Author: Elf
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The International Athlete and Entertainer: A Summary of Important U.S. Tax Considerations
Many famous athletes and entertainers from outside the U.S., like Justin Bieber, Manu Ginobili, Roger Federer, and Shakira, earn a lot of money in the U.S. They face special tax issues because of their income and travel. It’s important for them to plan for taxes from the start of their careers, as it can save…
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Florida Family Trust Companies: Tax and Nontax Considerations
If a family-run investment company wants to avoid SEC regulation, it can qualify for exemptions. One way is if it only serves family members and is owned and controlled by family members. Another way is if it follows state regulations instead of SEC rules. Using a family-run investment company for family trusts can cause tax…
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Continuing Trends in State Tax Litigation: Nexus and Challenging State Tax Laws in Federal Courts
Sales and use tax nexus continues to be a big issue in state tax cases. There are three important U.S. Supreme Court cases that have shaped the law in this area. One of the cases, called National Bellas Hess, Inc. v. Dept. of Revenue of Ill., involved a mail order seller who only shipped goods…
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Estate Planning with Carried Interests: Navigating I.R.C. §2701
Private equity firms and hedge funds are moving to Florida to take advantage of tax savings. Fund managers control and invest in these funds to make profits. They get a share of the profits (called a “carried interest”) in exchange for their services. Other investors, like pension plans and wealthy individuals, also invest in these…
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Proposed U.S. Model Treaty Provisions May Dramatically Alter International Tax Landscape
The U.S. Model Income Tax Treaty is like a template for making deals with other countries about taxes. The Treasury Department has proposed some changes to the treaty, which could affect how foreign businesses are taxed in the U.S. The current rules say that foreign businesses only have to pay taxes on certain types of…
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The Crux of the Clutch CRUT Crutch: How to Fix an Impermissible Split-Interest Trust to Obtain an Estate Tax Charitable Deduction
Creating a charitable remainder trust (CRT) at death is a way to get a tax break in someone’s estate after they have passed away. There are specific rules that the trust must follow in order to qualify for this tax break. If the rules are not followed, the trust can be “broken” and the tax…
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When Charitable Gift Agreements Go Bad: Why a Morals Clause Should be Contained in Every Charitable Gift Agreement
After becoming CEO of Tyco International, Dennis Kozlowski made the company very successful. However, he was later convicted of serious crimes and sent to prison. Before his conviction, he donated a lot of money to Seton Hall University, Berwick Academy, and Cambridge University. When he was convicted, the schools didn’t want his name on their…
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IRS Thinks Certain Profits Interests Are Too Good To Be True
In 2012, Mitt Romney’s company, Bain Capital, used a tax planning technique called management fee waivers to save on taxes. This technique allowed them to convert management fees into long-term capital gains, resulting in significant tax savings. The IRS has since proposed regulations to treat the grant of certain profits interests as disguised payments for…
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State Income Tax Planning for the Nonresident Floridian: The ING Trust
Florida is a great place to live because there’s no state income tax. Many people move here from other states and keep ties to their old state. Florida lawyers have to know about tax laws in other states to help their clients. Some people use a special kind of trust to avoid paying income tax…
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Pre-Immigration Tax and Estate Planning: Pitfalls and Considerations Related to Domicile
When it comes to taxes and where someone lives for tax purposes, it’s not just about where they physically live, but also about their intention to stay there. This is determined by looking at things like where their family is, where they work, and where they live. There are also specific rules for different types…
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A Practical Guide to Trustee Selection: A Review of the Most Common Tax (and Nontax) Traps
When it comes to estate planning, trusts are important. Choosing the right trustee can be challenging and have consequences for taxes. There are three perspectives to consider: the person setting up the trust, the person who will benefit from it, and the trustee. This article focuses on six important things to consider when choosing a…
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Florida Corporate Income Tax: Reporting of Federal Audit Adjustments
The Florida Corporate Income Tax (FCIT) uses the Internal Revenue Code to figure out how much tax a company owes. If the IRS looks at a company’s taxes and makes changes, the company has to file an amended FCIT return in Florida. There are time limits for when the Florida Department of Revenue can assess…
