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William Byrnes (Texas A&M) tax & compliance articles

Archive for January, 2011

New Rules For Tax Preparers

Posted by William Byrnes on January 31, 2011


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Prior to January 1, 2011, any individual could prepare a tax return or claim for refund for compensation.  An individual who prepared and signed a taxpayer’s return or claim for refund as the preparer generally could also represent that taxpayer during an examination of the taxable period covered by that return or claim for refund.

All that has changed ever since the IRS issued regulations which state that after December 31, 2010, in order to prepare a tax return for a fee, or to otherwise represent a taxpayer before the IRS, an individual must obtain a preparer tax identification number (PTIN). …

The Treasury Department and the IRS have decided to adopt the proposed regulations that establish a $50 user fee to apply for or renew a PTIN, which are estimated to recover the full cost to the IRS for administering the PTIN application and renewal program.

Read the full analysis at AdvisorFYI

Posted in Tax Policy | Tagged: , , , , , , , | 1 Comment »

Health Insurance Coverage for All Americans

Posted by William Byrnes on January 28, 2011


The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 are generally known as the national health care legislation.  The new laws created a number of changes in the health care insurance system, in general.  These changes will be discussed throughout the week, as presented below.

Under the new law, each individual is required to have “minimum essential coverage” for each month of the year starting in 2014. “Minimum essential coverage” means whichever; a government sponsored program such as Medicare, Medicaid, and TRICARE; an employer sponsored plan; plans in the individual market; and grandfathered health care plans.

For those individuals who choose not to obtain minimum essential coverage, imposed is a penalty to be included in the taxpayer’s annual return.  The penalty applies to each month where the individual is not covered equal to an amount of either 1/12 of the average cost of “bronze” level coverage or the greater of an annual set dollar amount, which is pegged at $695 for taxable years 2016 and beyond, or a set percentage of the taxpayer’s household income, currently 2.5 percent beginning after 2016. (The Legislation includes a phase in schedule for both the flat dollar amount and the percentage of income. The flat dollar amount is $95 for 2014, $325 for 2015. The percentage of household income is 1 percent for 2014 and 2 percent for 2015.)  To read this article excerpted above, please access AdvisorFYI

 

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Obama Tax Compromise Provides 100 Percent Bonus Depreciation of Business Assets Through 2011

Posted by William Byrnes on January 27, 2011


Although some items purchased by a business can be written off 100% for income tax purposes in the year of purchase, many types of property are not eligible to be deducted fully in the year they are purchased.  The tax deduction for purchase of a piece of depreciable property is spread out over the life of the property.

Each year during the depreciation period the business is allowed to take a tax deduction for some portion of the purchase price of the property. The Tax Relief Act includes a provision allowing 100% bonus depreciation for some business assets.  It also extends for an additional year the 50% bonus depreciation provisions previously scheduled to expire at the end of 2011.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

 

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Brazilian Investments and Structures webinar lectures begin Feb 1st

Posted by William Byrnes on January 26, 2011


Dates: Lectures starting Tuesday February 1st, ending 10 weeks later by Friday April 8th

Course access begins upon payment

Time – 5:30pm Eastern (New York time) Tuesdays

Medium – Wimba live lectured webcam video-conference and TWEN (Westlaw) course-ware

Course Description – This course will concentrate on the Brazilian corporate structures, tax & financial systems, regulations and compliance, focusing on the practical aspects of doing business in Brazil. We will also discuss the impact of the recent changes in tax/corporate laws and regulations.

Tuition – continuing education audit student – only US$997

Enrollment Contact: Associate Dean William H. Byrnes – wbyrnes@tjsl.edu

or call +1 (619) 961-4211

LexisNexis will make available to all students at a 76% discount the international tax treatise Foreign Tax & Trade Briefs covering 110 countries !

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The Small Business Tax Credit

Posted by William Byrnes on January 26, 2011


During 2010, President Obama realized his goal of providing health care coverage to all Americans when Congress passed the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.

