San Francisco Tax Blogs | Diosdi, Ching, & Liu, LLP

16Aug 2023 by Pat Geddie

An Introduction to the Corporate Transparency Act

By Anthony Diosdi Many states have marketed themselves as privacy havens to domestic and foreign business organizations over the years. Some of the states that have marketed themselves as privacy havens include Nevada, Wyoming, South Dakota, and Delaware. For years, entity owners could establish an entity in a privacy haven and the owners of the entity could remain anonymous. However, the days are numbered for privacy havens. Congress is requiring disclosure of entity ownership regardless of what individual state laws might say. Beginning in 2024, the Financial Crimes Enforcement Network (“FinCEN”) will require most businesses to file a statement detailing ownership information, which will be collected and stored by FinCEN. FinCEN (which is a bureau of the United States Department of the Treasury) will disclose entity ownership with law enforcement,…

16Aug 2023 by Pat Geddie

Income, Gift, Estate, Generation-Skipping, and State Tax Considerations Associated with Establishing and Administering Trusts

Tax Law

By Anthony Diosdi Trusts have become increasingly sophisticated vehicles for managing wealth. When a settlor (the person or entity that establishes a trust), he or she must evaluate the income, gift, estate, generation-skipping transfer tax (“GST”), and state tax aspects associated with establishing a trust. In cases of more complex trusts, there are roles to evaluate. For example, evaluating the income, gift, estate, and GST tax aspects of a trust might involve considerations of the rights, interests, and powers of the settlor, beneficiaries, trustee, distribution advisor, investment advisor, and trust protector.For federal tax purposes, a power held by a trust advisor or trust protector generally is evaluated in the same manner as if it was held by a trustee. A trust advisor or trust protector sometimes holds a power in…

12Aug 2023 by Pat Geddie

Hiring the Right San Francisco Tax Law Attorneys: Why Choose Diosdi Ching & Liu, LLP?

Tax Law

Navigating the intricate landscape of tax law can be a daunting task. It's not a journey you should embark on alone. Hiring skilled San Francisco tax law attorneys like the team at Diosdi Ching & Liu, LLP can make all the difference. Why Hire a San Francisco Tax Law Attorney? Tax law is complex and ever-changing. A small mistake can lead to significant financial repercussions. San Francisco tax law attorneys bring the expertise necessary to navigate these complexities. Whether you're facing an IRS audit, dealing with estate planning, or considering business tax implications, professional assistance is essential. Diosdi Ching & Liu, LLP: Your Partner in Tax Law Diosdi Ching & Liu, LLP is a leading law firm in San Francisco, California, with a team of accomplished attorneys skilled in various areas of tax…

09Aug 2023 by Pat Geddie

Demystifying the 2023 Form 5471 Schedule E Used to Report and Track Foreign Tax Credits of Controlled Foreign Corporations

Tax Law

By Anthony Diosdi Form 5471 is used by certain U.S. persons who are officers, directors, or shareholders in respect of certain foreign entities that are classified as corporations for U.S. tax purposes. The Form 5471 and schedules are used to satisfy the reporting requirements of Internal Revenue Code Section 6038 and 6046 along with the applicable regulations.Substantively, it backstops various international sections of the Internal Revenue Code including Sections 901/904 (Code Section 901 and 904 provide rules governing foreign tax credits), Section 951(a) (Section 951a provide rules governing Subpart F income and Section 956. Section 956 is an anomaly and operates differently than the rest of subpart F. Generally, a U.S. shareholder of a foreign corporation must include in income his or her pro rata share of the foreign corporation’s…

09Aug 2023 by Pat Geddie

A Look at Schedule G of Form 5471 Used to Report Cost Sharing Arrangements of Controlled Foreign Corporations

Tax Law

By Anthony Diosdi Form 5471 is used by certain U.S. persons who are officers, directors, or shareholders in respect of certain foreign entities that are classified as corporations for U.S. tax purposes. The Form 5471 and schedules are used to satisfy the reporting requirements of Internal Revenue Code Section 6038 and 6046 along with the applicable regulations.Substantively, it backstops various international sections of the Internal Revenue Code including Sections 901/904 (Code Section 901 and 904 provide rules governing foreign tax credits), Section 951(a) (Section 951a provide rules governing Subpart F income and Section 956. Section 956 is an anomaly and operates differently than the rest of subpart F. Generally, a U.S. shareholder of a foreign corporation must include in income his or her pro rata share of the foreign corporation’s…

