Caution- The 2019 Calendar Year Has Yet Another International                                   Return Requirement

Caution- The 2019 Calendar Year Has Yet Another International Return Requirement

tax planning
 By Anthony Diosdi Individuals with foreign assets are subject to never ending informational return requirements. This tax year there is yet another international reporting requirement. Form BE-10 is a benchmark survey from the Bureau of Economic Analysis (“BEA”) which is under the United States Department of Commerce. The BE-10 is conducted every five years and is designed to collect information for all U.S. direct investments abroad from both large and small entities. The BE-10 treats all individuals as entities or companiesThe 2019 calendar year is a “Benchmark Year.” This means if you or a business that you own conducts any business outside the United States or holds assets outside the United States, you may be required to file a BE-10. Unlike FBAR informational returns, there is no $10,000 threshold. The…
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The Top Five Tax Planning Opportunities and Pitfalls that Should be Considered Before Contributing Stock of a CFC to a Holding Corporation to Reduce the U.S. Tax Liability on GILTI

The Top Five Tax Planning Opportunities and Pitfalls that Should be Considered Before Contributing Stock of a CFC to a Holding Corporation to Reduce the U.S. Tax Liability on GILTI

tax planning
By Anthony Diosdi Internal Revenue Code Section 951A requires US shareholders of a controlled foreign corporation (“CFC”) to include the corporation’s income determined to be in excess of specified return on investment in depreciable tangible personal property (i.e., GILTI). For most purposes, a GILTI liability operates for tax purposes in a similar manner as a subpart F inclusion. However, unlike subpart F income, GILTI was intended to impose a current year tax on income earned from intangible property subject to no or a low tax rate outside the US. GILTI is defined as the residual of a CFC’s income (excluding subpart F income or income that is effectively connected with a US trade or business) above a 10 percent return on its investment in tangible depreciable assets (defined as “qualified…
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Understanding the Beneficial Rules of the CARES Act for Retirement Fund Withdrawals

Understanding the Beneficial Rules of the CARES Act for Retirement Fund Withdrawals

tax planning
By Anthony Diosdi Recently, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act allows retirement savers to take “coronavirus-related distributions” of up to $100,000 from their Individual Retirement Account (‘IRA”) and 401(k) plans without the 10 percent penalty that normally applies to people under age 59 1/2. If effect, the new law allows individuals that made contributions to retirement plans to borrow up to $100,000 from the plan and re-contribute the amount borrowed at any time with up to three years with no federal income tax consequences. In other words, if an individual takes a distribution from a retirement account, he or she will have three years to repay the money withdrawn from the retirement plan. If the individual does…
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Tax Deadlines for 2020

Tax Deadlines for 2020

tax planning
If you thought that filing taxes in 2019 was a confusing process, the situation is not much simpler in 2020. With the COVID-19 pandemic sweeping through the U.S. and the world in the early months of the year, the Internal Revenue Service (IRS) has made adjustments to filing deadlines. The following is an overview of tax deadlines in 2020. Filing Date Extended First and foremost, the IRS has extended the standard tax filing date from April 15 to July 15, 2020. This means you do not have to file your federal returns until July, and you will not be charged interest on payments until after July 15. This can help many people who might owe taxes but are facing financial hardship due to temporary job loss or a decline in…
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The IRS Delays the Filing Deadline from April 15th to July 15th

The IRS Delays the Filing Deadline from April 15th to July 15th

tax planning
By Anthony Diosdi Treasury Secretary Steve Mnuchin made the following announcement on Twitter “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” This means that in addition to providing taxpayers with additional time to pay their 2019 income tax liabilities, the IRS has extended the 2019 filing deadline from April 15th to July 15th. If taxpayers file extensions, they will be able to extend the filing deadline for their 2019 tax returns to October 15th.Anthony Diosdi is a partner and attorney at Diosdi Ching & Liu, LLP located in San Francisco, California. Diosdi Ching & Liu, LLP also has offices in Pleasanton, California and Fort Lauderdale, Florida.…
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Cross-Border Tax Planning with the Proposed Regulations Regarding Cloud Computing Transactions and Digital Downloads

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…
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Did You Sell Cryptocurrency in 2019?

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…
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Intentionally Defective Grantor Trusts:  Estate Planning with Schrödinger’s Cat

Intentionally Defective Grantor Trusts: Estate Planning with Schrödinger’s Cat

tax planning
by James Huang A popular estate planning vehicle for transferring wealth to descendants during one's lifetime is the "intentionally defective grantor trust" (IDGT), also referred to as an “intentionally defective irrevocable trust” (IDIT). Through this type of irrevocable trust, transferors can significantly increase the amount they shield from estate tax upon their deaths. This increase is achieved by virtue of how a trust can simultaneously exist, or not exist, depending on which tax perspective one takes in viewing it. In the case of IDGTs, transfers between the trust and the person (or grantor) who creates it are respected for gift and estate tax purposes, but disregarded for income tax purposes. Income Tax Payments When a grantor transfers property to an IDGT, the grantor "freezes" that property’s transfer date value for…
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Tax Planning for Foreign Individuals That Own U.S. Real Property

Tax Planning for Foreign Individuals That Own U.S. Real Property

tax planning
By Anthony Diosdi As I have discussed in previous articles, nonresident alien domiciliaries are generally subject to U.S. estate tax on his or her U.S. situs assets. The most common example of a U.S. situs asset is U.S. real estate. In this context, it is important to remember that a nonresident alien domiciliary does not benefit from the same “Unified Credit” as a U.S. citizen or resident alien domiciliary. Instead, a nonresident alien domiciliary is only entitled to a $60,000 deduction (equivalent to a $13,000 credit). Because the value of U.S. real estate owned by a nonresident alien domiciliary almost always exceeds this $60,000 “threshold,” the estate of a nonresident alien domiciliary can be subject to a U.S. estate tax on such real estate.In this context, many nonresident alien domiciliary’s…
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