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Depreciating Business Aircraft: Avoiding the Entertainment Disallowance and §280F
Business aircraft are often seen as a luxury rather than a useful tool. The IRS closely monitors aircraft purchases and use. However, when used properly, a business aircraft can be a valuable asset for a business. The biggest fixed cost for a business aircraft is depreciation. To qualify for depreciation, an aircraft must be used…
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Navigating IRS Challenges to Conservation Easements
The IRS is really cracking down on deductions for conservation easements. There have been a lot of court cases about it since 2010. If you’re thinking about doing a conservation easement or have one already, it’s important to stay up to date with the latest rulings and understand how they fit into the law. This…
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U.S. International Tax Planning for Bona Fide Residents of Puerto Rico
If you are a U.S. taxpayer and a resident of Puerto Rico for the entire year, you may not have to pay U.S. federal income tax on interest, dividends, and possibly worldwide capital gains from Puerto Rico. To be considered a resident of Puerto Rico, you must pass a presence test, have your tax home…
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Pay Early, Pay Less: Maximizing TPT Credit Availability for Married Couples
The federal estate tax credit allows married couples to save on taxes when one spouse dies within 10 years of the other. This happens because some of the property transferred from the first spouse to the second spouse is not subject to tax in the second spouse’s estate. As a result, the combined estate tax…
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The IRS and Their Pesky Summonses: A Primer on Enforcement and Common Defenses
The IRS uses summonses to get information from taxpayers and third parties for things like auditing tax returns and collecting taxes. Summonses don’t establish guilt or innocence, they just gather information. The IRS is allowed to issue summonses to taxpayers, witnesses, and third-party recordkeepers. For criminal investigations, the IRS can also issue summonses. Once a…
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Acquisition Planning for a Tax Basis Step-Up
When you buy a business, you can use certain methods to increase the value of its assets for tax purposes. This can give you a big tax advantage and help you save money. It can also give the seller more bargaining power in negotiations. So, it’s important to plan for this when buying a business.…
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Coming to America? Time to Seek International Tax Advice!
If a foreign company sells property in the US, it will have to pay higher taxes. The company may also have to pay a branch profits tax. If the property is owned through a series of corporations, it can avoid the branch profits tax, but will still have to pay other taxes. When the owner…
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Demystifying the Qualified Payment Right: Structuring and Administering a §2701-Compliant Entity
Estate planners use special business entities to help families pass on their wealth without paying high taxes. They often create these entities with two types of ownership: one that gets a guaranteed return on their investment (preferred interests) and one that gets any extra profits (common interests). Older family members can give the common interests…
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Buying America! Foreign Investment in U.S. Real Property: Recap and New Developments
In 2011, an article was published about foreign investment in U.S. real estate and the tax implications. Since then, there have been changes in U.S. tax laws and the economy, as well as how foreign governments share tax information. The U.S. real estate market has also changed, with more foreign investors buying property. This article…
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Basis Consistency: How to Kill a Fly with a Bazooka
Almost two years ago, the government created new tax rules for large estates that make it more complicated and costly for the people who inherit property. The rules were meant to close a tax loophole and bring in more money for the government, but many tax experts think the government is exaggerating how much money…
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Should I Stay or Should I Go? The Erosion of the Offshore Asset Protection Trust and the Rise of Its Domestic Analogue
The average American has always been suspicious of using foreign banks to hide money. When the “Panama Papers” were released in 2016, it made people even more wary of this practice. Offshore asset protection trusts (OAPTs) used to be the only way for people to protect their money from creditors, because the laws in most…
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Will Our Future Drown? Paying for the Costs of Sea-Level Rise
Florida’s coastline is not permanent and sea levels have risen in the past. If sea levels rise in the future, it could lead to problems for our homes, infrastructure, and tax base. We need to have real conversations about this issue instead of getting caught up in the loud voices on the internet. This article…