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Tag Archive for Tax Law

TaxConnections Worldwide Tax Blogs Honors Ronald Marini

Kat Jennings

Every week, until the end of the year, we will be celebrating one of our top writers on TaxConnections.

This week we are honoring Ronald Marini.

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The Interpretation of US Tax Treaties

John Richardson

Domestic Law, Foreign Law, or the Intent of the Treaty

 

On August 5, 2016 the United States Court of Appeals for the District of Columbia Circuits issued it’s decision in the Esher case.

This important case is: FRENCH TAXES US COURT REVERSAL 5 AUG 2016 (1)

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The Magna Carta Turns The Big 801!

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June 15, 1215. No Taxation Without Representation!

A phrase thought to belong to the US revolutionaries was actually rooted in principle in chapter 12 of the Magna Carta. Like those who revolted against England’s policy, the Baron’s believe that rampant taxation was a signature of tyrannical government.

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Non-Cash Charitable Contribution Rules May Be Changing

John Stancil1

Under current tax law, a donor may deduct fair market value for certain non-cash contributions of a capital asset to IRS qualified tax-exempt organizations.  This provision in the law has been a great benefit to organizations as well as donors.

For example, assume a taxpayer owns a capital asset such as a tract of unimproved land.  The land has a cost basis to the taxpayer of $10,000 but its fair market value is $50,000.  If this land has been owned by the taxpayer for more than 12 months, he or she gets a deduction equal to the fair market value when donated to an IRS qualified tax-exempt organization. So the taxpayer gets a $50,000 deduction for an asset costing him or her $10,000 and does not pay any tax on the appreciated amount. Read more

New FBAR Deadline: Why This Is Great News?

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This is what happened on the last day of July this year (2015): President Obama signed into law H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act (The Act). An unlikely vehicle for deadline changes, but it did make some really important changes to Tax Law & Revenue Provisions, including:

1. FinCEN Form 114 (FBAR) filing and extension deadlines;
2. Tax Filing Deadlines;
3. Changes to consistent basis reporting between the estate and the person acquiring the property from the decedent.

Point #3 above modifies due dates for Trust returns: Foreign trusts with US Owners and Read more

Travel And Entertainment: Maximizing Tax Benefits

Creative business travel, tourism and GPS navigation concept: stack of color traveling cases or bags, modern black glossy touchscreen smartphone with GPS navigation  map application and blue metal magnetic compass isolated on white background

Tax law allows you to deduct two types of travel expenses related to your business, local and what the IRS calls “away from home.”

First, local travel expenses. You can deduct local transportation expenses incurred for business purposes such as the cost of getting from one location to another via public transportation, rental car, or your own automobile. Meals and incidentals are not deductible as travel expenses, but you can deduct meals as an entertainment expense as long as certain conditions are met (see below).

Second, you can deduct away from home travel expenses, including meals and incidentals, but if your employer reimburses your travel expenses your deductions are Read more

Raise Your Hands In The Air Like You Just Don’t Care

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One of the classic Paper Chase cases, albeit from a different first-year course than the one that the late, great John Houseman taught, is 1891’s O’Brien v. Cunnard S.S. Co., Ltd. Mary O’Brien, an Irish immigrant on board a ship from Queenstown to Boston, held up her arm to be vaccinated against smallpox, a duty which the ship’s surgeon dutifully performed. She later claimed that the vaccination was an assault because the doctor “used force on the plaintiff against her will” and that he was “negligent” during the procedure, although the facts are a bit hazy as to exactly what this learned physician did, or did not, do. Although Ms. O’Brien was a new citizen, she apparently knew enough about the system to call a lawyer and sue everyone in sight.

The Massachusetts Supreme Court eventually ruled that Ms. O’Brien consented to the Read more

The IRS Streamlines The Methodology For Small Businesses To Comply With The Tangible Property Regulations

Examining Tax Law

On February 13 of 2015, The Internal Revenue Service (hereinafter the “Service”) streamlined the methodology for small business owners to comply with the Final Treasury Regulations (hereinafter the “regulations”) governing Tangible Property with newly released administrative authority.

Revenue Procedure 2015-20 permits small businesses to change a method of accounting under the regulations on a prospective basis for the first taxable year beginning on or after January 1 of 2014. Moreover, the Service is waiving the arduous requirement to file a Form 3115 Read more

Inflation Adjustments In The Tax Law

Business Future

Our federal tax system includes numerous dollar amounts, such as for the standard deduction amount, personal exemption amount, credits, where different tax rates start and end, and defining the parameters of a “small taxpayer.” Some of these amounts are adjusted for inflation and others are not. Should they all be? That’s a good question.

I think where the tax rates of the graduated rate system start and end should be adjusted annually for inflation. This prevents “bracket creep” where a taxpayer is pushed into a higher tax bracket just because their income increased by the rate of inflation (yet their buying power and sense of wealth remained the same). The same logic calls for adjusting the standard deduction and personal exemption amounts. Read more

Marijuana And The Tax Law

TaxConnections Picture - Pot Leaf

It’s unlikely anyone missed the news stories about marijuana sales becoming legal on January 1, 2014 in Colorado. The Huffington Post reported on January 8, 2014 that sales in the first week were about $5 million. That also generated a lot of tax revenue for the state because Proposition AA* that Colorado voters passed in November 2013 allows for a 15% excise tax when unprocessed retail marijuana is sold by a cultivation facility to a retailer AND a 10% sales tax (on top of the normal Colorado sales tax of 2.9%) when the retailer sells the marijuana. That proposition suggested that $70 million would be generated annually with the first $40 million to be used for public school capital construction. Additional revenues would be used to enforce regulations on the retail marijuana industry and the balance for other needs (apparently at the discretion of the Read more

DOJ Wins $1 Billion Tax Shelter Case Against Dow Chemical.

The Justice Department has won a tax shelter case involving Dow Chemical, in which the company was accused of creating approximately $1 billion in phony tax deductions in a scheme designed by Goldman Sachs and lawyers at King & Spalding.

A federal court in Baton Rouge, La., on Monday rejected two tax shelter transactions entered into by Dow Chemical that purported to create approximately $1 billion in phony tax deductions. In addition to rejecting the tax benefits from the shelter transactions, Chief Judge Brian A. Jackson also imposed penalties.

The schemes were allegedly created by Goldman Sachs and the law firm of King & Spalding, according to prosecutors, and involved creating a partnership that Dow operated out of its European headquarters in Switzerland. The case dates back to transactions Dow started in 1993 that involved patent transfers to company subsidiaries.

Chief Judge Jackson wrote in his 74-page opinionthat the government was correct to reject the artificial tax benefits created by these schemes that were designed to exploit perceived weaknesses in the tax code and not designed for legitimate business reasons.

The judge noted that:

tax law deals in economic realities, not legal abstractions.

Jackson also wrote that penalties were appropriate because any reasonable and prudent person should have known that the artificial tax benefits created by the scheme were “too good to be true.”

Need Solid Tax Advise That Will Hold Up in Court?

Connect with the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at:  Ronald Marini

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