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Tag Archive for Tax Advisor

Is Your Cryptocurrency IRS Approved?

Barry Fowler, Tax Advisor, Tax Blog, Houston, Texas, USA. TaxConnections

Cryptocurrencies such as Bitcoin are becoming more popular as a form of payment and as investment. However, there has been little attention paid to how this virtual currency will be treated by the IRS until now. In fact, the IRS is taking a much closer look and has established some tax guidelines.

According to an article published in accountingtoday.com, “For federal tax purposes, virtual currency is treated as property and not currency.” They add, “The fair market value of the virtual currency on the date of receipt determines the taxpayer’s basis.”

Some Businesses Are Actually Paying Employee Wages In Virtual Currency Instead Of U.S. Dollars Read more

Tax Cuts And Jobs Act: Impact On Businesses

Thomas Rex, Tucson, Arizona, USA, Tax Advisor, Tax Blog, TaxConnections

The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.

Corporate Tax Rates

  • Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
  • The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
  • The Act permanently repeals the corporate alternative minimum tax (AMT).

Read more

TV Star Michael “The Situation” Sorrentino Pled Guilty In $8.9 Million Tax Case

Tax Blog, Ronald Marini, Tax Advisor, Miami, Florida, USA, TaxConnections

According to Law360 “Jersey Shore” star Michael “The Situation” Sorrentino and his brother Marc Sorrentino have agreed to plead guilty in their criminal case over tax-related charges instead of going to trial next month, according to a government letter on January 17, 2018 to a New Jersey federal judge.

The parties told the court Tuesday that the Sorrentinos had agreed to plead guilty, and U.S.District Judge Susan D. Wigenton scheduled a hearing for Friday for the defendants to enter their guilty pleas, according to a one-page letter prosecutors sent the judge Wednesday. The parties thus asked Judge Wigenton in the letter to stay a Wednesday deadline outlined in parts of a scheduling order entered in connection with the brothers’ upcoming trial. Read more

Real Estate Expenses During Pre-Acquisition

Grant Gilmour, Tax Advisor, Tax Blog, Vancouver, Canada, TaxConnections

There are various real estate expenditures that are deductible to the corporation and others that are capitalized or allocated to inventory. In this FAQ, we will discuss the real estate expenses that are deductible during the pre-acquisition phase as an operating expense to the corporation in the fiscal year that expenditures were incurred.

There are many “soft” costs in real estate such as representation costs, site investigation costs and financing expenses.

Representation costs are eligible for a deduction for amounts paid in the year. Examples of these costs are rezoning applications, project planning and preliminary design costs. Read more

U.S. Impact Of Federal Tax Reform From Italy’s Perspective: Renewed Attention On Italy’s Anti Inversion Rules

Marco Rossi, Tax Advisor, New York, USA, Tax Blog, TaxConnections

As a result of the significant reduction of U.S. corporate income tax rates pursuant to the tax reform of the TCJA enacted on December 22, 2017, the Unites States now has a lower corporate tax rate than many of its trading partners, meaning that, in many instances, the profits of foreign owned or controlled-U.S. subsidiaries shall be taxed more favorably than the profits of their foreign parent companies or affiliates in their home jurisdictions. That creates an incentive for foreign companies to channel more profits through their U.S. subsidiaries, in order to benefit from lower U.S. income taxation compared to that applicable in the parent company’s home country. Read more

Are Home Mortgage And Home Equity Loan Interest Still Deductible Under The New Law?

Amy Thompson, Tax Advisor, Tax Blog, Arlington Heights, Illinois, USA, TaxConnections

I am writing to let you know about changes in the rules for deducting qualified residential interest, i.e., interest on your home mortgage, under the Tax Cuts and Jobs Act (the Act).

Under the pre-Act rules, you could deduct interest on up to a total of $1 million of mortgage debt used to acquire your principal residence and a second home, i.e., acquisition debt. For a married taxpayer filing separately, the limit was $500,000. You could also deduct interest on home equity debt, i.e., other debt secured by the qualifying homes.

Qualifying home equity debt was limited to the lesser of $100,000 ($50,000 for a married taxpayer filing separately), or the taxpayer’s equity in the home or homes (the excess of the value of the home over the acquisition debt). The funds obtained via a home equity loan did not have to be used to acquire or improve the homes. So you could use home equity debt to pay for education, travel, health care, etc. Read more

IRS To Begin Revoking US Passports Of Delinquent Taxpayers In 2018

Ronald Marini, Tax Advisor, Tax Blog, Miami, Florida, USA, TaxConnections

Starting this month, the IRS will start implementing new procedures required under a 2015 law to crack down on individuals with “seriously delinquent tax debts.”

