William Byrnes' Tax, Wealth, and Risk Intelligence

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

Archive for the ‘Uncategorized’ Category

Pandora Papers

Posted by William Byrnes on October 13, 2021


Like many of my subscribers, I’ve been following the Pandora Papers and the previous ICIJ releases (Panama papers, Bermuda-Paradise papers, Lux-Leaks et al..). Read the latest Pandora series of articles of the ICIJ here.

Some of the ICIJ writeups of the stolen documents are sensationalism, some are shocking, some surprising and thus truly shocking, and some are just salacious like a John Grisham novel (but a fun read if you like Grisham novels).

While I am strongly bothered by stolen confidential (by law) documents being glorified (though the relevant law of confidentiality of one jurisdiction is rarely relevant for another jurisdiction), the challenge is that if the confidential documents include information about corruption and other crimes then the confidentiality is waived (and the document drafter is may be part of the conspiracy to commit the crime). Then the ‘informant’ of the papers becomes a ‘whistleblower’ and should be rewarded. The challenge is: who is to decide which documents tend toward whistleblower-like and which tend toward just stolen legal-protected confidential papers that while salacious are really publicly newsworthy (maybe to TMZ)?

We all support the fundamental need for the free press to publish. But is the ICIJ the best positioned to decide the question of what papers may include crimes (and what may not)? I trust the ICIJ to bring to light these stories regardless of the pressure not to (thank goodness the Pentagon Papers were published by example), but journalists are not necessarily experts in the area of writing. I hope that the ICIJ has brought on board for vetting the trove of information a panel of experts that are able to advise on these issues (and probably has done as I think that would be best practice for journalism).

What I think would be interesting is for the ICIJ to keep a running tab on the number of investigations and audits (as best it can gather such information) that each trove of documents (Panama, Lux, Paradise/Bermuda, Pandora, etc) leads to on a country by country basis, and the outcomes (as best ICIJ can gather such information). Are countries acting on such information? For the U.S., are banks meeting their FATCA compliance requirements?

Anyway, glad the ICIJ has put together such a large and robust effort, especially as it regards corruption, sometimes at threat of life in some countries, and we should support the organization.

Transfer Pricing Risk Management Zoom Team-Based Case Studies Start Jan 19, run until May

Course Topics and Calendar

Week 1 January 17 Arm’s Length Standard case study by Dr. Bruno da Silva

Jan 18 Tuesday at 9am – 10:30am (2-minute student introductions, orientation to teamwork and case studies, expectations and obligations regarding participation asynchronously or synchronously, discuss the syllabus, set up first-week case study)

Friday at 9am – 10:30am (presentations, peer feedback)

Week 2 Jan 25: CUP & Comparables, Eden Hofert – the Christmas Tree case (Canadian)/Compaq by Dr. Lorraine Eden

Jan 26 Tuesday at 9am – 10:00am (2-minute student introductions, orientation to teamwork and case studies, expectations and obligations regarding participation asynchronously or synchronously, discuss syllabus, set up first week case study)

Jan 29 Friday at 9am – 10:30 (presentations, peer feedback)

Week 3 Jan 31: Cost Plus & Resale Minus (Byrnes’ Starbucks case study) by Dr. George Salis

Feb 1 Tuesday at 9am – 10:00am

second session at 9am – 10:30 (presentations, feedback)

  • Watch background and overview videos of big data & econometrics as it is used in transfer pricing.
  • Read textbook Chapter 7 then read chapter 6.
  • Contrast the analysis within the Cost Plus Method and Resale Minus Method cases.
  • Each team has a stakeholder role in Byrnes’ case study of Starbucks cost inclusion and exclusion, agriculture supply chain, and coffee global value chain.

Week 4 Feb 7: Comparable Profits Method & TNMM by Dr. George Salis

Feb 8 Tuesday at 9am – 10:00am (discussion about Byrnes’ case study and the CPM)

second session at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 8 and 9.
  • Watch second set of videos of big data & econometrics.
  • Review the CPM/TNMM examples.
  • Teams prepare the Case Study.

Week 5 Feb 14: functional analysis & global value chain, profit split methods by Dr. George Salis

Feb 15 Tuesday at 9am – 10:00am (discussion about Byrnes’ case study and the CPM, GVC)

second session at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 11 and 12, skim chapters 97 and 98
  • Watch videos about FA and GVC.
  • Review the GVC examples (chapters from textbook regarding coffee, technology, tobacco).
  • Team’s prepare the Case Study.

