Until the inception of the Tax Cuts and Jobs Act, entity selection by businesses was a fairly easy decision. In most cases, businesses chose a form of pass-through entity, given the high tax rate of thirty-five percent given to C corporations in the past. With the new changes brought forth in TCJA, and the lower tax rate of twenty-one percent, change is in the air. But what are the benefits of considering C corporation status? Unless you are a very large company, determining if you should change from a pass-through structure to a C corporation will not be an easy one. Read more
Tag Archive for Corporations
This is the third of a series of posts on the major developments introduced by Law No. 205 (enacting the Italian Budget Law for 2018),
Corporate taxation – Partial exemption of dividends distributed by CFCs.
According to current Italian rules, profits realized by non-resident subsidiaries are deemed to exist under the CFC legislation (article 167(4) of the ITA) if the relevant nominal rate in the foreign jurisdiction (other than EU and EEA countries) is lower than 50% of the combined IRES tax (rate 24%) and IRAP tax (rate 3,9%). Read more
One of the pressing issues of President-elect Donald Trump’s campaign was his proposed tax reform. It is clear that not everything will be passed into law, and in fact changes were made over the course of the presidential race before arriving at the current proposal. Of course, it is too early to know exactly what will change and by how much, but it is clear that some major changes will be made. With the backing of a Republican majority in both the House and Senate, it should not take long for these changes to happen. Furthermore, many of the changes are not significantly different than previously proposed tax reforms by some Congressmen, which should help ease their passage into law. Read more
On December 2, 2017, the Senate passed the Tax Cuts and Jobs Act, a sweeping tax reform bill that seeks to reduce tax rates for corporations and individuals following a strategy outlined in our previous Alert. A similar tax bill was passed by the House of Representatives on November 16, 2017. The White House and Congressional leadership plan to have a unified tax reform bill ready for the president to sign into law before the Christmas holiday. Read more
The IRS, within the last year or so, has begun issuing a final Information Document Request that requests the taxpayer to agree to underlying facts relating to an issue under audit (the Facts IDR).
My general advice to clients is to not respond to the Facts IDR.
IRS form 5472 is a U.S. filing requirement that affects some Americans living abroad who own or part-own corporations.
Form 5472 must be filed by U.S.-registered corporations that are 25% or more owned by a foreigner, and foreign corporations that trade in the U.S., that make any ‘reportable transactions’ during the filing period. A ‘reportable transaction’ typically means that they have received or transferred any money or assets. Read more
Are there any consequences when a corporation leaves Canada and takes up residence in a new country?
Generally, a corporation is a resident of Canada if its central management and control is exercised from Canada. When this stops occurring, the corporation is considered to be a non-resident of Canada, regardless if initially incorporated in Canada or not. This can result in taxes owing.
Similiar to the U.S. rules, Canada may tax personal services provided in Canada by U.S. persons who are not residents of Canada for income tax purposes. The provisions governing this are regulations 102, 105 and section 115 of the Income Tax Act (‘ITA”).
What is Foreign Accrual Property Income (FAPI) and what affect does it have on my corporate taxes?
If you are a Canadian resident and own a foreign corporation that earns passive income, the income needs to be reported on your Canadian tax return even if you never received the funds. However, if the foreign corporation has a loss, the loss is not allowed to offset any other income you have for the year. Instead, the loss can be carried back three years against previous FAPI or forward 20 years against future FAPI.
For this post, Brandon Rains, founder of the Rains Laws Firm and an expert on business formation, espouses his observations about business structure changes and I address the income tax reporting requirements of those changes therein.
The Colorado Department of Revenue has finally revised its guidelines in FYI Income 54 regarding people who do not live in Colorado but are partners and/or shareholders of partnerships and/or S corporations in Colorado, ensuring that pass-through entities pay Colorado income tax on their Colorado-source income. This Enrolled Agent says “About Time!”
On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” which includes a number of important tax provisions, including revised due dates for partnership, S corporations and C corporation returns and revised extended due dates for some returns.