Under the new health care legislation many new changes will affect taxpayers beginning last year.  This week’s blogticles are dedicated to the discussion of the health care legislation and the impact it is projected to have.  We begin with a discussion of the Small Business Tax Credit.

Under the new law, the Small Business Tax Credit allows qualified small employers to elect, beginning in 2010 a tax credit for some percentage of their employee health care coverage expenses.  Generally, a “qualified small employer” is an employer who has the equivalent of 25 full-time workers or less (e.g., a firm with fewer than 50 half-time workers would be eligible), pay average annual wages below $50,000, and cover at least 50 percent of the cost of health care coverage for their workers.

Further, the tax credit will cover up to 35 percent of the premiums a small business pays to cover its workers until 2014, when the rate will increase to 50 percent.  Nevertheless, the credit has phase out provisions which gradually reduce the credit amount for businesses with average wages between $25,000 and $50,000 and for businesses with the equivalent of between 10 and 25 full-time workers.  To read this article excerpted above, please access AdvisorFYI.

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House Passes Bill Modernizing Mutual Fund Taxation

Posted by William Byrnes on January 25, 2011


Although overshadowed by the fight over the Obama tax agreement, mutual fund legislation passed the House on December 15.  The Registered investment Company Modernization Act of 2010 (RICM Act), H.R. 4337, was originally passed by the House on September 28, but the Senate amended the bill, forcing a second vote in the House.  The President signed it into law December 22 – Public Law 111-325.

Tax Code provisions governing mutual funds have not had a substantial update since 1986, with some components of the Code relating to mutual funds sitting untouched for sixty or more years. The tax and regulatory landscape has changed significantly in the intervening years, which has left the tax rules for mutual funds sorely in need of updating.

The RICM Act brings the Tax Code’s treatment of mutual funds and other registered investment companies (RICs) up to date by introducing the following provisions to the Tax Code, among others: Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of mutual fund investment in Adviso’rs Journal, see Can Term Life Coupled with a Mutual Fund Investment Replace a Variable Universal Life Policy? (CC 10-77).

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2010 Estates: To Elect or Not to Elect

Posted by William Byrnes on January 24, 2011


Did Congress finally settle the estate tax confusion when it passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act) on December 16? Although the estate tax treatment of estates of decedents dying in 2011 and 2012 is crystal clear, most of our clients will outlive the current estate tax regime, and we will be stuck in the same spot we were for the last half of 2010, wondering what the next year holds.

And what about the estates of decedents dying in 2010? Under the Tax Relief Act, estates of decedents dying in 2010 have a choice. They can elect to have the estate subjected to an estate tax regime with an exclusion amount of $5,000,000 (unified credit of $1,730,000) and an estate tax rate of 35 percent. Beneficiaries of these estates will receive the benefit of the stepped-up basis rules applicable prior to 2010.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Obama’s tax agreement, including its estate tax provisions, in Advisor’s Journal, see Obama Tax Agreement Faces Stiff Resistance in Congress (CC 10-112) and Obama Tax Agreement Passed by House (CC 10-117).

For in-depth analysis of the estate tax, see Estate, Gift and GST Taxes.

Posted in Estate Tax | Tagged: , , , , , , , | Leave a Comment »

Importance and Value of Professional Designations and Board Certifications in the United States and Globally

Posted by William Byrnes on January 21, 2011


Why Accredited Program Exams &  Education matter.  Brief History of Professional Designations in the USA and Why Certification Matters

These days it is becoming more and more important to have an accredited degree along with certifications, graduate credentials, specializations, or other professional designations.  Many of todays  industry professionals  have the term “Board Certified” or certified on their resume which shows that they have completed the requirements for certification under the standards of an Independent Regulatory Body .

Certification bodies, honor societies, and Self Regulatory Organizations have been in existence for several hundred years in the United States.   Honors, awards, designations, certifications, and other non-government regulated credentials has been well recognized  since “academic honor societies” became popular over 200 years ago in the USA i.e. PBK Honor Society in year 1776.

Further, professional designations in the last 30 years have become almost a requirement to be hired into many job areas of: banking, insurance, project management, risk management, business, law, finance, and various other fields.