Week 6 Feb 21 Best Method – Snowin’ and Blowin’ case study by Dr. Lorraine Eden

Feb 22 Tuesday at 9am – 10:30am

Feb 25 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 15 and 16
  • Watch video.
  • Team’s prepare the Case Study.

Week 7 Feb 28 Capstone summation and tax risk technology presentations

March 1 Tuesday at 9am – 10:30am (counsel litigation discussion)

March 4 Friday at 9am – 10:30 (tech provider training)

March 7-11 Spring Break for distance education graduate programs

Week 1 of Course 2 (week 8 of both courses) March 14: Intangibles Royalty Rates CUT and CPM by Dr. Debora Talutto

March 15 Tuesday at 9am – 10:30am (counsel litigation discussion)

second session (presentations, peer feedback)

  • Read textbook chapter 10
  • Analyze the CUT cases
  • Case Study presentation

Week 9 March 21: Intangibles Buy In/Out Cost Sharing Arrangements, Platform Contribution Transactions by Dr. George Salis

March 22 Tuesday at 9am – 10:30am

second session (presentations, peer feedback)

  • Read textbook chapter 13
  • Analyze the CSA/PCT cases
  • Case Study presentations

Week 10 March 28: Digital; Unitary Apportionment; Pillar 1; EU State Aid

by Dr. Bruno da Silva dasilva.brunoaniceto@gmail.com

March 29 Tuesday at 9am – 10:30am

April 1 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 44 and 75
  • Review Pillar One
  • Case Study presentation

Week 11 April 4 Digital –Amazon, Internet of Things (IOT) by Dr. Lorraine Eden and Dr. Niraja Srinivasan

April 5 Tuesday at 9am – 10:30am

April 8 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read OECD Pillar 1 comment letters in the course folder
  • Read Lorraine Eden’s articles
  • Read Chapter 46

Week 12: April 11 Services by Hafiz Choudhury

April 12 Tuesday at 9am – 10:30am

April 15 Friday at 9am – 10:00 (presentations, peer feedback)

Week 13 April 18: Restructuring (and extractive industry experience) by Hafiz Choudhury

April 19 Tuesday at 9am – 10:30am

April 22 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 27, 43
  • In the second week, the investors find out that the state owned off take customer is not utilizing the full capacity of the FSRU

Week 14 April 25 Capstone presentations for comment letters

April 26 Tuesday at 9am – 10:30am

April 29 Friday at 9am – 10:00 (presentations, peer feedback)

  • Review past comment letter submissions
This image has an empty alt attribute; its file name is 500k-grad-group.jpg
Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!



Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence August 2, 2021

Posted by William Byrnes on August 2, 2021


This week’s newsletter offers the download to the Infrastructure Investment and Jobs Act of 2021 plus insight into different issues that may be important to clients who sponsor employee benefit plans. It’s time to file annual Form 5500—and this year, potential penalties for noncompliance may be higher than ever. We also offer analysis of the newly-popular retirement plan auto-enrollment features—and a reminder that small business clients may now benefit from a new post-SECURE Act tax credit for adopting the feature—as well as information about the ARPA pension relief law. Read on for more!

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

$1.2 Trillion Infrastructure Bill Released Sunday night (August 1, 2021)

The 2,702-page bi-partisan “Infrastructure Investment and Jobs Act of 2021” has been released by the Senate. The bill may be downloaded from the U.S. Senate website here. The bill contains approximately $550 billion of new project spending and carries over an additional $650 billion from previously funded projects for a total of over $1.2 trillion in infrastructure spending that will begin in 2021 and most end in 2026.

But the bill contains many energy provisions and excise taxes as well as fees that will impact all segments of the energy industry. These provisions include billions of dollars for the industry for expenditure and incentives for carbon capture; clean hydrogen R&D; nuclear; among others. By example, $500,000,000 is provided for clean hydrogen technology R&D (see page 1550 at section 40314). The excise taxes and fees include the extensions of the highway-related taxes, superfund excise taxes, and customs user fees.

