees Union (NTEU) announced that the IRS is sending out furlough notices this week to the entire IRS workforce, identifying the five following furlough days where the agency will shut down entirely: May 24, June 14, July 5, July 22, and Aug. 30. The thirty-day notices to employees also leave open the possibility of another two unpaid furlough days.

On those furlough days, all public operations of the IRS will be shut down, leaving taxpayers without access to information and assistance from frontline workers. According to the president of the NTEU, on those days, phone calls to the IRS will go unanswered and Taxpayer Assistance Centers across the country will have closed’ signs in their windows. The furloughs are being driven by the ongoing sequestration that is forcing federal agencies, including the IRS, to severely slash their budgets.

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.

Written by | Posted in TaxConnections
  Recent Entries »