Author: Elf
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Moving the Management and Control of a Foreign Corporation to Achieve Favorable U.S. Tax Results, Part II
If a foreign company is owned by a company in a country with a good tax treaty with the US, the dividends paid by the foreign company to the US may be taxed at a lower rate. Another option is to have the foreign company owned by another company in the same country to avoid…
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Profits Interest Converting Compensation to Capital Gains and Other Planning Ideas
Profits interest, also called carried interest, gives a person the right to receive a percentage of profits from a partnership without having to put in any money. Some hedge fund managers have received huge amounts of money through profits interest and paid lower taxes on it. This article explains how profits interest is taxed and…
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Ins and Outs: The Taxation of Imports and Exports in Florida
Your client, a computer manufacturer in Illinois, needs advice on a contract with a specialist in Miami to modify computers for customers in South America. They also need help with shipping issues through the port and other Florida-related matters. This article explains how state taxes on imports and exports work, focusing on Florida’s sales and…
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Eliminating IRS Tax Debts, Why Bankruptcy May Be Better Than an OIC to Resolve Your Client’s Tax Debts
The IRS can settle tax debts through an offer in compromise if they think the taxpayer can’t pay the full amount. This can happen if the taxpayer doesn’t have enough money and assets, or if there’s a question about whether the taxpayer actually owes the money. The IRS will look at the taxpayer’s financial situation…
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The IRS’s Derivative Treatment of Variable Prepaid Forward Sales
Wealthy clients sometimes have a lot of one particular stock in their investment portfolio. This can be risky because if the stock loses value, the client could lose a lot of money. To reduce this risk, clients can enter into a special agreement with a buyer, usually a big bank. The bank gives the client…
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IRS Rules Total Return Swap Tied to Real Estate Index Is Not Subject to FIRPTA
The IRS ruled that a type of investment called a total return swap, which is tied to U.S. real estate, does not count as U.S. real property for tax purposes. This is good news for foreign investors using this type of investment to invest in U.S. real estate. Total return swaps are contracts where two…
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Accelerating Losses with an Assignment for the Benefit of Creditors
When a partnership or S corporation has losses, the owners can use those losses to reduce their taxes, especially if they have enough investment in the business. Developers and home builders have been experiencing losses due to the economic downturn, and they can use these losses to get a tax refund. However, they need to…
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Estate Planning During Turbulent Times
Low interest rates and market downturns can create opportunities to transfer wealth to the next generation without paying taxes. This can be done through techniques like giving gifts, making loans within the family, or setting up trusts. The IRS sets minimum interest rates for these transactions, which can affect how much wealth can be transferred…
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The Application and Analysis of the New Proposed Contract Manufacturing Regulations
Most taxpayers want to pay as little tax as possible. In the past, some taxpayers were able to set up a company in a country with low taxes, sell goods to that company at a low price, and then sell the goods in other countries at a higher price, paying only the low tax rate.…
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Miami Beach: Receded, Revised, and Reaffirmed
The Supreme Court of Florida released three important opinions in 2008, upholding the principles established in a landmark 1980 case. These decisions are crucial for local governments in Florida to access funding for important projects like schools and fire stations. The court ruled that local governments can issue tax-increment financing bonds without a referendum, as…
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Employer-owned Life Insurance After the Pension Protection Act of 2006
Employers often buy life insurance for their employees, but there have been some cases of abuse. Congress added a new law, 101(j), to stop these abuses. This law has extra requirements for employers, and if they’re not followed, the money from the life insurance could be taxed. In the 1980s and 1990s, some companies started…
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Things That May Surprise You About Florida’s Principal and Income Act and Related Accounting Law, Part I
Mom’s will gives Son a piece of rental real estate and gives the rest of the estate to Daughter. The will doesn’t say who gets the money from the rental property or who pays for its expenses. After Mom dies, the estate gets $12,000 in rent and pays $2,000 in property taxes. It also has…
