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

08Jun 2022 by Anthony Diosdi

A Closer Look at the Title 31 Anti-Money Laundering Rules Governing Cryptocurrency Exchangers

Tax Law

By Anthony Diosdi On January 1, 2021, the Anti-Money Laundering Act of 2020 was enacted into law. Under the Anti-Money Laundering Act of 2020, the Department of Treasury has the power to declare that cryptocurrency is a monetary instrument. As a result, certain cryptocurrency transactions must be reported to the Financial Crimes Enforcement Network or FinCEN (The Financial Crimes Enforcement Network is a bureau of the Department of the Treasury) as part of a financial institution’s anti-money laundering (“AML”) program. This article will discuss cryptocurrency trader’s obligation under the Anti-Money Laundering Act of 2020. Money Transmitter Laws- What Cryptocurrency Traders Need to KnowIf you are in the business of trading cryptocurrency, it is imperative that you understand the money transmitter laws. There are federal and state money transmitting laws. We…

08Jun 2022 by Anthony Diosdi

The Rising Significance of Self-Cancelling Installment Notes as a Estate-Planning Tool for U.S. Citizens and Nonresidents

Tax Law

By Anthony Diosdi Federal law imposes a transfer tax upon the privilege of transferring property by gift, bequest or inheritance. This transfer tax takes the form of a gift tax in the case of completed lifetime gifts and an estate tax in the case of property owned by the decedent at the time of death. Gift and estate taxes are computed on the progressive unified rate schedule set forth in Section 2001 of the Internal Revenue Code with rates as high as 40 percent. As of 2022, the lifetime estate and gift tax exemption for U.S. domiciled single filers is $12.06 million and $24.12 million for married couples U.S. domiciliaries filing jointly. For nonresident aliens not domiciled in the United States, there is only a credit equivalent to $60,000 against…

07Jun 2022 by Anthony Diosdi

A Tax Professional’s Guide to Form 5471 Schedule E and Schedule H

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the “global intangible low-taxed income” or “GILTI” and Subpart F income, each year certain U.S. persons must file a Form 5471 with the IRS. A Form 5471 must be 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 its schedules are used to satisfy the reporting requirements of Internal Revenue Code Sections 6038 and 6046. The Form 5471 serves as a reporting form to various international provisions of the Internal Revenue Code such as Sections 901/904 (Foreign Tax Credit), 951(a) (Subpart F and Section 956), Section 951A (“GILTI”), Section 965…

07Jun 2022 by Anthony Diosdi

A Tax Professional’s Guide to Form 5471 Schedule J and Schedule H

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the “global intangible low-taxed income” or “GILTI” and Subpart F income, each year certain U.S. persons must file a Form 5471 with the IRS. A Form 5471 must be 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 its schedules are used to satisfy the reporting requirements of Internal Revenue Code Sections 6038 and 6046. The Form 5471 serves as a reporting form to various international provisions of the Internal Revenue Code such as Sections 901/904 (Foreign Tax Credit), 951(a) (Subpart F and Section 956), Section 951A (“GILTI”), Section 965…

07Jun 2022 by Anthony Diosdi

An Introduction to the Form 5471 Filing Categories of the Modern Day Foreign Corporation and a Brief Look at the Taxation of CFC Income

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the “global intangible low-taxed income” or “GILTI” and Subpart F income, each year certain U.S. persons must file a Form 5471 with the IRS. A Form 5471 must be 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 its schedules are used to satisfy the reporting requirements of Internal Revenue Code Sections 6038 and 6046. The Form 5471 serves as a reporting form to various international provisions of the Internal Revenue Code such as Sections 901/904 (Foreign Tax Credit), 951(a) (Subpart F and Section 956), Section 951A (“GILTI”), Section 965…

02Jun 2022 by Anthony Diosdi

Did You Receive Notice of an IRS Audit?

Tax Law

The IRS informs taxpayers of audits by mail. If you received an audit notice by any other means - phone, email, etc. - it is likely a scam, and you should not respond with any information. That said, what happens if you receive proper notice of a tax audit? First off, never panic or ignore the audit notice. Instead, seek help from a San Francisco tax audit attorney who can help with every step of the process. What Happens Next? You might have one of three types of audits: A correspondence audit takes place via written communicationsAn office audit requires you to go into an IRS field officeA field audit involves an IRS agent coming to your home or office to review your documents In all of these audits, the…

02Jun 2022 by Anthony Diosdi

The Crimes an Individual Targeted by an IRS Criminal Tax Fraud Investigation May Ultimately Find Himself Charged With

Tax Law

By Anthony Diosdi An individual targeted by an Internal Revenue Service (“IRS”) criminal tax fraud investigation may find himself charged with specific revenue offenses (contained in Title 26 of the Internal Revenue Code) and with general federal criminal offenses (contained in Title 18). There is a tendency in criminal tax prosecutions to pile up charges and indict an individual for multiple years with a combination of revenue offenses and general federal criminal offenses as the situation warrants. For anyone involved in an IRS criminal tax fraud investigation, it is necessary to know something about revenue criminal offenses and Title 18 offenses that have been traditionally involved in criminal income tax cases. This is because a defense to one may be no defense to another, which is the main reason for…

02Jun 2022 by Anthony Diosdi

A Closer Look at the Road to Indictment in an IRS Criminal Tax Fraud Case

Tax Law

By Anthony Diosdi This article will trace a typical criminal tax fraud case through the administrative structure of the Internal Revenue Service (“IRS”) and the Department of Justice, beginning with the first contact by a special agent and ending with an indictment (an indictment is a criminal accusation that a person has committed a crime) in a court. The reason we elected to discuss this process in our article is because we believe it is extremely important that anyone targeted in a criminal tax fraud investigation understands how the IRS conducts its investigations. The understanding of this process may ultimately significantly reduce an accused’s prosecutorial exposure to a criminal tax crime. By way of background, it is important to understand that relatively few cases involving criminal tax evasion are actually…

24May 2022 by Anthony Diosdi

Decoding Cryptocurrency Loans

Tax Law

By Anthony Diosdi Cryptocurrency investors are turning to lending primarily for liquidity reasons- by putting up cryptocurrency as collateral, they can continue to invest in the digital currency market while obtaining access to cash. There are two main types of cryptocurrency as collateral, they can continue to invest in the digital currency market while obtaining access to cash. This article will take a closer look at cryptocurrency loans. There are two main types of cryptocurrency loans that are discussed below.What is Cryptocurrency?Cryptocurrency has grown in popularity and ubiquity in the past few years. Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Cryptography allows digital currency transactions to be pseudonymous and secure with no bank or other intermediary requirement. Although some major retailers accept cryptocurrencies…

24May 2022 by Anthony Diosdi

The Tax Treatment of Charitable Contributions of Cryptocurrency to Public Charities and Private Foundations

Tax Law

By Anthony Diosdi Over the past two years cryptocurrency donations have greatly increased. This article will discuss the tax rules governing donating cryptocurrency and why it may be more preferable to donate cryptocurrency to a qualified charity than cash. Investors may find it far more beneficial to donate cryptocurrency to a public charity or a private foundation because the donated crypto asset may be eligible for a charitable deduction at its fair market value instead of its basis. This is consistent with the Internal Revenue Service’s classification of cryptocurrency as an intangible personal property similar to stocks and bonds. Calculating the value of cryptocurrency being donated to a public charity or foundation depends on the holding period of the donor. If the donor holds the cryptocurrency for one year or…