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

27Feb 2020 by Anthony Diosdi

The Collection of State Sales Tax in Today’s eCommerce World

Sales Tax

By Anthony Diosdi Introduction For years, retailers conducting business through eCommerce were advised that states could not require them to collect and remit sales tax on online sales unless they were ‘doing business’ in a taxing state based on the tax laws of that state. This concept was referred to as a “nexus” based on a seller’s physical presence within a state. Therefore, a seller who is determined to have a physical presence within a state would be obligated to withhold and remit sales tax to the taxing state. Examples of physical presence included but were not limited to having employees working in a taxing state, placing sales agents in a taxing state, moving business property into a taxing state, or renting property in a taxing state.Many online merchants avoided…

06Feb 2020 by Anthony Diosdi

Dynasty Trusts- the Most Powerful Tool Available to Combat the Estate, Gift, and Generation Skipping Taxes

Gift Tax

By Anthony Diosdi Introduction On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act of 2017. The 2017 Tax Cuts and Jobs Act increased the exemptions for federal estate tax, gift tax, and generation-skipping tax (“GST”) to $11,180,000 per person for 2018. The exemptions are indexed for inflation. The tax rates on estates, gifts, and GST transfers is forty percent. The 2017 Tax Cuts and Jobs Act contains a sunset provision. The exemption for federal estate tax, gift tax, and GST are scheduled to revert back to $5.5 million effective January 1, 2026. As a result of the 2017 Tax Cuts and Jobs Act, individuals are presented with a number of estate planning opportunities to transfer significant amounts of wealth out of their estate without the imposition…

05Feb 2020 by Anthony Diosdi

Crossing The Line – Felony Tax Crimes

Tax Law

By Lynn K. Ching So when does failing to file a tax return or not accurately reporting income and expenses on a return, cross the line - from the civil to the criminal arena? Why is it that one person gets assessed an accuracy related penalty for not correctly reporting his income and expenses, while another goes to jail for doing - seemingly - the same thing? Following is a brief discussion of crossing THAT ‘line’. Failure to File + More = Tax Evasion - 26 USC § 7201 While failure to file a tax return is generally a misdemeanor, failure to file a return + 2 “more” (discussed below) is a felony. Under 26 USC § 7201, the willful attempt to evade or defeat the assessment of taxes or…

31Jan 2020 by Anthony Diosdi

Former Miami Dolphins Linebacker Zach Thomas Will Go Up Against His Toughest Opponent to Date- The IRS in Refund Litigation

Tax Law

By Anthony Diosdi In the future, a jury of selectors will vote on whether former Miami Dolphins linebacker Zach Thomas should be in the Hall of Fame. Down the road, in a Fort Lauderdale federal court room, a jury might vote whether Thomas should get over $18,000 plus interest back from the Internal Revenue Service (“IRS”).Zach and wife Maritzabel Thomas, as a married couple who filed taxes jointly, filed a lawsuit in Fort Lauderdale federal district court on January 3, 2020 for a refund of an accuracy related penalty in the amount of $18,602 plus interest for the 2007 tax year.The story starts with Gary Stern, a Chicago tax lawyer who got an 18 month prison sentence after pleading guilty to committing tax fraud in a case involving energy credit…

31Jan 2020 by Anthony Diosdi

Cross-Border Tax Planning with the Proposed Regulations Regarding Cloud Computing Transactions and Digital Downloads

tax planning

By Anthony Diosdi On August 9, 2019, the U.S. Treasury Department and the Internal Revenue Service (“IRS”) released proposed regulations characterizing cloud computing transactions and “transactions involving digital content.” See Prop. Reg. Sections 1.861-18 and 1.861-19. The proposed regulations modify the current “Software Rules” that govern the taxation of computer programs and transfer of digital content. This article will discuss these new proposed regulations and potential cross-border tax planning opportunities available to businesses involved in cloud computing and digital downloads. An Overview of Current Regulations Promulgated by the Treasury Department and the IRS Regarding the So-Called “Software Rules”The current Income Tax Regulations enumerated in Treasury Regulation Section 1.861-18 otherwise known as the “Software Rules” govern the taxation of transactions involving computer programs. These Software Rules provide guidance on how to…

30Jan 2020 by Anthony Diosdi

Did You Sell Cryptocurrency in 2019?