AAFM ®  American Academy of Financial Management®, a global certification standards body,  was the first to require program exams and courses from a government recognized and  double accredited business schools by creating legal  articulation agreements directly with Governmental Bodies and Accreditation Bodies.

Under US government laws, individuals generally must be registered with some federal or state governmental licensing authority  before working in a regulated field such as law or accounting.  However, corporations, state bar associations and accounting societies allow their members to  use other professional certifications after your name.  e.g.  John Doe, MBA, CWM ®

Overall, if you research the  ACBSP – The Accreditation Council for Business Schools and Programs www.ACBSP.org, The American Bar Association ABA, or other  accredited business schools in North or South America, we find that double accredited programs maintain the highest admissions requirements, educational standards, and testing & assessment criteria in the world.  These top business schools are also recognized by the Government sanctioned CHEA Council of Higher Education  through the US Government’s  DOE Department of Education.

Thus, there is a continued new movement toward applying to and beginning or entering specific degree or accredited business programs with the intent to earn specialized-graduate certifications while actually working toward a diploma or degree.   Some certifications, such as AAFM®, may even count toward credit for a Graduate Degree.

As for trends, research shows that more and more of the TOP ranked accredited institutions will continue to move toward integrating independent “graduate certifications”, diplomas, charters, and even joint certification programs with external certification bodies.

Below are typical benefits for holding certifications taken from the AAFM® American Academy Website.

Sample Benefits of Professional Certification from AAFM ®  International Board of Standards

  • Gain Recognition from an Independent  “Professional Certifying Body”
  • Use Post-Nominal Credentials after your name on your business cards.
  • Addition of Certification Marks after your on your Resume, CV, & Promotional Materials.  Ex. John Doe, MFP Master Financial Planner
  • Achieve an accredited degree-based designation that rewards you for your professional exams,  education, hard work and experience.
  • Protect your job security by achieving graduate recognition from: an independent, vendor-neutral, globally recognized authority and standards body.
  • Promote Advanced Specialization Skills  in your resume and  portfolio of credentials
  • Enhance your digital resume with key memberships, awards,  and industry recognized qualifications.
  • Certifications and knowledge expansion have been proven to increase your professional image and salary potential.
  • Advanced Standing to Publish research in the journal or websites as a Certified Member.
  • Assist in work helping charity, governments, the United Nations, or  NGOs through our volunteer and outreach programs.
  • Use  our private career network of:  job alerts, advice, communications and job tools.
  • CPE continuing professional education from any affiliated business school.
  • Networking with members in more than 150 Countries via online or conferences.
  • The AAFM ® Certification body has international alliances with Leading Associations in Arabia, Asia, Africa, India, China, Asia, Singapore and more.
  • The AAFM ® Official Approved Annual Conference is a TOP Global Conferences in Business, Management, Finance, Economics, Leadership and more.
  • Become a Fellow or Advisor of the Academy and Institute.
  • Professional Online Networks with LinkedIn
  • Can show others that the Holder of certification has achieved Double Accredited Education from a government recognized business school such as ACBSP.
  • Certifications are verified online globally to improve your ability to be hired &  screened through our Certification Verification System
  • Certifications help your resume to be found in the digital world of “Search”.
  • Qualified Board Certifications are allowed by State Bar Associations and The AICPA State Accounting Bodies.

Prof. Mentz, who is CEO of the AAFM ® American Academy and a licensed US attorney stated, “Board Certification that is backed by “double accredited business program’s exams and education” is the confirmation which validates your hard work and expertise, and tells the world that your graduate certification has met the highest global accreditation standards for business education under the US Department of Education and CHEA governmental standards.”