The major tax reform provisions addressing estate and gift tax, capital gains, carried interests, real estate exchanges, retirement plans, and high-income earners have been reserved to the forthcoming yet-to-be-agreed/released Democratic reconciliation bill. However, the Infrastructure Investment and Jobs Act of 2021 contains some new tax provisions including:

  • Sec. 80501. Modification of automatic extension of certain deadlines in the case of taxpayers affected by Federally declared disasters.
  • Sec. 80502. Modifications of rules for postponing certain acts by reason of service in combat zone or contingency operation.
  • Sec. 80503. Tolling of time for filing a petition with the tax court.
  • Sec. 80504. Authority to postpone certain tax deadlines by reason of significant fires.
  • Sec. 80601. Modification of tax treatment of contributions to the capital of a corporation.
  • Sec. 80602. Extension of interest rate stabilization.
  • Sec. 80603. Information reporting for brokers and digital assets.
  • Sec. 80604. Termination of employee retention credit for employers subject to closure due to COVID–19.

The automatic extension for certain tax deadlines for Federally declared disasters addresses the situation of multiple declarations relating to a disaster area which are issued within a 60-day period. A separate 60-day period shall be determined with respect to each such declaration pursuant to the bill’s language.

The bill contains hundreds of not-obvious federal grants and contract opportunities for business. By example of one provision related to education and training of workers, section 401513 includes $10 million dollars for FY2022 for government grants of 50 percent of the cost to provide ‘career skills training’ to identify and involve in training programs target populations of individuals who would benefit from training and be actively involved in activities relating to energy efficiency and renewable energy industries; and the ability to help individuals achieve economic self-sufficiency. The program students must concurrently receive classroom instruction and on-the-job training for the purpose of obtaining an industry-related certification to install energy efficient buildings.

Look in your Tax Facts Online app for our continuing analysis of this bill, the tax reform in the reconciliation bill, and other weekly intelligence.

Reminder: It’s Time to File Form 5500 for Employee Benefit Plans

It’s that time of year again. The deadline for filing Form 5500 for health plans and retirement plans with the IRS and DOL is July 31 for most calendar-year plans. The deadline is seven months after the end of the plan year. However, clients who aren’t yet ready to file should be advised that they may obtain a filing extension of up to 2.5 months. Penalties for failure to file Form 5500 on time have increased in recent years—and can equal as much as $2,000 per day in some cases. The forms are used by the IRS and DOL to identify potential compliance issues, so small business clients with employment benefits offerings should be advised to prepare the forms carefully and expect scrutiny. Form 5500 is filed under the penalty of perjury—for the employer who signs the document, not the service provider who prepared the document. For more information on Form 5500 filing requirements and increased penalties under the SECURE Act, visit Tax Facts Online. Read More

Related Questions:

3774. What requirements apply to matching contributions in the context of a 401(k) safe harbor plan?

3777. What are the requirements for a SIMPLE 401(k) plan?

Auto-Enrollment Popularity Soars Post-COVID

According to recent surveys, the majority of workers who have been automatically enrolled in employer-sponsored retirement savings plan have indicated that they are pleased with the decision. On the other hand, only about 30 percent of U.S. employers currently provide an auto-enrollment option. When asked whether they hoped their employer would offer financial wellness programs to help them better understand savings options, 80 percent of employees surveyed answered “yes”. At least one version of the “SECURE Act 2.0” bill would require a minimum 3 percent auto-enrollment rate for most newly adopted 401(k)s. Under the existing SECURE Act, small business owners may be entitled to a tax credit for adopting a plan that automatically enrolls employees. For more information on the tax credit, visit Tax Facts Online. Read More

Related Questions:

8553. When does a taxpayer qualify for the tax credit for the elderly and the permanently and totally disabled and how is the credit computed?

8554. When is a taxpayer entitled to claim the child tax credit?

PBGC Issues Interim Guidance on ARPA Special Financial Assistance for Multiemployer Pension Plans

The PBGC issued an interim final rule implementing the special financial assistance (SFA) rule for multiemployer pension plans in the American Rescue Plan Act. Eligible plans may apply to receive a lump-sum payment from a new Treasury-backed PBGC fund. Under the new rules, eligible plans are entitled to amounts that are sufficient to pay all benefits for the next 30 years. According to the PBGC interpretation, that means sufficient funds to forestall insolvency through 2051 (but not thereafter). Plans are entitled to receive the difference between their obligations and resources for the period. Surprisingly, the PBGC rule provides that SFA funds will be taken into account when calculating a plan’s withdrawal liability. However, plans are required to use mass withdrawal interest rate assumptions published by the PBGC when calculating withdrawal liability until the later of (1) 10 years after the end of the year in which the plan received the SFA or (2) the time when the plan no longer holds SFA funds. For more information on multiemployer pension plan withdrawal liability, visit Tax Facts Online. Read More

Related Questions:

3740. Are there any limitations on a pension plan’s ability to reduce participant benefit levels under the Multiemployer Pension Reform Act of 2014?

