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

13Sep 2023 by Anthony Diosdi

Basic U.S. and Canadian Tax Considerations of Canadian Investment in U.S. Real Estate

Tax Law

By Anthony Diosdi Canadians actively invest in U.S. real estate by speculating on land and developing homes, condominiums, shopping centers, and commercial buildings. Canadian investors generally have the same goals of minimizing their income tax liabilities from their U.S. real estate investment as do their U.S. counterparts. Although their objectives are complicated by the very fact that they are not U.S. persons. That is, Canadian investors must be concerned not only with income taxes in the United States, but also Canadian taxes. Further, the United States has special income tax regimes that are applicable to foreign persons. This article attempts to summarize the cross-border consequences surrounding a Canadian’s acquisition of different U.S. real property interests. Holding U.S. Real Estate DirectlyThe simplest way for a Canadian investor to acquire U.S. real…

30Aug 2023 by Anthony Diosdi

A Closer Look at FTB Notice 2023-02 Offering Settlement for Micro-Captive Insurance and Syndicated Conservation Easement Tax Motivated Transactions

Tax Law

By Anthony Diosdi Some time ago, California enacted some unique penalties for taxpayers who are considered to have participated in abusive “sham transactions” or tax shelters. One of the penalties is an interest based penalty. The other penalty is a so-called noneconomic substance transaction (“NEST”) penalty. These penalties are significant and can be combined in cases where the Franchise Tax Board (“FTB”) has determined an individual has participated in a sham tax shelter.Once these penalties are assessed, they are not easily removed or abated.Federal and State Law Differences Regarding the Assessment of Tax Shelter PenaltiesLike the Internal Revenue Service (“IRS”), the FTB has taken a tough stand against taxpayers claiming tax deductions on certain transactions classified as sham transactions. Both federal and state law imposes harsh penalties against individuals who…

30Aug 2023 by Anthony Diosdi

Dynasty Trusts- the Most Powerful Planning Available to Combat the Estate, Gift, and the Generation Skipping Tax

Tax Law

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. In 2023, the exemption was increased to $12.92 million. 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…

30Aug 2023 by Anthony Diosdi

A Deep Dive Into the New 2022 IRS Form 3520-A

Tax Law

By Anthony Diosdi United States persons with foreign assets are subject to an ever expanding universe of reporting requirements. A prime example of this can be found in Internal Revenue CodeSection 6048(b). This Internal Revenue Code Section provides that a foreign trust owner must file Internal Revenue Service (“IRS”) Form 3520-A. Each U.S. person is treated as an owner of any portion of a foreign trust under the grantor trust rules (Internal Revenue Code Sections 671 through 679) is responsible for ensuring that the foreign trust files Form 3520-A and furnishes the required annual statements to its U.S. owners and U.S. beneficiaries. The penalty for failure to file IRS Form 3520-A will be imposed directly on the U.S. owner of the foreign trust. The penalty is equal to five percent…

30Aug 2023 by Anthony Diosdi

A Deep Dive Into the New 2022 IRS Form 3520

Tax Law

By Anthony Diosdi United States persons with foreign assets are subject to an ever expanding universe of reporting requirements. A prime example of this can be found in Internal Revenue Code Section 667(a). This Internal Revenue Code Section provides that if a United States person beneficiary receives (directly or indirectly) a distribution from a foreign trust, that person is required to make a return with respect to such a trust using Internal Revenue Service (“IRS”) Form 3520, and show thereon the name of the trust, the amount of the aggregate distribution received, and any other data the IRS may require. A foreign gift, bequest, or inheritance that exceeds $100,000 from a nonresident must also be disclosed on a Form 3520. This article will take a deep dive into Form 3520…

22Aug 2023 by Anthony Diosdi

What Hungarian High Tech Companies Need to Know Now that the U.S.-Hungarian Tax Treaty Will be Terminated

Tax Treaty

By Anthony Diosdi and Istvan Csovari On July 8, 2022, the Biden administration announced that it will terminate the United States-Hungary Income Tax Treaty that was enacted in 1979. The provisions of the tax treaty will no longer apply beginning on January 1, 2024. According to a July 8, 2022, article in the Wall Street Journal entitled “U.S. Moves to End Tax Treaty With Hungary”, the U.S. Department of the Treasury (the “Treasury”) explained that its action was based on long-standing concerns with Hungary’s tax system and the treaty itself, and a lack of satisfactory action by Hungary to remedy these concerns in coordination with other EU member countries that are seeking to implement the OECD Pillar Two global minimum tax proposal. The treaty’s termination will apply to U.S.-source dividends,…

22Aug 2023 by Anthony Diosdi

What is an RRSP and How is it Taxed Under the United States- Canada Income Tax Treaty

Tax Treaty

By Anthony DiosdiThe Canadian diaspora in the United States comprises approximately 3.1 million individuals who were either born in Canada or reported Canadian ancestry. Many of these individuals have Canadian registered retirement accounts or (“RRSPs”). An RRSP is a retirement savings and investing vehicle for employees and self-employed individuals in Canada. Under Canadian tax law, money that is placed into an RRSP grows tax-free until it is withdrawn from the account. An RRSP is similar to a U.S. 401(k) plan. There are a number of retirement plans available to Canadian residents to save for retirement. These plans provide tax deferral benefits and are intended to promote savings for retirements. Some common Canadian retirement plans are RRSPs, registered retirement income funds (“RRIFs”), tax-free savings accounts (“TFSAs”), registered education savings plans (“RDSPs”),…

16Aug 2023 by Anthony Diosdi

An Introduction to the Corporate Transparency Act

Tax Law

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 Anthony Diosdi

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 Anthony Diosdi

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…