Archive for Tax Provision/Tax Reporting

The White House Releases its Fiscal Year 2015 Budget Proposal

President Obama released a fiscal year 2015 budget proposal on March 4th of 2014 that includes tax increases primarily targeting multinational corporations and high-income individuals to pay for lower- and middle-class tax relief, increased spending on transportation infrastructure, and deficit reduction. As part of that process, the White House also released what’s known as the “Green Book,” which provides the Treasury Department’s explanations of the revenue provisions in the budget proposal.

Key Provisions Affecting Individual & Corporate Tax Consequences

While the tax section of the President’s budget renews a number of provisions from his previous annual submissions, it does include some new and noteworthy revenue raisers, such as proposals to: Read More

Written by | Posted in Corporate • Expatriate • International • Tax Policy • Tax Provision/Tax Reporting

Staying With The Trend For The Tax Function

The “Buzz Words” these days for the in-house Tax Function are:

• Transformation
• Value Creation
• Tax/Business Strategic Alignment
• Business Partnering
• Risk Management/No Surprises

Transformation of the Tax Function – The Whys, What’s and How’s

Why does the Tax Function need transformation? Read More
Written by | Posted in Tax Provision/Tax Reporting • Tax Risk Management • Tax Tips

PFICs – A Fairytale Definition; Lives Happily Ever After

What is a PFIC?

A PFIC is a so-called “Passive Foreign Investment Company” which is defined to include any foreign (non-US) corporation if 75% or more of its gross income for the year consists of “passive income” (“income test”), or (2) at least 50% of the average fair market value of its assets during the year are assets that produce or are held for the production of passive income (“asset test”). Passive income generally includes dividends, interest, rents, royalties, most foreign currency and commodity gains, and capital gains from assets that produce such income. As pointed out in my earlier tax blog post just about all of the income of a foreign fund will usually qualify as passive and so, nearly all foreign funds will qualify as PFICs. Read More

Written by | Posted in Corporate • Income Tax • Tax Provision/Tax Reporting

7 Habitual Mistakes Companies Make – Chapter 5 (23)

TaxConnections Blog Post
More Facts Resolve Tax Risks –
Report to the Audit Committee and a Provision Recommendation –

A TAX EXPOSURE is typically a combination of capital, penalties, and interest. A determination must be made, based on the information available, as to whether there is a tax exposure or whether circumstances exist to mitigate or eliminate the exposure. Based on this determination the amount is either provided for, raised as a contingent liability, or excluded as an exposure.

In reporting to the audit committee , the tax exposure is dependent on the facts of the matter which in turn will dictate the risk. The risk could be classified into three categories, Read More

Written by | Posted in Tax Provision/Tax Reporting • Tax Risk Management

New Reporting Obligations For Trustee And/Or Beneficiaries Related To Italians

The Milan law firm of Belluzo & Partners explain the new rule requiring Italian tax residents to disclose all assets held by a foreign trust of which they are a beneficial owner, regardless of the trust’s place of residence.

The rule, announced in Circular 38/E of 23 December 2013, takes effect in the 2013 tax year, and the deadline for reporting is 30 September 2014.

Such requirement holds for the “beneficial owner” of the assets located abroad and held directly or through companies, trusts and/or other arrangements (i.e. insurance wrappers).

The requirement refers to resident individuals and assimilated noncommercial entities Read More

Written by | Posted in Tax Provision/Tax Reporting

IRS Argued Authority To Regulate Tax-Return Preparers

On February 11, 2014, the United States Court of Appeals for the District of Columbia Circuit (the “Court of Appeals”), in the case of Loving v. Internal Revenue Service, affirmed an order of the District Court enjoining the Internal Revenue Service (IRS) from enforcing regulations related to paid tax-return preparers. The subject regulations were issued by the IRS in 2011 and purported to require paid tax-return preparers to pass a qualifying exam, pay annual registration fees, and meet certain professional continuing education requirements.

