Category: Florida BAR article
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Dividends Recieved From Foreign Corporations Recent Developments Change the Landscape
The American Jobs Creation Act of 2004 is a big deal because it has new rules for how foreign income is taxed in the U.S. One part, called §965, lets U.S. companies pay a lower tax rate on money they bring back from their foreign subsidiaries. But individual shareholders can’t get this benefit. Another part…
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The Need for Tax Reform or Tax Replacement
Most lawyers in Florida think the tax system needs to change. A group appointed by the President and Congress is working on a report about it. Congress also wants to change the tax system because it’s too complicated and costs a lot of money for both taxpayers and the government. The federal tax system is…
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Valuing Interest in Tenancies by the Entirety Under Craft
In the case of United States v. Craft, Mr. and Mrs. Craft owned property together. Mr. Craft didn’t pay his taxes, so the IRS said he owed a lot of money. To avoid the IRS taking their property, Mr. Craft gave his share to Mrs. Craft for just $1. But the IRS said this was…
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Section 412(i) Defined Benefit Plans: Simplicity, Safety, and Power
A 412(i) plan is a type of retirement plan that is fully insured and guaranteed by the government and an insurance company. It is like a private social security plan. Employers may want to qualify their plan under §412(i) because it exempts them from certain funding requirements, making it less complicated and costly to manage.…
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The Ins and Outs of the Florida Estate Tax
The Florida estate tax is connected to the federal estate tax, so if no federal estate tax is owed, then no Florida estate tax is owed. The tax law in 2001 changed the responsibilities of personal representatives of estates under federal and Florida law. A resident who passes away in Florida is subject to the…
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Gift-splitting: The Intricacies of §2513 of the Code
The rules for gift-splitting for married couples are complex and can have unintended tax consequences if not done properly. Three requirements must be met for a married couple to elect to split gifts made to third parties. The gifts must also be ascertainable, meaning the portion of the gift to the third party must be…
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Qualified Dividend Income Under the 2003 Tax Act
The 2003 Tax Act reduced federal income tax on certain dividend income, but it also changed the rules for deducting interest on investment properties. This means that for some taxpayers, the tax savings on dividends may not be worth the loss of deductions for interest expenses. Basically, Congress made a rule in 2003 that allows…
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New Rules for Qualifying a Transaction as a Statutory Merger or Consolidation Under Section 368(a)(1)(A) of the Internal Revenue Code
Section 368(a)(1)(A) of the Internal Revenue Code says that a merger or consolidation between two companies can be considered a reorganization for tax purposes. A merger is when one company takes over another, while a consolidation is when two or more companies come together to form a new one. If a merger or consolidation meets…
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The Top Five Things Practitioners Need to Know About IRAs Now; A Discussion of State Law, Case Law, and Other Considerations
IRAs are popular retirement accounts that offer tax benefits. They have become a significant part of estate and tax planning, with trillions of dollars held in them. Most households in America have some sort of retirement account. Each state has laws that affect how IRAs are administered, and IRA trustees and custodians may have their…
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The Final Tax Shelter Disclosure Rules: Reporting,Registration, and List Maintenance Requirements
The IRS issued new regulations to make it harder for people to use shady tax strategies to avoid paying taxes. Now, anyone who takes part in certain types of transactions has to tell the IRS about it. This is a change from the old rules, which were easier to get around. The new regulations require…
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Can FIRPTA Be Avoided With Financial Instruments?
Foreign investors are looking to invest in U.S. real estate due to uncertainty in the stock markets. However, they face tax obstacles under the Foreign Investment in Real Property Tax Act (FIRPTA). This law requires foreign investors to pay taxes on any gains from selling U.S. real estate. Some investors are using financial instruments to…
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The Complete Advisor: One Attorney’s Case for Ancillary Practices
Summary: A legal firm and attorney were being sued for negligence in a car accident case. The plaintiff claimed that the lawyer didn’t file the necessary paperwork on time, resulting in a lost settlement. The court ruled in favor of the plaintiff and awarded them a large sum of money. When people come to a…
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Tax and ERISA Considerations Associated With Nonqualified Severance Benefit Plans Sponsored By Professional C Corporations
Nonqualified deferred compensation arrangements are used by employers to attract and keep employees, allow them to save money for the future, and provide extra pay and incentives. However, these arrangements are usually not backed by any assets, so there is a risk that the employer may not be able to pay. There are ways to…
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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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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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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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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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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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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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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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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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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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Qualifying Trust Transfers for Split-gift Treatment
Section 2513 of the tax code allows a married couple to split gifts, meaning they can both take advantage of tax exclusions and exemptions for gifts made by one spouse. This can help minimize gift tax liability and maximize the amount that can be gifted to others. It can get complicated when the non-gifting spouse…
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Tax Increment Financing in Florida: A Tool for Local Government Revitalization, Renewal, and Redevelopment
TIF is a way for Florida cities to bring in more tax money to help improve run-down areas. It works by using the extra taxes collected from improvements to pay for those improvements. Some people argue against TIF because of concerns about using eminent domain to take private property. One county in Florida has come…