tax law Archives | Page 29 of 30

26Apr 2019 by Anthony Diosdi

Are Prosecutors Making a Mistake by Prosecuting Lori Loughlin For Honest Services Wire Fraud?

Tax Law

By Anthony Diosdi Actress Lori Loughlin has been indicted on fraud and money laundering charges by a federal grand jury for their alleged roles in a college admission scandal. Federal prosecutors ultimately filed a superseding indictment against Loughlin alleging that she conspired to commit mail and wire fraud, honest services mail and wire fraud, and money laundering. According to the indictment Loughlin knowingly laundered bribes through charities and corporations set up by William “Rick” Singer, from outside the United States, for the purpose of promoting a fraudulent scheme. In particular, prosecutors allege that Loughlin paid Singer approximately $500,000 to get her daughters admitted to University of Southern California (“USC”) as crew recruits, even though neither daughter had previously rowed as crew. Prosecutors claim that Loughlin made payments to Key Worldwide…

16Apr 2019 by Anthony Diosdi

Can Non-U.S. Citizens Elect to be Taxed as an “S” Corporation?

Tax Law

By Anthony Diosdi As part of the complex U.S. tax law, certain domestic corporations can make an election to be taxed as an “S” corporation. An “S” corporation is only permitted to have certain types of shareholders which are generally limited to individuals who are U.S. persons and certain trusts and estates. The result is that the corporation is not subject to income tax, but its taxable income is instead taxed directly to shareholders. In the case of a “C” corporation, the corporation is subject to income tax but there is a second tax at the individual level upon the receipt of corporate dividends.Among the technical requirements of an “S” corporation is that such corporation cannot have a nonresident alien as a shareholder. Unfortunately, many tax practitioners who may not…

16Apr 2019 by Anthony Diosdi

The Potential Adverse Consequences Associated with the Transfer of Property to Foreign Entities by U.S. Persons

Tax Law

By Anthony Diosdi Over the past couple of decades, there have been substantial changes to the U.S. tax law which can adversely affect any U.S. citizen, U.S. income tax resident alien, or domestic corporation, partnership, estate, or trust (hereinafter “U.S. Person”) that transfers assets to a foreign entity such as a foreign corporation, a foreign partnership, or a foreign trust. This article will briefly describe the U.S. tax consequences that could result from such transfers and the forms that must be filed with the Internal Revenue Service (“IRS”) as a result of such transfers. This article will also discuss the potential reporting consequences of such transfers. General Rules of TaxationIn general, contributions to a corporation, transfers to “controlled” corporations, certain reorganizations, and contributions to partnerships are tax-free events for federal…

15Apr 2019 by Anthony Diosdi

How Long Can the IRS Audit Your Tax Return?

tax return

Many people are concerned about a possible IRS audit, as anyone can be audited, even without suspicions of misconduct. How long do you have to worry about a particular return being audited? It depends on the situation, and the following are some timelines for IRS audits. If you receive notice of an audit, you should immediately contact an experienced tax lawyer in San Francisco. Three years - Generally speaking, the IRS has three years from the due date of your returns to begin an audit. However, there are many exceptions to the three-year rule. Six years - If the IRS believes that your returns included at least a 25 percent understatement of income, it has six years to conduct the audit of those specific returns. For example, if you earned…

11Apr 2019 by Anthony Diosdi

The Perils of a Foreign Individual Transferring U.S. Real Property for No Value

Tax Law

By Anthony Diosdi When a U.S. estate and gift tax nonresident domiciliary (“Foreign Individual”) gratuitously transfers U.S. real estate to another individual, he or she should be aware of the various U.S. gift and estate tax consequences associated with such a transfer. In addition, the Foreign Individual should also make his or her U.S. legal advisor aware of his or her ultimate goal when transferring such U.S. real property.The example which follows comes from our previous experiences and demonstrates a situation in which a Foreign Individual transfers “or gifts” to another individual U.S. real property without intending to make it a gift for U.S. transfer tax purposes. Transfers of real estate are often made by an elderly and/or sick Foreign Individual who was thinking in terms of avoiding potentially costly…

11Apr 2019 by Anthony Diosdi

Can a Non-U.S. Citizen/Non-Domiciliary be Subject to a U.S. Gift Tax for Gifting Money to a U.S. Family Member?