The IRS issued Notice 2018-1 on January 16, 2018, which provides guidance for implementation of the new IRC 7345, added by Section 32101 of the FAST Act. Upon receipt of section 7345 certification, the State Department is generally required to deny a passport application for individuals with seriously delinquent tax debts and may also revoke or limit passports previously issued to those individuals. The notice also describes some exceptions to certification and taxpayer remedies.  Read more

Municipalities Lose Preliminary Injunction Request – Register For Centralized Collection Of Municipal Net Profit Tax

Thomas Zaino, Tax Advisor, Tax Blog, Columbus, Ohio, USA, TaxConnections

Yesterday, February 21, 2018, Franklin County Court of Common Pleas Judge David E. Cain denied the request for a preliminary injunction from the municipal group that is comprised of more than 160 municipalities. The language of the decision has yet to be published. Zaino Hall & Farrin LLC will provide a more detailed analysis once the language is available.

This decision puts to rest, for now, an effort by municipalities to forestall the state’s centralized collection of tax on behalf of municipalities, as well as keeps in place the elimination of the anti-competitive municipal throwback rule for years beginning in
2018. A hearing on a permanent injunction is scheduled for December 2018. Read more

Upcoming Texas Amnesty Program

Monika Miles, Tax Blog, Tax Advisor, San Jose, California, USA, TaxConnections

There always seems to be an amnesty program going on somewhere, particularly if you know where to look.

States are aggressively pursuing delinquent taxpayers, while still making it relatively easy for them to come forward themselves. Last year, we wrote an article about some interesting amnesty programs in Connecticut (CT), Ohio (OH), and Rhode Island (RI).

Most amnesty programs allow for a waiver of penalties and a limitation on interest if businesses come forward under the terms of the program as specified by the state legislature. Most of the programs are limited in time (often only a two to three month window) and only cover certain taxes.  Yet, with the right fact pattern, a company might benefit from engaging in such a program. But not always.  As with most things related to multi-state tax issues, the answer may require a little more research and analysis. Read more

Casualty And Theft Losses

Nanda Kumar, Sterling, Virginia, Tax Blog, Tax Advisor, TaxConnections

It is not unknown for people to suffer a loss in the form of theft and casualty for their personal properties. If you are one of them, you can claim the same as itemized deduction for your tax returns. To do so, you need to fill up the Form 4684 to understand how much of yours loses you can report and then mention the same in the Schedule A of the Form 1040.

It is important to note that you can claim only for those losses that are not covered or reimbursed by any insurance company. Also, in order to qualify for the deductions, your loss should amount to more than 10% of your adjusted gross income. You cannot claim a deduction otherwise. Read more

Taxes And Virtual Currencies: What You Need To Know

John Adams, Tax Advisor, Tax Blog, Cherry Hill, New Jersey, USA, TaxConnections

Bitcoin, blockchain, cryptocurrency… Digital and virtual currencies are all the rage lately. However, just because there isn’t a physical coin in hand, doesn’t mean they are shielded from taxes. Following are some virtual currency tax consequences you must know if you decide to dip your toe in that world.

“While Bitcoin is the most popular virtual currency there are many others (e.g. Ripple, Ethereum, Lite Coin, etc.). The IRS rules on income recognition apply regardless of which virtual currency you’re using.” — Ren Cicalese III, CPA, MST

The IRS Is Paying Close Attention Read more

Calculator Helps You – Should You Lease Or Buy An Automobile?

As CEO of TaxConnections, I want to personally credit our member Lisa Nason for her Calculator – Should You Lease Or Buy An Automobile? TaxConnections has many smart and resourceful tax advisors as members and Lisa is in Greenville, South Carolina is certainly one smart tax advisor.

We recently discovered a wonderful tool on Lisa Nason’s site and want to share it with our community. This Calculator Resource was devised to help you determine if it makes more sense to lease or purchase an automobile. Here is the link for you: https://www.nasonaccounting.com/calculators/BuyvsLease.html

We know you will find value with this resource and want to thank Lisa Nason for sharing it with our members. Have a question? Contact Lisa Nason