Category: Florida BAR article
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Post-Mortem Considerations with Foreign Grantor Trusts After H.R. 1, Tax Cuts and Jobs Acts
For a long time, tax experts have helped families with one parent from another country and the kids in the U.S. set up trusts with a foreign corporation to save on taxes. But a new law called the Tax Cuts and Jobs Act changed the rules, and now everyone has to rethink their trust plans.…
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An Introduction to the Complexities of Taxing Cross-Border Transfers of Digital Goods and Services
Many companies now sell digital products and services online, like clothes and movies. People use their smartphones to shop and store their data in the cloud. But this has made it hard for governments to figure out how to tax these transactions across different countries. The U.S. has its own tax issues to deal with…
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Using Income Tax Treaties to Convert Taxable Income Into Nontaxable Distributions
The United States taxes its citizens on their income, no matter where they live in the world. Top-earning taxpayers are taxed at a rate of 39.6 percent. However, there are some exceptions to this rule, such as the I.R.C. §911 earned-income exclusion and the exclusion available under I.R.C. §933 for certain âbona-fide residents of Puerto…
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New Partnership Audit Regime: Opt-Out, Push-Out, or Pay-Up?
In 2015, Congress passed a new law that changes how partnerships are audited by the IRS. It makes the partnership responsible for any extra taxes owed after an audit, instead of the individual partners. The Treasury and IRS had to create regulations for this new law, but there were a lot of problems with the…
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Disastrous Tax Consequences to Avoid When Liquidating an S Corporation
An S corporation is a small business corporation that can be advantageous for small businesses because the business itself is not subject to federal taxation, only the shareholders are. When an S corporation liquidates, the tax consequences for the corporation and its sole shareholder depend on the fair market values and basis of its assets.…
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The Applicability of the Administrative Procedure Act to Federal Tax Litigation
When Congress made the Administrative Procedure Act (APA) in 1946, it was meant to balance the power of government agencies with individual rights. The APA allows people to challenge agency actions in court. However, it doesn’t apply if there’s already a way to challenge the action. The U.S. Tax Court, for example, doesn’t follow the…
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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…
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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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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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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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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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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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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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Expatriation from the United States: The Inheritance Tax Under I.R.C. §2801
The Heart Act added a new tax called the Inheritance Tax, which applies to gifts or inheritances received from someone who has given up their U.S. citizenship. This tax is paid by the person who receives the gift or inheritance, not the person who gave it up. The tax rate is 40% of the value…
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Preparer Penalties: The Thin Line Between Tax Advisor and Return Preparer
The IRS has given out over 1.8 million tax preparer ID numbers since 2010, with almost 700,000 still active. Anyone who gets paid to prepare tax returns is considered a “tax return preparer.” Even if you’re a lawyer giving legal advice that ends up in a tax return, you’re also considered a preparer. The IRS…
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Navigating I.R.C. §2036 Tax Planning with Florida Law
For many years, a common technique in estate planning has been to create a partnership or LLC to hold valuable property and then transfer ownership interests to a trust to avoid estate tax. However, the IRS may challenge these transfers as an attempt to pass untaxed wealth to future generations while still maintaining some control…
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Tax Penalties After VMOB: What to Know and How to Fight Back
In 2020, a court decision in Florida changed how tax penalties work for businesses. The case, VMOB, LLC v. Florida Department of Revenue, means that officers or directors of a company can be held personally responsible for the company’s tax debt. The court’s decision could be risky for taxpayers who don’t know about it. The…
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Corporate Transparency Act to Have Major Impact on Clients and Attorneys
Congress passed the National Defense Authorization Act of 2021, which includes the Corporate Transparency Act. This Act creates a new reporting requirement and database for ownership of U.S. companies, which could affect clients and lawyers when the new regulations take effect. The Act also includes the Anti-Money Laundering Act of 2020, which aims to strengthen…
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Funding the Estate Tax: Defusing the Liquidity Time Bomb
It seems like the rules around estate taxes might be changing soon. If they do, more people might have to pay taxes on their estates when they die. As lawyers, we help our clients figure out how to pay as little tax as possible and in the least disruptive way. In this article, we talk…
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The Taxation of Cryptocurrencies
Cryptocurrency and blockchain technology have become very popular and valuable in recent years. Cryptocurrency, like Bitcoin, is a type of digital money that uses cryptography to keep transactions secure. It’s stored in digital wallets and relies on blockchain technology, which is a way of storing and keeping track of information. This technology is important for…
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Changes in the U.S. International Tax System Proposed by the Biden Administration
Before the Tax Cuts and Jobs Act, the US had a tax system that theoretically imposed US tax on all foreign income of a US-based multinational company. However, there were ways for companies to reduce or avoid paying these taxes, such as forming subsidiaries in lower-tax foreign countries. These subsidiaries could shield profits from US…
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The Trust Beneficiary’s Right of Access to Information
Beneficiaries have the right to know certain information about a trust, but sometimes trustees refuse to provide it. This can lead to beneficiaries feeling upset and hiring lawyers. In some cases, the trustee may not know their responsibilities or may intentionally withhold information. This article explains what information beneficiaries can get under Florida law and…
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Tax Planning for Inbound Licenses of IP: What Is Left After Tax Reform?
In simple terms, intellectual property (IP) rights include things like patents, copyrights, trademarks, and trade secrets. Sometimes, the owner of these rights may want to let someone else use them in exchange for money. However, recent changes in U.S. tax laws have made it more difficult to do this in a tax-efficient way. Non-U.S. taxpayers…
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Expatriation from the United States: The Exit Tax
If you give up your U.S. citizenship or green card, you may have to pay a special tax. This tax has two parts: an “exit tax” and an “inheritance tax.” U.S. citizens can give up their citizenship at a U.S. embassy, while long-term residents can give up their green card. The tax rules are in…