References

  • AAFM ® Investopedia http://www.investopedia.com/terms/a/american-academy-of-financial-management.asp
  • AAFM ® US Dept of Labor http://www.bls.gov/oco/ocos301.htm
  • AAPM ® Project Management Certification  www.certifiedprojectmanager.us
  • Government licensed: Attorneys/Lawyers, CPAs, and Engineers who offer Advice and services incidental to their work are generally excluded from this regulatory registration http://www.sec.gov/divisions/investment/iaregulation/memoia.htm
  • AAFM  ® FINRA Referenced Designations: http://apps.finra.org/DataDirectory/1/prodesignations.aspx
  • CHEA, DOE, ACBSP, etc. www.ACBSP.org
  • TJSL Law School http://llmprogram.tjsl.edu

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New York Life Insurance Commission Disclosures

Posted by William Byrnes on January 20, 2011


Beginning last week life insurance brokers in the Big Apple started disclosing commissions to consumers.  New York is one of the first states that are mandating life insurance commission details to be disclosed to clients.

Under New York Insurance law, [1] an insurance producer selling or renewing an insurance contract must disclose the following information to the purchaser orally or in writing not later than application for the insurance contract or the renewal:

(1)     whether the insurance producer represents the purchaser or the insurer for purposes of the sale;

(2)     that the insurance producer will receive compensation from the selling insurer based on the  insurance contract the producer sells;

(3)     that the compensation insurers pay to insurance producers may vary depending on a number of factors, including the insurance contract and the insurer that the purchaser selects, the volume of business the producer provides to the insurer or the profitability of the insurance contracts  that the producer provides to the insurer; and

(4)     that the purchaser may obtain information about the compensation expected to be received by the producer for the sale and for any alternative quotes obtained by the producer by requesting such information from the producer.

To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/new-york-life-insurance-commission-disclosures/

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Cancellation of a Policy Generates Taxable Income: The Sanders Case

Posted by William Byrnes on January 19, 2011


Life insurance policies are granted preferred tax treatment, with death benefits distributable tax-free to beneficiaries, but some distributions from a life insurance policy are subject to income tax. For instance, although inside buildup of policy value occurs tax-free, when that value is tapped through policy withdrawals, the policy owner may be taxed on the distribution. Current income taxation can also result when a policy is cancelled or otherwise terminated when a policy loan is outstanding, as illustrated by a recent Tax Court case.

For previous coverage of life insurance developments in Advisor’s Journal, see Life Insurance: Iron-Clad Asset Protection or Chink in the Armor? (CC 10-114) and IRS Blesses Life Insurance Policy Held by Profit-Sharing Plan (CC 10-96).  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of policy loans and withdrawals, see Advisor’s Main Library: Section 19.1 G—Tax Treatment Of Policy Loan Interest and Section 19.1 C—Taxation of Amounts Payable During Life.

Posted in Insurance, Taxation | Tagged: , , , , , , , | Leave a Comment »

Thomas Jefferson Law unveils new home — on site of 300,000-year-old fossils

Posted by William Byrnes on January 18, 2011


Jefferson portrayed on the United States two-d...

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Students at the Thomas Jefferson School of Law arrived Tuesday for the first day of spring semester classes at a new, $90 million building in downtown San Diego — a facility that revealed a surprise of mammoth proportions during construction.  Read the article at The National Law Journal.

Posted in Education Theory | Leave a Comment »

Selected Provisions and Analysis of the Tax Relief Act of 2010

Posted by William Byrnes on January 18, 2011


Written by the foremost experts in the field, Robert Bloink, Esq., LL.M and Professor William H. Byrnes, Esq., LL.M, CWM 

Understand the Act’s Implications for You and Your Clients

  • Analyzes important insurance, estate, gift, and other elements of the Act
  • Provides pertinent information on other important 2010 tax developments
  • Convenient Q&A format speeds you to the information you need – with answers to over 100 important questions

Summary Table of Contents

  • Analysis of the Tax Relief Act of 2010
    • Income Tax Provisions
    • Estate Tax Provisions
    • Generation Skipping Transfer Tax
    • Deduction for State and Local Sales Taxes
    • Alternative Minimum Tax
    • Tax Credits
    • Payroll Tax Holiday
    • Wage Credit for Employees who are Active Duty Members of the Military
    • Charitable Distributions from Retirement Accounts
    • Bonus Depreciation and Section 179 Expensing
    • Basis Reporting Requirements for Brokers and Mutual Funds
    • Regulated Investment Company Modernization Act of 2010
    • Health Care Act
    • Form 1099 Reporting Requirement for Businesses
    • American Jobs and Closing Tax Loopholes Act of 2010
    • Requirements for Tax Return Preparers

