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

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…
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29Jan 2020 by Anthony Diosdi
Calculating Foreign Tax Credits Before and After the 2017 Tax Cut and Jobs Act

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 After the enactment of the Tax Cuts and Jobs Act, the pools have been repealed and replaced with a single year indirect credit for the foreign income taxes “attributable to” the item of income under Internal Revenue Code Section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.…
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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?

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…
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23Jan 2020 by Anthony Diosdi
An Overview of the Taxation of Cloud Transactions and Digital Downloads

An Overview of the Taxation of Cloud Transactions and Digital Downloads

Tax Law
By Anthony Diosdi U.S. Taxation of the Digital Economy- a Broad OverviewNew 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 electronically 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 royalty for the…
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17Jan 2020 by Anthony Diosdi
The IRS Whistleblower Program and the Potential for Additional Recovery Under the False Claims Act

The IRS Whistleblower Program and the Potential for Additional Recovery Under the False Claims Act

Tax Law
By Anthony Diosdi Let’s suppose that John has been a tax attorney at a law firm owned by Bob for the last 25 years. Bob has enjoyed a reputation for being a very successful tax attorney in Miami, Florida for many years. Everything was going nicely until John noticed that Bob was cheating on his own tax returns to fund his lavish lifestyle. To make matters worse, in order to increase business, Bob demanded that John file frivolous refund claims on behalf of the firm’s clients with the Internal Revenue Service (“IRS”).  It turns out that Bob had been filing fraudulent refund claims on behalf of clients for years. John declined to take any part in the filing of frivolous refund claims with the IRS. This resulted in his discharge…
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13Jan 2020 by Anthony Diosdi
Should Your LLC be Taxed as a Disregarded Entity or a Corporation?

Should Your LLC be Taxed as a Disregarded Entity or a Corporation?

Tax Law
By Anthony Diosdi Probably one of the most frequent questions any tax professional receives from his or her clients is how should my limited liability company (“LLC”) be taxed. As usual in any area of tax planning, there is no one-size-fits-all approach. Each individual’s circumstances must be carefully considered in determining how an LLC should be taxed.An LLC is an entity formed under state law. Once an LLC is formed under state law, a determination must be made for federal (and in some cases for state tax purposes) how the LLC will be taxed. The Income Tax Regulations typically treat an LLC that has a single owner as a “tax nothing.” This means that a single-owner LLC is disregarded for tax purposes and treated as an extension of its owner.…
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06Jan 2020 by Anthony Diosdi
Demystifying the Form 5471 Part 6. Schedule O

Demystifying the Form 5471 Part 6. Schedule O

Tax Law
By Anthony Diosdi Schedule O is used to report the organization or reorganization of a foreign corporation and the acquisition or disposition of its stock. This is the sixth of a series of articles designed to provide a basic overview of the Internal Revenue Service (“IRS”) Form 5471. This article is designed to supplement the IRS’ instructions to Schedule O of IRS Form 5471. Who Must Complete Schedule OFive different categories of filers of Form 5471 have been defined by the Income Tax Regulations. They are as follows:Category 1 FilerCategory 1 (previously reserved) is now used by U.S. shareholders of a Specified Foreign Corporation (“SFC”) that is subject to the provisions of Internal Revenue Code Section 965. Category 2 FilerCategory 2 filers are U.S. persons who are officers or directors…
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06Jan 2020 by Anthony Diosdi
The District Court Allows a Suit to Proceed Challenging the Regulations to Section 965 of the Internal Revenue Code

The District Court Allows a Suit to Proceed Challenging the Regulations to Section 965 of the Internal Revenue Code

Tax Law
By Anthony Diosdi As part of the Tax Cuts and Jobs Act of 2017 (“TCJA”), Congress enacted certain “transition tax” provisions applicable to “controlled foreign corporations” (“CFC”) owned by United States persons. See Pub. L. 115-97, 131 Stat. 2054 (2017). On January 15, 2019, the Internal Revenue Service (“IRS”) and United States Department of Treasury (hereinafter “Defendants”) published final regulations to effectuate these tax provisions.Monte Silver, is the sole shareholder of Monte Silver, Ltd, a CFC incorporated in Israel. Monte Silver (hereinafter “Plaintiffs”) brought an action against the United States in the United States District Court for the District of Columbia. The case is entitled Monte Silver, et al v. Internal Revenue Service, et al. Civil No. 19-cv-247 (APM). The Plaintiffs challenged Defendant’s alleged failure, in connection with promulgating the…
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30Dec 2019 by Anthony Diosdi
New York Estate of Mind

New York Estate of Mind

Tax Law
By James Huang Ranked among the highest taxing jurisdictions in the country, New York is one of the few states that also has a state-level estate tax. Ranging from 3.06% to a top rate of 16%, New York's estate tax is imposed on decedents domiciled in New York. This tax is also imposed on those who are not New York domiciliaries, but who own real or tangible personal property located in the state. Described below are some of the key features of New York's estate tax and how these features interact with the federal regime. Exclusion Gap Like the federal estate tax, New York's estate tax allows estates a "basic exclusion amount" (BEA) — i.e., an amount up to which a decedent's estate is not subject to estate tax. Historically,…
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