Tax Law Archives | Page 15 of 55

28Oct 2022 by Anthony Diosdi

A Brief Look at the Hurdles Involved in a Type F Cross-Border Reorganization

Tax Law

By An By Anthony Diosdi In the corporate tax context, the term “reorganization” is a statutory term of art. Rather than providing a general definition, the Internal Revenue Code attempts to provide precise definitions for the term “reorganization” in Section 368(a)(1) with an exclusive list of seven specific types of transactions that will be considered “reorganizations.” Subparagraphs (A) through (G) of Section 368(a)(1) each provide a description of a particular reorganization transaction. Unless a transaction fits into one of the seven categories stated in subparagraphs (A) through (G), it is not a corporate reorganization. A Type F reorganization involves “a mere change in identity, or place of organization of one corporation, however effected.” See IRC Section 368(a)(1)(F). The major tax advantage to classification as a Type F reorganization is a…

17Oct 2022 by Anthony Diosdi

Thinking About Starting a Private Foundation? Proceed With Extreme Caution

Tax Law

By Anthony Diosdi Promoters of private foundations make private foundations sound like the perfect tax planning option. Here is how one promoter describes private foundations-“Private Foundation or Family Foundation (PF) can let you control your legacy, reduce your income taxes and impact your values to future generations. Family foundations provide living donors with flexibility as to the trimming of gifts. For instance, a donor may in one year have particularly high income and wish to take full advantage of the income tax deduction for a cash gift to a foundation (individual taxpayers may deduct up to 30% of their adjusted gross income for cash gifts), without deciding in that same year on the final charitable recipients. In a subsequent lean year, the foundation will have available additional funds for giving…

17Oct 2022 by Anthony Diosdi

Cross-Border Corporate Reorganizations and the Use of Gain-Recognition Agreements to Avoid Significant Adverse Tax Consequences

Tax Law

By Anthony Diosdi Whenever a U.S. person decides to establish a foreign corporation (or foreign business entity), it will be necessary to capitalize the foreign corporation with a transfer of cash and other property in exchange for its stock. When appreciated property, such as equipment or certain property rights, is transferred to a foreign corporation, gain will often be realized by a U.S. person. The basic problem is the need to protect the right of the country of residence of the transferor corporation or shareholder to tax gains realized by its taxpayer in the transaction. The concern of that country is that, if not taxed immediately, the gain will escape its tax net permanently. Since 1932, Internal Revenue Code Section 367 has provided the mechanism for protecting the U.S. taxing…

14Oct 2022 by Anthony Diosdi

An Introduction to the Secure Act for Qualified Retirement Plans and IRA Minimum Distribution Rules

Tax Law

By Anthony Diosdi The policy behind creating tax advantage qualified retirement plans and Individual Retirement Accounts or “IRAs” under the Internal Revenue Code is to provide income to employees when they retire from employment. This goal would not be satisfied if employees could infinitely defer the receipt of income from these plans. The regulations under Internal Revenue Code Section 401(a)(9) provides guidance to plan participants, IRA owners and beneficiaries as to the amounts which must be distributed from a qualified plan or IRA on an annual basis and be subjected to income tax. All qualified retirement plans and individual retirement accounts are subject to the minimum distribution rules. The minimum distribution rules also apply to SEPS, tax sheltered annuities, and certain deferred compensation plans for employees of tax-exempt organizations or…

14Oct 2022 by Anthony Diosdi

Why the Anti-Inversion Rules Make the Holding of U.S. Real Property through Multi-Tiered Blocker Structures Worthless to Foreign Investors