05Aug 2023 by Pat Geddie

Here Comes the Employee Retention Credit Enforcement, There Goes the Criminal Indictments

Tax Law

By Anthony DiosdiThe Internal Revenue Service or (“IRS”) has warned business owners to watch out for misleading claims involving the employee retention credit. See IR-2023-105, 5/25/2023. The general public continues to be subject to a barrage of broadcast advertisements and online promotions involving the employee retention credit or (“ERC”). The IRS has stated that while the benefits of the ERC are real, aggressive promoters are misrepresenting and exaggerating who can qualify for the ERC. See This Little-Known Pandemic-Era Tax Credit Has Become a Magnet for Fraud, Alan Rappeport, New York Times, May 26, 2023. The IRS has stepped up audit and criminal investigations involving ERC claims. The IRS is investigating both businesses claiming an employee retention credit and the promoters of these credits. When properly claimed, the ERC is a…

05Aug 2023 by Pat Geddie

What is Superannuation and How it Could be Taxed Under the United States- Australia Income Tax Treaty

Tax Treaty

There are currently more than 100,000 Australian-born people living in the United States. Many of these individuals have an Australian Superannuation account. A superannuation is an Australian pension program created by a company to benefit its employees. Funds deposited in a superannuation account will grow through appreciation and contributions until retirement or withdrawal. As with many foreign pension plans, the U.S. federal taxation of superannuation accounts is a gray area. The most common type of superannuation is the Self-Managed Superannuation Funds. This article will focus on Self-Managed Superannuation Funds. This is because Self-Managed Superannuation Funds are the most common type of superannuation. Many tax professionals consider a superannuation fund to be a foreign grantor trust for U.S. tax purposes. If a superannuation fund can be classified as a grantor trust,…

20Jul 2023 by Pat Geddie

Does the Farhy Decision Apply to 3520 Penalty Assessments?

Tax Law

By Anthony DiosdiRecently the United States Tax Court held in Alon Farhy v. Commissioner of Internal Revenue, that the Internal Revenue Service or (“IRS”) lacked the authority to assess certain penalties against taxpayers under Internal Revenue Code Section 6038(b). In Farhy the petitioner was required to file Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, but he did not. The penalty for failure to file, or for delinquent, incomplete, or materially incorrect filing is a reduction of foreign tax credits by 10% and a penalty of $10,000. An additional $10,000 continuation penalty may be assessed for each 30-day period that noncompliance continues up to $50,000 per return. See IRC Section 6038(b) and (c). The IRS assessed penalties against the petitioner under Section 6038(b) of the…

12Jul 2023 by Pat Geddie

Secure Your Financial Future with Diosdi Ching & Liu, LLP: Your Reliable San Francisco Tax Law Attorneys

Tax Law

Tax law is an intricate maze. It's easy to get lost in its complexities and even easier to make a mistake. Don't navigate this challenging landscape alone. Diosdi Ching & Liu, LLP, a trusted law firm in San Francisco, California, is ready to assist you as your dependable San Francisco tax law attorneys. At Diosdi Ching & Liu, LLP, we understand the intricacies of tax law. We believe that effective tax planning and dispute resolution is vital for your financial well-being. Our experienced attorneys are committed to providing you with comprehensive tax law services, helping you minimize your liabilities and maintain compliance. Our attorneys are adept at handling a range of tax issues. From tax planning and audit representation, to resolving tax controversies and tax litigation, we have the knowledge and skills to guide…

28Jun 2023 by Pat Geddie

The U.S. Taxation of Foreign Computer Programs and Cloud Computing Transactions

Tax Law

By Anthony Diosdi The United States taxes U.S. persons on all of their income, from whatever source derived. Therefore, the source of income generally has no effect on the computation of a U.S. person’s taxable income. Sourcing can, however, have a significant impact on the computation of a U.S. person’s ability to claim a foreign tax credit. The source rules play a more prominent role in the taxation of a foreign person or foreign business, since they effectively define the boundaries of U.S. taxation. The U.S. taxes the gross amount of a foreign person’s or foreign business’s U.S.-source passive type income at a flat rate of 30 percent. The U.S. also taxes foreign persons and foreign businesses at graduated rates on the net amount of income effectively connected with the…