Product Information:

Softcover/64 pages total;  42 pages of questions and answers

Publication Date: January 2011

Publication Number: 1350011

Price: $12.95 + shipping & handling and applicable sales tax

To order:

With our Custom Imprint program, you can place your company’s logo on the cover of this analysis and you’ll leave a lasting impression.  Call 1-800-543-0874 for additional information.

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Obama Tax Cuts Analysis: Estate and Generation Skipping Transfer Tax

Posted by William Byrnes on January 18, 2011


The recent Obama Tax Cuts reinstated the estate and generation skipping transfer taxes effective for decedents dying and transfers made after December 31, 2009.  As was discussed earlier this week, the estate tax applicable exclusion amount is $5 million for decedents dying in calendar years after 2011, and the maximum estate tax rate is 35 percent. Furthermore, the generation skipping transfer tax exemption for decedents dying or gifts made after December 31, 2009, is equal to the applicable exclusion amount for estate tax purposes ($5 million for 2010).

For a general background on the Generation Skipping Transfer Tax, see our November 1st Blogticle entitled: Life Insurance and the Generation—Skipping Transfer Tax

Although technically the generation skipping transfer tax is applicable for 2010, the generation skipping transfer tax rate for transfers made during 2010 is zero percent. After this year, the generation skipping transfer tax rate equals the highest estate and gift tax rate in effect for such year (35 percent in 2011 and 2012), notwithstanding the exclusion amounts.

Moreover, under the new law, a recipient of property acquired from a decedent who dies after December 31, 2009, generally will receive fair market value basis (i.e., “step up” in basis). [1]

To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/obama-tax-cuts-analysis-estate-and-generation-skipping-transfer-tax/

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Does the New Estate Tax Make the Bypass Trust Obsolete?

Posted by William Byrnes on January 17, 2011


President Obama’s tax compromise introduces a new estate tax concept for 2011 and 2012, the deceased spouse unused exclusion amount (DSUEA).  Essentially, the DSUEA allows a surviving spouse to utilize the unused exclusion amount of the first spouse to die.  The new law raises an important planning question: Is the bypass (credit shelter) trust obsolete as an estate planning device? Also: Do existing bypass trusts need to be amended in light of the new law?

In general, under the new estate tax, an estate’s exclusion amount, referred to as its applicable exclusion amount, is the sum of two components: the basic exclusion amount and the DSUEA. The basic exclusion amount for estates of decedents dying in 2011 and 2012 is $5 million. The second part of the equation, the DSUEA, is the amount of the first-to-die spouse’s exclusion amount that is not used by the that spouse’s estate. Note that a surviving spouse’s DSUEA is equal to the unused exclusion amount of the surviving spouse’s last deceased spouse.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Obama’s tax agreement, including its estate tax provisions, in Advisor’s Journal, see Obama Tax Agreement Faces Stiff Resistance in Congress (CC 10-112) and Obama Tax Agreement Passed by House (CC 10-117).

For in-depth analysis of the estate tax, see Advisor’s Main Library: Estate, Gift and GST Taxes.

Posted in Estate Tax | Tagged: , , , , , , , | Leave a Comment »

Obama Tax Cuts Alternative Minimum Tax Exemption Extensions

Posted by William Byrnes on January 15, 2011


“For more than three decades, the individual income tax has consisted of two parallel tax systems: the regular tax and an alternative tax that was originally intended to impose taxes on high-income individuals who have no liability under the regular income tax.” [1]

Current law imposes an alternative minimum tax (AMT) only on individuals.  “The stated purpose of the alternative minimum tax (AMT) is to keep taxpayers with high incomes from paying little or no income tax by taking advantage of various preferences in the tax code.” [2]

The parallel tax structure to the regular income tax law requires individuals “to recalculate their taxes under alternative rules that include certain forms of income exempt from regular tax and that do not allow specific exemptions, deductions, and other preferences.” [3]

Generally, the AMT is an amount that is the excess of the “tentative minimum tax” over the regular income tax.