Gift Tax

By Anthony Diosdi Any individual who is a non-U.S. citizen/non-U.S. domiciliary is subject to special transfer tax rules. A non-U.S. citizen/non-U.S. domiciliary is subject to a U.S. federal estate tax only with regard to the decedent’s assets which were situated within the United States upon his or her death (i.e., real estate located in the United States, or stock in a domestic corporation). Unlike U.S. citizens and U.S. domiciliaries, the estate of a person who is neither a U.S. citizen nor a U.S. domiciliary is only allowed a $13,000 estate tax credit, which results in an estate tax exemption of only $60,000 of United States situs assets. A person who is a non-U.S. citizen/non-U.S. domiciliary is also subject to U.S. gift tax with regard to inter vivos transfers of real…

08Apr 2019 by Anthony Diosdi

The Impact of an Installment Sale and the Potential Branch Profits Tax Liability for any Foreign Corporation Doing Business in the U.S.

Tax Law

By Anthony Diosdi In prior blogs, I discussed the very complex and potentially costly branch profits tax (“BPT”) provisions. Simply put, any foreign corporation that is engaged in business in the U.S. can be subject to the BPT in a particular year if the foreign corporation has effectively connected earnings and profits (“ECEP”). The potential BPT often generates an unpleasant “surprise.” This is especially the case where a foreign corporation has incurred losses in prior years and seeks to use loss carryforwards to eliminate a corporate tax liability. Generally speaking, if a domestic corporation pays a dividend to a foreign shareholder, for instance from an Asian country, a 30 percent U.S. withholding tax will be imposed and is required to be collected at the source by the payor domestic corporation.…

08Apr 2019 by Anthony Diosdi

Discrepancy of the U.S. Income Tax Consequences for Foreign Investors Selling Limited Liability Company Units Compared to Corporate Shares

Tax Law

By Anthony Diosdi When a foreign person decides to start an active trade or business in the United States (referred to hereafter as “USTB”), he or she should be aware of the various United States income and estate tax consequences associated with the type of entity he or she chooses to conduct business through. In addition, the foreign person should make his or her U.S. income tax advisor aware of his or her ultimate goal in starting the U.S. business as the tax advisor’s advice may hinge on the foreign person’s ultimate objective.For those foreign persons who would like to start a USTB and plan on operating the business indefinitely (i.e., they do not wish to sell the business once it becomes profitable), standard tax advice may be sufficient. The…

03Apr 2019 by Anthony Diosdi

Violation of a Temporary Visa and the Possible Effect on “Domicile”

Tax Law

By Anthony Diosdi As discussed in previous articles, the determination of an individual’s residency status for U.S. income tax purposes is different than the determination of an individual’s residency status for U.S. estate and gift tax purposes. A U.S. citizen or a resident alien is subject to U.S. income tax on his or her worldwide income. An individual becomes a resident alien by violating the so-called “substantial presence test” or obtaining lawful permanent resident status (obtaining a Green Card). A nonresident alien is subject to U.S. income tax on certain passive income that is sourced in the United States and income that is effectively connected with the conduct of a U.S. trade or business. A U.S. citizen or a resident alien domiciliary is subject to U.S. estate and gift tax…

22Mar 2019 by Anthony Diosdi

Did You Receive a Notice CP 508C From the IRS Stating That Your Passport is Being Revoked? Maybe the APA Can Prevent the IRS from Taking Your Passport

Uncategorized

By Anthony Diosdi IntroductionI have been assisting clients with tax problems for nearly twenty years. One question that I was always asked is,’Can the Internal Revenue Service (“IRS” or “Service”) stop me from traveling abroad?’. Up until fairly recently, I advised clients that the IRS could not prevent them from traveling abroad. That all changed in 2015 with the passage of Fixing America’s Surface Transportation Act (“Fast Act”). The Fast Act requires the State Department to deny a passport application by, and authorizes it to revoke the passport of, any individual that the Service certifies as having a “serious delinquent tax debt.” See Fixing America’s Surface Transportation Act, Pub. L. No. 114-94, Section 32101(e), 129 Stat. 1311, 1732 (2015). Internal Revenue Code Section 7345 governs the IRS’ certification process and…