tax planning

With the ubiquity of online transactions and accounts, taxpayers must take the necessary steps to ensure they are in full compliance with tax laws in regard to these transactions. This certainly applies to cryptocurrency transactions, which became significantly more common in recent years. If you have tax-related questions about crypto sales, contact a tax lawyer at SF Tax Counsel. The markets for Bitcoin and other forms of cryptocurrency have been volatile, leading many people to sell their crypto investments during 2019. The IRS has provided guidance regarding crypto sales, and these must be reported as capital gains and losses on Schedule D (1040). Despite its name, the IRS treats cryptocurrency as property and not as currency. Therefore, it is reported like sales of stocks, bonds, and real estate. If you…

29Jan 2020 by Anthony Diosdi

Your Chance of an IRS Audit is Way Down. But That’s Not Good News if You Have to File an IRS Form 3520 and/or IRS Form 3520-A

Tax Law

By Anthony Diosdi The Internal Revenue Service (“IRS”) has been asked to do more with less by Congress. As a result far fewer American’s are having their tax returns audited by the IRS. For reasons that will be discussed in this article, that may not be a good thing. This is particularly true if you have an obligation to file IRS Form 3520 and/or IRS Form 3520-A. The International Penalties Associated with Not Timely Filing an IRS Form 3520 and IRS Form 3520-ARecently, U.S. persons with business interests outside of the United States have become subject to an expanding universe of reporting requirements. U.S. persons are required to disclose foreign assets and transactions not only on FinCen 114 (“FBAR”) but in many cases foreign assets and transactions must be disclosed…

29Jan 2020 by Anthony Diosdi

Calculating Foreign Tax Credits Before and After the 2017 Tax Cut and Jobs Act

Tax Law

By Anthony Diosdi The 2017 Tax Cut and Jobs Act significantly changed the way we plan cross-border transactions. Prior to the 2017 Tax Cut and Jobs Act, foreign tax credits were calculated using tax pools. After the enactment of the Tax Cuts and Jobs Act, the pools have been repealed and replaced with a single year indirect credit for the foreign income taxes “attributable to” the item of income under Internal Revenue Code Section 960(a).History of Foreign Tax Credits As a result of the United States taxing U.S. persons on their worldwide income, in 1918, Congress enacted the foreign tax credit system. Foreign tax credits were developed to prevent double taxation of foreign source income. A foreign tax credit is intended to allow a U.S. taxpayer to reduce the U.S.…

29Jan 2020 by Anthony Diosdi

Are Taxpayers Who Fail to File a FBAR Today at Greater Risk of Being Assessed the Willful ($100,000) FBAR Penalty?

Tax Law

By: Lynn K. Ching Do you have an interest in a foreign financial account which you have not disclosed on a ‘Report of Foreign Bank and Financial Accounts’ (FBAR)? If so, heads up!! The IRS continues to prioritize prosecution of taxpayers with undisclosed offshore foreign accounts. As has been wide publicized by the IRS, U.S. persons who have a financial 1 interest in, or signatory authority over foreign financial accounts - with a combined total exceeding $10,000.00 at any time during the year, are required to file an FBAR. The penalty for failure to do so is up to $10,000 for each non-willful violation, and a civil penalty of up to 50% of the balance of each foreign account or $100,000.00, whichever is greater, for a willful violation. Courts have…

27Jan 2020 by Anthony Diosdi

Are Families Who Took Advantage of the Temporary Increase in the Unified Credit for Estate and Gift Taxation Purposes in for a Very Unpleasant Surprise after 2025?

Gift Tax

By Anthony Diosdi Estate and Gift Tax 101On December 31, 2012, President Obama signed the Economic Growth and Tax Relief Reconciliation Act exempting $5,120,000 (indexed for inflation) from estate and gift taxes, and the generation-skipping transfer taxes (“GST”). The Tax Cut and Jobs Act of 2017, the current law signed by President Trump on December 22, 2017, essentially doubled the transfer tax exemptions from $5 million to $10 million, indexed for inflation. The Tax Cuts and Jobs Act of 2017 currently excludes $11.4 million of assets from estate and gift taxes of a U.S. citizen or resident. However, many of the provisions of the Tax Cut and Jobs Act of 2017 are scheduled to expire on December 31, 2025. This means that on January 1, 2026, the estate and gift…