Tax Law

By Anthony Diosdi Many foreign investors (who are not domiciled in the U.S.) are advised to hold U.S. real property through U.S. corporations which in turn are owned by foreign corporations. Foreign investors are told to use these multi-tiered corporate blocker structures to avoid the U.S. estate and gift tax. At one time, multi-tiered corporate blocker structures could protect foreign investors from U.S. federal estate and gift tax.All this was possible because prior to the 2004 calendar year, a U.S. corporation may reincorporate in a foreign jurisdiction and thereby replace the U.S. parent corporation with a foreign parent corporation. These transactions were commonly referred to as asset inversion transactions. In asset inversions, a U.S. corporation generally recognized gain (but not loss) under Section 367(a) of the Internal Revenue Code as…

04Oct 2022 by Anthony Diosdi

Common Issues that Lead to Tax Audits

Tax Law

An IRS is one of an individual or company’s biggest nightmares. These audits do not come out of nowhere, and they often follow patterns. Here are some common reasons why the IRS would audit a tax return. One of the top reasons for an audit is failing to report all income on a tax return. The IRS receives reports of income, and they compare it with what you have reported. The agency has ways to measure your income. If it detects a significant difference, it may launch an audit. Large deductions are another trigger for the IRS. If your deductions seem totally out of sync with your financial situation, it could raise red flags. For example, if you have business deductions that are totally out of sync with your business,…

23Sep 2022 by Anthony Diosdi

A Deep Dive Into the IRS Form 5471 Attribution Rules, Form 5471 Category of Filers, and the Safe Harbor Rules

Tax Law

By Anthony Diosdi This article will attempt to explain the attribution rules for stock ownership for individuals and entities regarding the filing requirements of the Form 5471. 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, Form 5471 backstops various international provisions of the Internal Revenue Code such as Sections 901/904 (Foreign Tax Credit), Section 951(a) (Subpart F and Section 956), Section 951A (GILTI), Section 965 (transition Tax), Section 163(j) (interest deduction limitation), and Section 482 (transfer pricing). International information returns that often are associated…

09Sep 2022 by Anthony Diosdi

Are You Ready for the Tax Extension Deadline?

Tax Law

Many people have April 15th entered into their consciousness because it is thought of as "Tax Day.” However, October 15th may sneak up on them when they have asked for an extension on filing their income taxes. You must pay an equal amount of attention to your income taxes, even when you do not have to file them on the standard day. October 15th may be here before you know it. If you owe taxes to the IRS, you would need to pay even more in interest and penalties if you miss the October 15th deadline. In addition, the IRS would view your taxes as very late, and it may prompt them to ask even more questions if they have them. This is the time to contact an experienced professional…

24Aug 2022 by Anthony Diosdi

An In Depth Look into U.S. Estate, Gift, and Generation-Skipping Tax Treaties

Tax Law

By Anthony Diosdi The United States imposes estate and gift taxes on certain transfers of U.S. situs property by “nonresident citizens of the United States.” In other words, individual foreign investors may be subject to the U.S. estate and gift tax on their investments in the United States. The U.S. estate and gift tax is assessed at a rate of 18 to 40 percent of the value of an estate or donative transfer. An individual foreign investor’s U.S. taxable estate or donative transfer is subject to the same estate tax rates and gift tax rates applicable to U.S. citizens or residents, but with a substantially lower unified credit. The current unified credit for non domiciliaries is equivalent to a $60,000 exemption, unless an applicable treaty allows a greater credit. U.S.…

20Aug 2022 by Anthony Diosdi

How Digital Evidence Can be Obtained from Computers, Smartphones, and Social Media Platforms

Tax Law

By Anthony Diosdi Whether criminal or civil, digital evidence impacts just about all areas of the legal profession. This article is designed to provide attorneys and other legal professionals with an overview on how to obtain phone, social media, and other records. Hopefully this article will educate its readers on how digital evidence may be obtained from computers, cell phones, and social media platforms. This article will also discuss the proper forensic practices to preserve digital evidence.Creating and Storing Digital EvidenceWe will begin this article by talking about the creation of digital data or evidence and where digital data is stored. Digital data is created whenever someone sends an email, drafts a document on a computer or a portable device, makes a call on a smartphone, posts on social media,…