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Considerations When Combining Crummey Powers with Total Discretionary Trusts
Total discretionary inter vivos trusts have many benefits, like taking care of multiple generations’ needs and protecting those who can’t handle money or have addictions. Adding Crummey powers to these trusts can have consequences for gift tax, but it can still save taxes for other beneficiaries. It might be helpful when the settlor is worried…
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So You Left Your Trust at Home When You Moved to Florida
Florida is a popular place for retirees because of the warm weather and tax benefits. Many people who move to Florida from other states may have irrevocable trusts that need to be reviewed. These trusts may have outdated rules and may need to be changed. This article talks about how it may be possible to…
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Untangling Taxes from Personal Injury Damages
In personal injury cases, the amount of money awarded for lost future earning capacity can be affected by whether the jury considers the plaintiff’s potential earnings before or after taxes. This decision can significantly impact the final award. If the jury uses gross earnings (before taxes), the award will be higher than if they use…
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Roth IRA Conversions: Benefits and Planning Opportunities
The main point is that contributing to a Roth IRA allows your money to grow tax-free, unlike a traditional IRA where you have to pay taxes when you take the money out. Converting to a Roth IRA can be a good idea for some people because it means you won’t have to pay taxes on…
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Creditor’s Rights Under Private Annuities and Grantor-retained Annuity Trusts in Florida
This article talks about whether annuity contracts are protected from creditors in Florida. The authors argue that even private annuity contracts should be protected under the law, based on their analysis of the statute and previous court decisions. They believe that if the legislature didn’t specifically exclude private annuities from the law, then they should…
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IRS Takes Controversial Approach to Characterization of Separately Stated Item of Subpart F Income
The IRS recently refused to give a ruling on whether a U.S. shareholder of a controlled foreign corporation can make a retroactive election. The issue was whether a U.S. shareholder that owns a CFC through a 100 percent owned S corporation has an amount included in their income. The IRS says they don’t have the…
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Higgs v. Warrick: Lessees of 99-year Leases Qualify for Homestead and Save Our Homes Tax Exemption Purposes
The court made a decision that the property appraiser in Monroe County couldn’t revalue William L. Warrick’s home after his trust ended. This is good news for planners who help clients with similar trusts and are worried about losing tax benefits when the trust ends. A 98-year lease is a technique that allows someone to…
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Sales Tax on Commercial Leases of Real Property: A Refresher on the Issues Involving Florida Sales Tax and Commercial Leases
In Florida, sales tax must be paid on certain charges in commercial lease transactions. This includes base rent, additional rent, and common area maintenance charges. The state imposes a six percent sales tax on the total rent, and counties may add an additional tax on top of that. The Department of Revenue has specific rules…
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Can an Investment Become a Theft for Tax Purposes?
Bernie Madoff, like Charles Ponzi before him, ran a huge investment scam that cost many people billions of dollars. The IRS has a special rule for people who lost money in Ponzi schemes, allowing them to treat their losses as theft for tax purposes. This means they can deduct the losses from their taxes, but…
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Tax and Asset Protection Benefits Afforded Florida Domiciliaries
The main reason people move to Florida is because of its warm weather. But Florida also has good tax laws and protections for your assets. If you want these benefits, you may need to take some steps to make sure you qualify. If you own property in another state or spend a lot of time…
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Asset Location: Why Attorneys Should Bridge the Perceived Investment Gap
Hayley, a widow, is meeting with her attorney to get advice on her estate planning. The attorney suggests that she should fund her revocable trust with her $2.5 million investment account and keep her IRA, other assets, and her home in her individual name. The attorney also recommends that she review her beneficiary designation for…
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Asset Purchase Stockholders’ Agreements
A stockholders’ agreement is like a contract for people who own a company together. It helps to keep things fair and protect everyone’s interests. It can say things like who can buy or sell the company’s stock, how important decisions are made, and how to keep business secrets safe. It’s a good idea to have…