Tax Law Archives | SF Tax Counsel

22Nov 2023 by Pat Geddie

The Tax Consequences of Liquidating C Corporations

By Anthony DiosdiThe closing events of corporate lifetime invoke liquidation of the corporate enterprise. The Internal Revenue Code and regulations fail to provide a precise definition of the term liquidation. However, some guidance is provided by regulations providing that “[a] statute of liquidation exists when the corporation ceases to be a going concern and its activities are merely for the purpose of winding up its affairs, paying its debts, and distributing any remaining balance to its shareholders.” See Treas. Reg. Section 1.332-2(c). Thus, it is useful to think of liquidations as a process through which the corporation winds up its affairs and distributes remaining assets to its shareholders rather than a single event.A corporation may liquidate in one of two ways. After paying off creditors, it may distribute the assets…

22Nov 2023 by Pat Geddie

An Overview of the Federal Taxation of S Corporations

Tax Law

By Anthony DiosdiA U.S. corporation can be taxed as either a C or S corporation. C corporations are subject to a double tax regime meaning that there is a tax at the corporate level and a second tax when a dividend is paid to the shareholders. An S corporation is an alternative to the two-tier tax system applicable to C corporations. For federal tax purposes, with an S corporation, there is no corporate taxation. Instead, only the shareholders of an S corporation are subject to tax when there is a distribution from the corporation. Since S corporations are only subject to one layer of tax, S corporate shareholders tend to recognize less tax than C corporate shareholders. This article will discuss the basic rules governing the federal taxation of S…

16Nov 2023 by Pat Geddie

Navigating San Francisco’s Tax Landscape: Choosing the Right Tax Attorney

Tax Law

In the dynamic and often complex world of San Francisco's tax laws, having a skilled tax attorney is crucial. At Diosdi Ching & Liu, LLP, our expert team specializes in guiding individuals and businesses through the intricacies of tax law. When seeking a San Francisco tax law attorney, it’s essential to choose a professional who not only understands the law but also prioritizes your unique needs. Why Expertise in San Francisco Tax Law Matters San Francisco's tax regulations can be labyrinthine. Whether it's navigating state taxes, understanding federal tax obligations, or dealing with specific local tax laws, the expertise of a seasoned tax attorney is invaluable. Our attorneys at Diosdi Ching & Liu, LLP possess deep knowledge of these regulations and offer tailored strategies to manage your tax matters effectively. Services…

16Nov 2023 by Pat Geddie

A Brief Overview of Taxable Corporate Mergers and Acquisitions

Tax Law

By Anthony DiosdiCorporations sometimes purchase stock in other corporations to hold for investment or purchase assets from other corporations to hold for investment or to use for business operations.In common tax parlance, “corporate acquisition” generally refers to an acquisition of control by one corporation over another. One corporation may acquire control over another through two different transaction types. First, a simple asset acquisition from the target corporation itself offers the purchaser direct control over the selling corporation’s assets. Second, a stock acquisition from the target corporation’s shareholders provides the purchaser with indirect control over the selling corporation’s assets through its ownership of the target corporation’s stock.In a stock purchase, the purchasing corporation (P) acquires a controlling interest in the target corporation’s (T) stock from the target’s shareholder, thus becoming a…

13Nov 2023 by Pat Geddie

The Taxation of Affiliated Corporations and Computing Consolidated Taxable Income

Tax Law

By Anthony Diosdi A corporation generally determines its taxable income or loss without reference to the taxable income or loss of its shareholders or other entities, The theory that each corporation is a separate taxpayer is limited, however, in certain situations in which corporations are “affiliated” (i.e., subject to common control or joined through interlocking ownership). In the case of affiliated corporations. Internal Revenue Code restrictions limit the ability to obtain multiple tax benefits and to manipulate intercompany transactions to reduce tax liability. The Internal Revenue Code also recognizes that the identities of affiliated corporations may merge at certain very high levels of common control. For tax purposes, it is permissible to treat the corporation as a single entity in which intercompany transactions are disregarded. This article discusses the taxation…

13Nov 2023 by Pat Geddie

An Introduction to the Tax-Free Corporate Reorganization Rules

Tax Law

By Anthony Diosdi The term “reorganization” is used in the Internal Revenue Code to describe a variety of transactions that result in a fundamental change in the ownership or structure of one or more corporations. Transactions that qualify as reorganizations under Section 368 are wholly or partially tax-free to the corporations and their shareholders. This article provides an introduction to the various types of tax-free reorganizations.Types of Corporate ReorganizationsCorporate reorganizations fall into three broad categories:Acquisitive ReorganizationsIn an acquisitive reorganization, the purchasing or acquiring corporation acquires control over or combines with another corporation, usually referred to as the target corporation. In other words, acquisitive reorganizations are transactions where one corporation (the…

25Oct 2023 by Pat Geddie

Foreign Cloud Computing Transactions: U.S. Taxation of Service, Intangible, Copyright, and Royalty Income

Tax Law

By Anthony Diosdi New technology and new transactions often raise difficult issues of tax policy and administration in part because existing rules were developed to deal with other situations. The dramatic expansion in electronic commerce facilitated by the use of the Internet and other technology is subjecting existing tax principles to new pressures. One area of concern is the application of source rules to electronic commerce transactions. Suppose, for example, that a corporation delivers software or a digital product to a customer on the Internet. The customer can download the product and use it commercially. Depending upon the nature of the transaction and the property interests involved, the income to the corporation might appropriately be characterized as a rent or royalty for the use of technology, profit from the sale…

19Oct 2023 by Pat Geddie

Why You Need an Experienced Tax Law Attorney in San Francisco, California

Tax Law

The complex world of tax law can be daunting for individuals and businesses alike. Navigating through federal and state tax codes, understanding intricate financial documents, and negotiating with the IRS can be overwhelming. That's where a specialized tax law attorney comes into play. In the bustling hub of San Francisco, California, you'll find no shortage of tax dilemmas that warrant professional assistance. Here’s why hiring a tax law attorney from Diosdi Ching & Liu, LLP can be invaluable. Expertise in Complex Tax Issues Tax laws are complex and constantly evolving, making it difficult for a layperson to keep up with the latest changes. A qualified tax law attorney stays updated on these changes and can provide informed advice. From helping you with tax planning to representing you in tax court, a specialized attorney will…

18Oct 2023 by Pat Geddie

When Are You Required to File a Form 3520 with the IRS?

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 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. Transfers to foreign trust also need to be reported on a Form 3520. In addition, large foreign gift, bequest, or inheritance that exceeds $100,000 from a nonresident must also be disclosed on a…

18Oct 2023 by Pat Geddie

Factors to Consider When Developing a Strategy to Contest a 3520 Penalty

Tax Law

By Anthony Diosdi Chapter 61 of the Internal Revenue Code contains countless reporting requirements regarding foreign information filing obligations. Many of the sections under Chapter 61 impose significant penalties for the failure to comply with its reporting requirements. A well-known provision in Chapter 61 by tax attorneys is Section 6039F. Section 1905 of the 1996 Tax Act created new reporting requirements under Section 6039F for U.S. persons (United states person means United States citizens, United States residents, corporations, partnerships, or limited liability companies created or organized in the United States) that receive large gifts (including bequests) from foreign persons. The information reporting provisions require U.S. donees to provide information concerning the receipt of large amounts that the donees treat as foreign gifts, giving the Internal Revenue Service (“IRS”) an opportunity…