3741. What procedures and notices are required in order for a pension plan to reduce participant benefit levels under the Multiemployer Pension Reform Act of 2014?

Wealth & Risk Management Studies for Industry Professionals

The Texas A&M graduate programs for risk management for areas like wealth management, tax risk management, financial risk, economic crimes, ESG risk, are accepting applications for fall. Over 500 candidates are currently enrolled in the graduate courses yet maximum enrollment per course section is maintained at 30 so that each student receives meaningful feedback throughout the course from the full-time academic and professional part-time faculty. Check out the graduate program here: https://law.tamu.edu/distance-education

Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Retirement Planning, Taxation, Uncategorized | Leave a Comment »

TaxFacts Intelligence June 24, 2021

Posted by William Byrnes on June 24, 2021


Both the Courts and the IRS have had a busy week. The Supreme Court rejected the latest challenge to the Affordable Care Act and the ACA remains the law of the land–although the next ACA challenge has already been filed in Texas. On the IRS side, we have a new online tool designed to help lower-income taxpayers take advantage of the advance child tax credit benefits for 2021. Read on to make sure you’re up to date on the latest news.

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Supreme Court Dismisses Latest ACA Challenge

In a 7-2 vote, the Supreme Court dismissed the latest challenge to the constitutionality of the Affordable Care Act (ACA). Rather than addressing the case on the merits, the Court determined that the plaintiffs did not have standing to sue–meaning that the plaintiffs had no legal right to launch the challenge in the first place. Because the individual mandate was reduced to $0 by the 2017 tax reform legislation, the plaintiffs would suffer no adverse consequences if they simply chose to not purchase health insurance. Therefore, there was no government action connected to their injury. However, yet another constitutional challenge to the ACA has already been filed. The next lawsuit challenges the law’s zero dollar coverage for preventative services–including vaccines, contraceptives and other preventative services. For more information on the ACA employer mandate, visit Tax Facts Online. Read More

Related Questions:

8845. How does an employer that has been in existence for less than one year determine whether it is subject to the ACA shared responsibility provisions?

8846. How does an employer that has a common owner with another employer determine whether it is subject to the ACA shared responsibility provisions?

Considerations for Resuming RMDs in 2021

The 2020 CARES Act suspended all RMD requirements for the 2020 tax year. That relief was not extended into 2021, although taxpayers have no obligation to “make up” their skipped 2020 RMDs. However, many taxpayers may be surprised to see that the amount they’re required to withdraw in 2021 is larger than distributions prior to the pandemic. The amount of a client’s RMD is determined based upon their account balance and life expectancy factor. Strong market performance means that many clients will have larger retirement account balances, meaning that the percentage of withdrawal required has also increased. Taxpayers who reached age 70½ in 2019 are required to resume taking RMDs. However, taxpayers who had not reached age 70½ in 2019 are not required to begin RMDs until April 1 of the year after they reach age 72. These RMD rules apply to traditional retirement accounts and inherited accounts—but not to Roth IRAs. For more information on the RMD rules, visit Tax Facts Online. Read More

Related Questions:

3683. What can be done before the IRA required beginning date in order to minimize required minimum distributions?

3684. How are minimum distribution requirements calculated if an individual owns more than one IRA?

IRS Releases New Online Tool to Help Taxpayers Register for Monthly Child Tax Credit Payments

The IRS has launched a new online tool to help taxpayers who may not be required to file a federal income tax return register to receive installment payments for the 2021 child tax credit. The tool provides a way for eligible people who don’t make enough income to have an income tax return-filing obligation to provide the IRS the basic information to figure and issue their Advance Child Tax Credit payments beginning next month. Eligible individuals can visit IRS.gov to access the tool and provide their name, address, Social Security numbers and direct deposit information so that the IRS can deposit their installment payments. Taxpayers who have already filed a return are not required to take any other action to receive installment payments of the child tax credit. The IRS release noted that these are the only two options to sign up for advance payment benefits–any other method offered is a scam. For more information on the child tax credit in 2021, visit Tax Facts Online. Read More

Related Questions:

756. What credits may be taken against the tax?

757. Who qualifies for the tax credit for the elderly and the permanently and totally disabled and how is the credit computed?

