Archive for Federal

Trump’s NOL And The Complexity Of Taxation

Annette Nellen

Lots of news stories and excitement over the first page of three of Trump’s state tax returns for 1995 (NY, NJ and CT)! The New York Times broke the story: “Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found,” New York Times, 10/1/16. It’s a big NOL carryover – over $916 million (almost $1 billion). Several observations:

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Overlooking Tax Expenditures Affecting The Federal Budget

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The GAO released a report today called Tax Expenditures: Opportunities Exist to Use Budgeting and Agency Performance Processes to Increase Oversight (GAO-16-622). The report examines the estimated $1.23 trillion annual cost of special tax deductions, exclusions, credits and preferential rates AND how there is basically no oversight of these costs relative to discretionary budget items. Apparently, OMB and federal agencies were to review tax expenditures (there are over 150 of them) to see how they help agency goals. So far, only 11 of 169 expenditures were addressed representing less than one-third of the total cost.

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FATCA 2015 Roundup: It’s All Serious Business!

TaxConnections Member Manasa Nadig

A lot has been written about the Foreign Account Tax Compliance Act {FATCA} in the past year. As this year comes to a close and I write up this post, I wanted to give you all, my dear readers a synopsis at your finger-tips, a round-up, if you will of some major FATCA events for 2015:

1. FBAR Deadlines Changed:

On July 31, 2015 President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 into law, which modified the due date of several key forms for Americans with foreign income and Americans living abroad. That includes the Report of Foreign Bank and Financial Accounts, or Form 114, colloquially known as the FBAR.

Any U.S. person with a financial interest in, or signatory authority over, foreign financial accounts must file the FBAR, if at any time, the aggregate value of their relevant foreign account or accounts exceeds $10,000. An account over Read more

IRS Intends To Amend Sections 1471-1474 Regulations to Extend the Time that FATCA Transitional Rules Will Apply

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In Notice 2015-66 the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced that they intend to amend regulations under sections 1471-1474 to extend the time that certain FATCA transitional rules will apply.  Specifically, the amendments will extend:

(1) the date for when withholding on gross proceeds and foreign passthru payments will begin;

(2) the use of limited branches and limited foreign financial institutions (limited FFIs); and

(3) the deadline for a sponsoring entity to register its sponsored entities and redocument such entities with withholding agents. Read more

Family Courts Don’t Always Pay Attention to Federal Tax Law

Barry Fowler5

All too often, family law courts make rulings that are contradictory to federal tax law, causing confusion and inequity in divorce actions since family court rulings cannot trump federal tax law.

An issue for divorced parents is who gets to claim the children for tax purposes. Federal tax law provides that the parent with physical custody claims the child unless that parent releases the exemption to the other parent. Frequently, family courts award physical custody to one parent and the tax exemption to the other. To make matters worse, the courts assume that the exemption deduction will provide a financial benefit to the non-custodial parent. Then the court adjusts child support accordingly, leaving the non-custodial parent with two unpleasant surprises when filing his or her tax return: the Read more

Digital Economy, Tax Issues And Due Diligence


We’ve been in the “digital economy” for some time, yet it continues to evolve with new business activities and ways of living. And, we see “old economy” businesses, like Ford Motor, move more into the new economy.

I define the digital economy from the perspective of how people and businesses engage in it:

• Transacting business with virtual currencies, such as Bitcoin;

• Providing digital goods and services; and

• Transacting business enhanced by the Internet, such as finding customers, including Read more

Recent Important Tax Changes

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The three month highway funding extension was passed by the House July 29 and by the Senate July 30. The president signed the bill into law on July 31. The law contains several important tax provisions changing the due dates for partnership and C corporation returns, FinCEN Form 114-Report of Foreign Bank and Financial Accounts (FBAR), several common tax returns and several other IRS information returns It also overrules the Supreme Court’s Home Concrete decision, requires that additional information be reported on mortgage information statements, and requires consistent basis reporting between estates and beneficiaries. Read more

10 Tips For Deducting Losses From A Disaster


National Hurricane Season is officially in progress. If you suffer damage to your home or personal property, you may be able to deduct the losses you incur on your federal income tax return. Here are ten tips you should know about deducting casualty losses:

1. Casualty loss. You may be able to deduct losses based on the damage done to your property during a disaster. A casualty is a sudden, unexpected or unusual event. This may include natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.

2. Normal wear and tear. A casualty loss does not include losses from normal wear and tear. It does not include progressive deterioration from age or termite damage. Read more

Cash Flow: The Pulse of Your Business

Cash flow word cloud image with hi-res rendered artwork that could be used for any graphic design.

Cash flow is the lifeblood of any small business. Some business experts even say that a healthy cash flow is more important than your business’s ability to deliver its goods and services! While that might seem counterintuitive, consider this: if you fail to satisfy a customer and lose that customer’s business, you can always work harder to please the next customer. If you fail to have enough cash to pay your suppliers, creditors, or employees, then you’re out of business!

What is Cash Flow?

Cash flow, simply defined, is the movement of money in and out of your business; these movements are called inflow and outflow. Inflows for your business primarily come from the sale of goods or services to your customers but keep in mind that inflow only occurs Read more

Tax Tips For Students With A Summer Job

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Is your child a student with a summer job? Here’s what you should know about the income your child earns over the summer.

1. All taxpayers fill out a W-4 when starting a new job. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. Taxpayers with multiple summer jobs will want to make sure all their employers are withholding an adequate amount of taxes to cover their total income tax liability. If you have any questions about whether your child’s withholding is correct, please call our office.

2. Whether your child is working as a waiter or a camp counselor, he or she may receive tips as part of their summer income. All tip income is taxable and is therefore, subject to Read more

The Home-Based Business: Basics to Consider


More than 52 percent of businesses today are home-based. Every day, people are striking out and achieving economic and creative independence by turning their skills into dollars. Garages, basements, and attics are being transformed into the corporate headquarters of the newest entrepreneurs–home-based business people.

And, with technological advances in smartphones, tablets, and iPads as well as a rising demand for “service-oriented” businesses, the opportunities seem to be endless.

Is a Home-Based Business Right for You?

Choosing a home business is like choosing a spouse or partner: Think carefully before starting the business. Instead of plunging right in, take the time to learn as much about Read more

The President Signed Into Law The Trade Preferences Extension Act of 2015

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On Monday, June 29th of 2015 President Obama signed into law H.R. 1295 entitled “The Trade Preferences Extension Act of 2015” (hereinafter “TPEA”) which not only extended a trade deal between the U.S. and sub-Saharan Africa but also included a number of tax-related provisions within the bill in connection to the Health Coverage Tax Credit (e.g., claimed on IRS Form 8885); the American Opportunity and Lifetime Learning Tax Credits (e.g., claimed on IRS Form 8863); and the Hope Scholarship Tax Credit (e.g., claimed on IRS Form 8863).

As a legislative synopsis from the Hill, the Senate approved TPEA by unanimous consent on June 24th of 2015 and within twenty four hours the House of Representatives on June 25th approved TPEA by a 286-to-138 margin. “I thought I’d start off the week with Read more