In a post on 1/17/14 titled “Marijuana And The Tax Law“, I noted the significant tax dollars that Colorado was to generate from legalizing recreational use of marijuana. I also noted that for tax practitioners who assist these businesses (as well as those selling in other states for medicinal use), there are tax law issues (such as IRC Section 280E) and ethical considerations given that growing, cultivating, distributing and using marijuana is still a federal crime. CPAs and attorneys need to consider the rules of conduct applicable in their state.

I have a 4-page article on this topic in the Tax Talk feature of the Federal Bar’s July 2014 The Federal Lawyer. It is entitled, “Ethical Considerations When Your Potential Tax Client is a Marijuana Business.” I explain the issues CPAs and attorneys face in helping these Read More

The value-added tax (VAT) has been adopted by every developed country and most developing countries in the world. There is, however, one exception –The United States. That may be changing as there is currently discussion regarding its adoption in the U. S.

The value-added tax is a tax on goods and services and is collected at every step in the production chain. This is unlike the sales tax, which is paid only on retail sales. In a sense it is similar to sales taxes that are currently in place in 45 states as it is a consumption tax. VAT rates, obviously, vary from country, but in a survey of Organisation for Economic Co-operation and Development (OECD) countries, the rate varies from a low of five percent to a high of 24.5 percent. Read More

The inflexibility of the IRS in the offshore area is starting to get some professionals down. I am one of them, but there are some others voicing similar frustration.

Taxpayers and professionals alike, were very pleased when the IRS announced the new Streamlined procedures in mid-June. You can learn more about the new Procedures here.

It seemed that sensibility and reason were beginning to prevail over at the IRS! Finally, “benign actor” (as opposed to “bad actor”) taxpayers with undisclosed offshore assets, could obtain relief and come into tax compliance without driving themselves into both fiscal and physical bankruptcy. Read More

In the past year there have been numerous reports of fraud and embezzlement, mostly involving small businesses. These can be prevented by a few low cost controls.

One of the most important is separation of responsibilities of asset custody and record keeping for these assets. For example, someone other than the person who receives and disburses cash and writes checks should record these in the accounting records.

Other essential controls include, but are not limited to:

(1) approval of payments by the owner or other responsible person who does not write the checks, or authorize credit card payments and maintain the accounting records. Read More

Payments to Independent Contractors can be a very grey area within the tax law. Often times I am asked the question, “Should my employees be given a W-2 or Form 1099-MISC for there pay?” There’s really no clear-cut answer to this question. It’s important to answer other questions to even begin to get some clear direction on the proper way to classify a worker as an employee or an independent contractor.

There are two types of business relationships which may exist between an employer/owner and a employee/worker. They are 1. Independent contractor and 2. Employee (common-law employee).

These business relationships are established based on common-law rules: Read More

Congressman Camp’s discussion draft of the Tax Reform Act of 2014, released in February 2014 aims to broaden the income tax base and lower tax rates. Broadening the tax base means that some special deductions and credits could be eliminated. It also means that some deductions could be stretched out over longer periods. In the long run, that doesn’t raise revenue as it is just timing. But when you only measure the effects out 10 years, it raises revenue.

One stretched out deduction would be advertising expenses of large companies. Under Camp’s proposal, 50% would be deducted in the year incurred and the balance would be deducted over ten years. That might sound simple, but you need to dig deeper. This proposal will require a definition of advertising. Camp’s is fairly complex. Also, the small Read More

Canadians earning income from US rental property can be fraught with unexpected tax problems, which could severely hurt their after-tax return on investment. It is important to consult a cross-border tax professional before the purchase to understand all the US and Canadian tax implications of owning US rental property and to make the best decision for their situation on the right structure to own and finance the purchase of US rental property.

This is the first of a series of articles on the cross-border tax considerations of investing in US rental property. If you are planning to purchase US rental property, you need to have some basic understanding of the following US and Canadian tax law before you can make a sound decision on how you should own and finance the purchase of US rental property. Read More

Take It Off!

I had put it on some time ago. I kept it on everywhere I had a presence. I was submissive and had a desire to be obedient. The ramifications of not doing as the master said weren’t nearly as pleasurable as complying with my master’s commands.

Having become a creature of habit, and not wanting to displease my master, I had put it on everywhere. Having quite the presence online, I had it on in lots of places. You could see on me in my blog posts, my web page, my social media posts. Everywhere I was, I had it on.

Now, after months of making sure I’d covered my a**, I’m told to TAKE IT OFF!

Yep. In a webinar presented by the Office of Professional Responsibility, Karen Hawkins Read More

Bankruptcy and CODI

All bankruptcy falls under USC Title 11. There is also a bankruptcy Chapter 11. This similarity causes a lot of confusion. Since we are mainly dealing with personal tax returns, we will not deal with the Chapter 11 bankruptcy in this course. We will be talking about Chapter 7 and Chapter 13 of the Title 11 Code.

Chapter 7

Chapter 7 is the “discharge” chapter. In a Chapter 7 bankruptcy all included debts are theoretically discharged. If there are assets secured by those debts the assets are usually forfeit. The Deemed Sales and CODI rules apply in those cases. Read More

With millions of site visitors coming to TaxConnections this year, we are driving to meet the demands of our visitors who come to find a wide range of tax expertise around the world. This is the last two days this SPECIAL LIMITED OFFER will be available and your last opportunity to save $199.95.

When you register for a one year membership before midnight July 31st, you will receive the second year free. This offer is not available August 1st.

Tax professional members benefit by being in front of millions of people who can connect with them on TaxConnections. We are not like other sites that block people from seeing you unless they pay for the connection. You see, TaxConnections members join to control Read More

Over the years in executive search, I had the pleasure to meet extraordinarily talented tax professionals all over the world in corporations, public accounting firms, law firms, independent tax services firms, academia and government. During this time, I learned how highly educated tax professionals are and continue to be throughout their tax careers. What I also discovered is that many of the very finest tax technicians enjoyed looking through the tax code to “ figure out the tax problem and solve it like a puzzle”. These great tax technicians are masters at solving tax problems yet many are shy about promoting themselves. Four years ago, I decided to develop a platform that would bring tax professionals out from behind the scenes and make them visible to the people who are searching for them. In order to ensure the most success for tax professionals, we decided Read More