Tentative minimum tax is equal to the sum of (1) 26 percent of so much of the taxable excess as does not exceed $175,000 ($87,500 in the case of a married individual filing a separate return) and (2) 28 percent of the remaining taxable excess, which is essentially an individual’s taxable income adjusted to take into account certain specified preferences and adjustments (also known as alternative minimum taxable income (“AMTI”)) minus the exemption amount.  To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/obama-tax-cuts-alternative-minimum-tax-exemption-extensions/

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New Tax Brackets under the Obama Tax Cuts

Posted by William Byrnes on January 14, 2011


History of top marginal income tax rates in th...

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In 2001, the Economic Growth and Tax Relief Reconciliation Act first created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent.  That law also reduced the other regular income tax rates. The otherwise applicable regular income tax rates of 28 percent, 31 percent, 36 percent and 39.6 percent were reduced to 25 percent, 28 percent, 33 percent, and 35 percent, respectively.

Under Section 101 of the new Tax Relief, Unemployment Insurance Reauthorization, And Job Creation Act of 2010, the law creates an extension of the taxable income brackets created almost a decade ago.

Generally, a taxpayer determines his or her tax liability by applying the tax rate schedules (or the tax tables) to his or her taxable income. The rate schedules are broken into several ranges of income, known as income brackets, and the marginal tax rate increases as a taxpayer’s income increases. Separate rate schedules apply based on an individual’s filing status.

Below are the new tax rate tables for those filing as single taxpayers, married filing jointly, as well as head of household.

To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/new-tax-brackets-under-the-obama-tax-cuts/

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Report Slams Reverse Mortgages

Posted by William Byrnes on January 13, 2011


Reverse mortgages are facing renewed scrutiny after the December 7 release of the Consumer Union Report, Examining Faulty Foundations in Today’s Reverse Mortgages.  According to the report, reverse mortgages are suitable for only a small slice of low-income seniors, and seniors often enter into the contracts without understanding the financial consequences, including the high fees and interest charges attached to the mortgage products.

“Reverse mortgages are a very risky deal for borrowers who don’t understand the complicated terms of the loan and how quickly fees and interest charges can add up,” said Norma Garcia, an attorney with Consumer Union.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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The Recession: Over or America’s Lost Decade?

Posted by William Byrnes on January 12, 2011


Some economists are reporting that the recession is officially over.

Others are less optimistic, suggesting that the recession could last into 2012. And with unemployment numbers hovering around 10 percent, median household income falling, and foreclosures mounting, the most important part of any potential recovery, the public, is still cynical.

What if even the most cynical predictions for the world economy are underestimating the length of the path to recovery?

One economist is predicting that the current recession could last until 2018.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the economic downturn in Advisor’s Journal, see Fed to Purchase $600 Billion in Treasuries in Move to Stimulate Economy (CC 10-94).

 

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The Future of Estate Planning under the Obama Tax Cuts

Posted by William Byrnes on January 11, 2011


Why is this Topic Important to Wealth Managers? Presents discussion on the effect of the Obama Tax Cuts on the Estate Planning industry in general.  Also presents analysis regarding the estate tax burden on taxpayers.

The quintessential planning tool that many wealth managers relied on could easily become a thing of the past.  In other words, the Obama Tax cuts are creating concern for some wealth managers who sold life insurance to cover the tax of an estate at the death of the decedent. Sections 301-304 of the new law reinstated the estate tax, but nevertheless, created large exclusions, essentially removing the need for many to cover the estate tax burden with the purchase of life insurance.