758. Who qualifies for the child tax credit?

Wealth & Risk Management Studies for Industry Professionals

The Texas A&M graduate programs for risk management for areas like wealth management, tax risk management, financial risk, economic crimes, ESG risk, are accepting applications for fall. Over 500 candidates are currently enrolled in the graduate courses yet maximum enrollment per course section is maintained at 30 so that each student receives meaningful feedback throughout the course from the full-time academic and professional part-time faculty. Check out the graduate program here: https://law.tamu.edu/distance-education

Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Uncategorized | Leave a Comment »

TaxFacts Alert June 21, 2021 for wealth managers representing NCAA athletes

Posted by William Byrnes on June 22, 2021


The Supreme Court upheld, in a unanimous decision of all nine Justices, the District Court’s injunction against the NCAA. The injunction allows the NCAA to maintain rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. BUT the injunction stops as unlawful NCAA rules limiting the education-related benefits schools may make available to student-athletes.

Colleges and universities across the country have leveraged sports to bring in revenue, attract attention, boost enrollment, and raise money from alumni. That profitable enterprise relies on “amateur” student athletes who compete under horizontal restraints that restrict how the schools may compensate them for their play. The National Collegiate
Athletic Association (NCAA) issues and enforces these rules, which restrict compensation for student-athletes in various ways. These rules depress compensation for at least some student-athletes below what a competitive market would yield.

Against this backdrop, current and former student-athletes brought this antitrust lawsuit challenging the NCAA’s restrictions on compensation. Specifically, they alleged that the NCAA’s rules violate §1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.”

The Supreme Court upheld, in a unanimous decision of all nine Justices, the District Court’s injunction against the NCAA. The injunction allows the NCAA to maintain rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. BUT the injunction stops as unlawful NCAA rules limiting the education-related benefits schools may make available to student-athletes.

Regarding today’s Supreme Court decision (entire 45-page opinion is available here), first it was expected by industry analysts and court watchers after the Court’s oral arguments March 31, 2021 with an foretelling Q&A session. We are already preparing Tax Facts Intelligence and Q&A for the books/app for financial advisors to leverage the new athletics marketplace and revenue streams and best represent their clients. I know of financial advisory firms that as of Tuesday will be hanging up a ‘sports agent financial advisor shingle’ and trolling SEC high schools, especially Texas, recruiting for tomorrow’s top collegiate athletes to sign up the talent.

Why not? That is how the market already works outside the USA for soccer (what everyone else calls football) and to a lesser extent baseball (albeit not nearly as popular as soccer so we hear much less about baseball camps for Dominican rising star 12 year old players like we hear about for the 12-year-old next Brazilian Pele). 

Interaction with social media followers is the currency of this new era for young athletes and can lead to a couple of hundred thousand during college for the star players, and even millions for the SEC Heisman level types. But, not having the ultimate talent and thus top sports ranking in a field does not also mean that an interactive social media following of millions cannot be created. The Russian tennis star Anna Kournikova, case in point, though she was just a little too early for the modern social media movement. Johnny Manziel, another case in point: had this decision been in place already and had he contracted a great wealth management advisor (thus great personal agent) with social media and promotional background, his life would have been very financially comfortable before his drug abuse ruined him in the pro league (talent or not aside). He certainly could have afforded a stint at the Betty Ford clinic to sober up and clean out.

Via the advice of a great wealth manager, a personality can be leveraged into millions of dollars before the athlete graduates university, or at least hundreds of thousands.

It is clear from the unanimous ruling and the judges questioning and opinions that this is not a restrictive ruling. NCAA proponents are trying to spin that some restriction remains allowable like direct payments to players. But all it takes is one school that has money that wants to break into the big league to beat ‘Bama and LSU. Kind to think of it, I know that school… and don’t think Bama and LSU are just going to let that happen. Let real market competition begin!

An interesting question that I think will lead to much future litigation: How this ruling plays out throughout all sports regarding Title IX (such as a school spending money on men’s football, basketball, baseball, must by federal and state law also spend an equal amount on the equivalent sports for women). I am for market opportunity and thus I think it is an exciting preposition that opportunities will open up in all sports for athletes and wealth manager advisors alike (to negotiate the optimum financial rewards for the athletes).