The IRS argued it had authority to regulate tax-return preparers based on 31 U.S.C. § 330, which authorizes the IRS to “regulate the practice of representatives of persons before the Department of Treasury.” The Court of Appeals disagreed, describing the IRS’s Read More

Written by | Posted in IRS • Tax Provision/Tax Reporting

Miami “Hookah” Takes On Florida

Most Florida tobacco distributors are familiar with Micjo which was decided on February 1, 2012. Micjo would change the alcohol and beverage tax world in Florida forever. At issue was whether the taxpayer had to pay Florida tobacco tax on all of the invoice components, including shipping charges and federal excise tax or if the tax should only apply to the tobacco product itself, not the federal excise tax and transportation charges. For example, Micjo (or any tobacco distributor) gets an invoice from its supplier that says tobacco $100, federal excise tax $60, transportation charges $40, total invoice $200. Should the tobacco tax apply to the $200 or the $100? Of course, Florida’s Division of Alcoholic Beverages and Tobacco of the Florida Department of Business and Professional Regulation (“AB&T”) believed it was the $200 and Micjo believed it was the $100. Read More

Written by | Posted in North America • State And Local Tax (SALT) • Tax Provision/Tax Reporting

Tax Implication of Publicly Traded Partnerships: Why Purveyors of the US Tax Code Snarl at Investment Brokers – Part II

My friend Roger Botterbusch recently put together a most excellent presentation on the tax implications of owning Publicly Traded Partnerships (PTPs), also commonly referred to as Master Limited Partnerships (MLPs). As a result I developed a new profound distaste for investment brokers pedaling these things for their ‘prospective’ fat returns whilst simultaneously poo-pooing the heavy, heavy administrative burden they bring at tax time.

The most interesting point of the presentation was that all but two PTP’s traded in the United States kick out incredibly complicated year end K-1′s to the owner for reporting on the 1040. In preparation for the presentation a ridiculous case study was bandied around about a taxpayer who engaged in ‘day trading’ PTP’s. The ‘trading’ activities on their face were moderately successful but when taking into consideration that the tax practitioner Read More

Written by | Posted in Partnership • Tax Provision/Tax Reporting

Tax Implication of Publicly Traded Partnerships: Why Purveyors of the US Tax Code Snarl at Investment Brokers – Part I

My friend Roger Botterbusch recently put together a most excellent presentation on the tax implications of owning Publicly Traded Partnerships (PTPs), also commonly referred to as Master Limited Partnerships (MLPs). As a result I developed a new profound distaste for investment brokers pedaling these things for their ‘prospective’ fat returns whilst simultaneously poo-pooing the heavy, heavy administrative burden they bring at tax time.

The most interesting point of the presentation was that all but two PTP’s traded in the United States kick out incredibly complicated year end K-1′s to the owner for reporting on the 1040. In preparation for the presentation a ridiculous case study was bandied around about a taxpayer who engaged in ‘day trading’ PTP’s. The ‘trading’ activities on their face were moderately successful but when taking into consideration that the tax practitioner Read More

Written by | Posted in Partnership • Tax Provision/Tax Reporting

New York Governor Announces 2014-2015 Budget Proposal

On Tuesday, January 21, 2014, Governor Andrew Cuomo of New York announced his executive budget for 2014-2015. Included in the budget are a number of tax reforms geared towards accomplishing the policy goals also outlined in the budget announcement, among them simplifying the tax code and reducing rates and assessments. Manufacturers are the recipients of a few of these reduced assessments. The budget provides for a 20% credit on property taxes paid by manufacturers who own property, and “upstate manufacturers” have their tax rate on income eliminated entirely, from a previous rate of 5.9%. Similarly, the 18-a temporary assessment on utilities has been eliminated for industrial customers, three years in advance of its scheduled expiration date. Read More

Written by | Posted in Tax Provision/Tax Reporting • United States

Israel/South Africa Expatriates Face Costly New Tax Rules

In terms of the Right of Aliyah doctrine (the right of every Jew to immigrate to Israel) every Jew going to or intending to go to Israel will be granted an Oleh’s visa. Oleh, for my colleagues not dealing with Israeli law (plural: olim) means a Jew immigrating into Israel. The Oleh Visa is granted by mere expression of the interest to “relocate” to Israel as a qualifying Jew (albeit born outside Israel after 1950).

A person shall not be registered as a Jew by ethnic affiliation or religion and will be denied Oleh Visa, despite being a Jew as defend, inter alia because of political status / activity (i.e. is engaged in an activity directed against the Jewish people or which is likely to endanger public health or the security of the state of Israel) or secondly, where a notification (issued under the Law of Return 5710-1950 as amended by Law of Return Read More

Written by | Posted in Africa • Europe, Middle East • Expatriate • Gift Tax • Individual • International • OECD • Specialty Tax Incentives • Tax Controversy • Tax Fraud/Evasion/Crimes • Tax Policy • Tax Provision/Tax Reporting
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