Specifically, the applicable estate tax exclusion amount is $5 million under the law (and is indexed for inflation) for decedents dying in calendar years starting in 2011.  Married individuals’ will see a total exclusion of $10 million.  Furthermore, the new law reinstates the maximum estate tax rate of 35 percent.  To read this article excerpted above, access www.AdvisorFYI.com

 

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Brazilian Taxation and Investment (in-depth video-conference course) February 1st – April 7th

Posted by William Byrnes on January 10, 2011


This 10 week live online video-conference course on Brazil will be taught in English (but all attendants may use Portuguese to ask and respond to questions) by several renown Brazilian specialists who have extensive out-of-country experience, working as international counsel for large multinational companies, big 4 firms, and government.

Please contact Associate Dean Prof. William Byrnes if you are interested in enrolling in this executive education course.  wbyrnes@tjsl.edu or skype: professorbyrnes  All lectures are recorded for playback during the ten weeks.  Lexis access is included.

Tax System:

  1. Overview – Main taxes;
  2. Corporate Taxation: Corporate Income tax and Social Contribution;
  3. Simplified tax regime;
  4. Accounting Rules (IFRS and SPED);
  5. Investment incentives;
  6. Developing a Tax Strategy in Brazil;
  7. Tax avoidance versus Tax Evasion

General Overview of Brazilian Indirect Taxes

  1. VAT;
  2. Other Indirect Taxes;

Foreign Investments:

  1. Brazilian Central Bank (Regulations, Registrations and forms);
  2. Dividends, Royalties, Loans, etc;
  3. Capital Gains;
  4. Foreign Trade Rules (Import and Export transactions);

Mergers & Acquisitions;

  1. Corporate aspects;
  2. Tax implications;

Financial System:

  1. Organization,
  2. Newcomers,
  3. Competition,

Foreign Companies:

  1. Tax credit
  2. Withholding Tax;
  3. Financing issues;
  4. Permanent Establishment;
  5. Low-tax Jurisdictions (Tax Haven Countries);
  6. Tax treaties

Transfer Pricing

Industrial Property Rights

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New York Court of Appeals Issues Decision on STOLI Arrangement

Posted by William Byrnes on January 8, 2011


The Court of Appeals of New York—the state’s highest court— issued a decision as to whether New York’s insurable interest law was violated when an insured purchased a life insurance policy and immediately assigned the policy to a third party who did not have an insurable interest in the insured’s life.

The case involves an attorney who purchased $56.2 million in insurance coverage on his own life at the prompting of a STOLI promoter.  The policies were held by life insurance trusts that initially named the attorney’s adult children as beneficiaries of the trust, but the children immediately assigned their interests in the trusts to third party investors.  Investors paid all premiums.

When the attorney died, his wife refused to provide his death certificate to the investors.  She then sued the insurance companies and investors in federal district court, alleging that, because the policies were issued in violation of New York’s insurable interest law, policy proceeds should be paid to her instead of the investors.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

We invite your questions and comments by posting them or by calling the Panel of Experts.

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Insurance Agents Sued for Giving Bad Tax Advice

Posted by William Byrnes on January 7, 2011


Can life insurance agents and their carriers be held responsible for adverse tax consequences resulting from their advice to customers about transactions involving the policies agents recommend and sell?  A customer who relied on agents for tax advice concerning an annuity transaction believed the agents should be held to account for recommending a transaction that turned out to carry an unexpected tax bill.   She sued the Insurance Company in federal district court, claiming its agents committed fraud against her by failing to inform her of the tax consequences of an annuity rollover.

The plaintiff owned two annuities—valued at about $80,000 and $12,000—that she received in a divorce settlement.  She contacted the insurance company to find out her options for rolling the annuities over into one policy. Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

We invite your questions and comments by posting them or by calling the Panel of Experts.

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Life Insurance: Iron-Clad Asset Protection or Chink in the Armor?

Posted by William Byrnes on January 6, 2011


Life insurance is often touted as an iron-clad asset protection vehicle since many states exempt life insurance policies from attachment by an insured’s creditors.  Life insurance can even provide limited asset protection in bankruptcy.

But life insurance is not a foolproof method of protecting family assets from all creditors, as illustrated by a recent U.S. District Court case.  In that case, an insured sued his insurance company and the IRS after the insurance company paid over the cash value of a life insurance policy to the IRS to satisfy a tax levy.  The insured’s wife and daughter were the beneficiaries of the life insurance policy, which would have shielded the policy from creditors in many states, including his.   Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of asset protection in Advisor’s Journal, see Domestic Asset Protection Trusts: New Chart Ranks the States (CC 10-30).

For in-depth analysis of asset protection, see Advisor’s Main Library: G—Domestic Asset Protection Trusts.

We invite your questions and comments by posting them below or by calling the Panel of Experts.

 

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Estate Asks Supreme Court to Consider GST Tax Grandfathering Exemption

Posted by William Byrnes on January 5, 2011


An estate has asked the U.S. Supreme Court to consider whether the GST tax “grandfathering exemption” is ambiguous.  Two circuit courts of appeal have held that the statute is ambiguous while another two circuits hold that it is plain and unambiguous.

The Supreme Court is being asked to settle the split between the circuits.

The Generation Skipping Trusts

A generation skipping trust is a trust designed to shift property from one generation to another without passing the property through an intervening generation—e.g. a trust that transfers property from grandparents to their grandchildren.  Generally the “child beneficiaries” (children of the grantor) take only an income interest in the trust with grandchildren taking a remainder interest in the trust.  When the child beneficiaries die, trust assets will be transferred to the grandchildren.  Assuming the child beneficiaries took only an income interest in the trust and did not hold any incidents of ownership in the trust, the trust will not be included in the children’s estates when they die.

So, for example, if Grandfather funds a trust will for $5 million, naming his three adult children as income beneficiaries and his grandchildren as remainder beneficiaries, the trust is a generation skipping trust.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of the generation skipping transfer tax, see Advisor’s Main Library: Section 2.1 A—Generation Skipping Transfers Explained

We invite your questions and comments by posting them below or by calling the Panel of Experts.

 

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The National Health Care Bill Invoice

Posted by William Byrnes on January 4, 2011


Barack Obama signing the Patient Protection an...

Image via Wikipedia

Why is this Topic Important to Wealth Managers? Reviews the National Health Care Legislation’s revenues and expense provisions.  Discusses one area in particular where high income earners are subject to additional tax liability provided by the new law.

There are many new questions being raised by the national health care legislation that was passed into law earlier this year.  The Patient Protection and Affordable Care Act[1] and the, Health Care and Education Reconciliation Act of 2010,[2] created a number of significant changes to the landscape of the health care system in the United States.  The total cost of the program, is estimated at approximately $356 Billion dollars over the ten year period from 2010-2019. [3]However, revenue projections from taxes incorporated into the legislation are actually estimated upwards of $437 Billion dollars over that same ten year period. [4]

Now that we can reasonably be assured the health care bill’s cost is properly allocated and encumbered, let’s see how and where the revenue generating provisions will affect American taxpayers.

The largest single line item that will contribute to the funding of the health care legislation is a new surtax for Medicare.  Estimates that over $200 billion will be raised over 10 years, is a burden carried by only a small percentage of high income taxpayers, estimated at approximately the top 2% of all taxpayers, or those taxpayers who will earn more than $200,000 or $250,000 filing jointly. [5] This means approximately 98% of the population will not be required to contribute to the new surtax with regards to Medicare.  To read this article excerpted above, please access www.AdvisorFYI.com

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The Macroeconomic Effects of the Bush Tax Cuts

Posted by William Byrnes on January 3, 2011


Why is this Topic Important to Wealth Managers? Discusses and examines some long-term implications on the economy, through a macroeconomic perspective, of the Bush Tax Cuts.  Examines financial data spanning over a decade to help wealth managers converse on current economic topics.

A recent report examined certain major economic indicators in relation to the Bush tax cuts.  These indicators, in total, showed a negative overall effect that the Bush tax cuts had on the economy.  The below chart presents common economic gauges before and after the tax cuts (which first occurred in 2001 and 2002).

To read this article excerpted above, please access www.AdvisorFYI.com

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