Also, if athletic programs, such as golf or hockey, are forced to ‘come up’ with additional dollars to attract the star players to remain competitive, will the programs themselves start to think like SEC football (the most profitable league and sport) to generate additional income to meet the demands of staying or obtaining high ranking?  After all, whether it be academics or sports, it is all about ranking. Deans and Provosts rise and fall based on academic rankings. Coaches based on league rankings and national championships. Sports rankings and academic rankings have connection via alumni fundraising as of course voter university name / brand awareness and recognition. Basketball in particular through March madness has supported the academic rankings of universities though academic and sports ranking are not directly connected in voting and evaluation scoring, the indirect connect in undeniable.

This Supreme Court decision is great news for wealth managers / financial advisors who subscribe to Tax Facts because we are well-positioned to enter the new market of clientele representation created for the high school athlete seeking to share in the value that the athlete creates for a university and for the athlete through social media leveraged revenues. Understanding that “value”, generating more of it, and ‘sharing’ in the value is the bread and butter of a holistic wealth manager’s representation of athletes and entertainers.

Texas A&M already has education in this regard for our wealth management students and JDs who focus on such emerging artist/athlete/entertainer representation. We even have a law clinic for this emerging artists run by JD students supervised by my colleague that joined me at Texas A&M from our former law school in SoCal.

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience: Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.

  • all Tax Facts books
  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence June 17, 2021

Posted by William Byrnes on June 22, 2021


Taxpayers have a number of valuable tax planning opportunities in 2021. One of the recent changes allows more taxpayers to take advantage of the often-overlooked child and dependent care tax credit for work-related childcare expenses. Another lets clients leverage historically low tax rates to mitigate the impact of future estate tax changes. Are your clients taking advantage of these and other limited-time planning strategies?

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

IRS Issues FAQ on Child and Dependent Care Tax Credit for 2021

Last week, the IRS released new FAQ to help taxpayers understand the expanded child and dependent care tax credit in 2021. For 2021, eligible taxpayers can claim qualifying work-related expenses up to $8,000 for one qualifying person, or $16,000 for two or more qualifying persons (up from $3,000 and $6,000 in prior years). To claim the credit, taxpayers are also required to have earnings. The FAQ is clear that the amount of qualifying work-related expenses claimed cannot exceed the taxpayer’s earnings. Additionally, the taxpayer must subtract employer-provided dependent care benefits, including those provided through a flexible spending account, from total work-related expenses when calculating the credit. As in prior years, the more a taxpayer earns, the lower the percentage of work-related expenses that are taken into account in determining the credit. However, the credit is fully refundable for the first time in 2021. This means eligible taxpayers can receive the credit even if they owe no federal income tax. To be eligible for the refundable credit, a taxpayer (or the taxpayer’s spouse on a joint return) must reside in the United States for more than half of the year. For more information on the credit, visit Tax Facts Online. Read More

Related Questions:

757. Who qualifies for the tax credit for the elderly and the permanently and totally disabled and how is the credit computed?

758. Who qualifies for the child tax credit?

Roth IRA Planning Now for Higher Estate Taxes Later

With tax rates at historic lows, many clients have already evaluated the Roth conversion strategy as a retirement income tax minimization strategy. However, high net worth clients who anticipate estate tax liability in the future might also be attracted to the Roth strategy. IRAs are generally included in calculating the taxable estate. If the estate is subject to estate taxes, that reduces the value of assets left to beneficiaries. Once a beneficiary receives the IRA (after taxes), they generally must deplete the funds within 10 years under the SECURE Act. That means beneficiaries will be required to quickly pay income taxes after the estate taxes have been levied. Distributions from inherited Roth IRAs are not taxable. Further, because the client has paid income taxes during life, they’ve presumably reduced the value of the taxable estate in the process. Given current uncertainties about Biden’s estate tax plans, high net worth clients may be particularly interested in this strategy. For more information on Roth conversions, visit Tax Facts Online. Read More

Related Questions:

3661. Can a taxpayer whose income level exceeds the limitations for Roth IRA contributions maintain a Roth IRA?

3662. Can an individual roll over or convert a traditional IRA or other eligible retirement plan into a Roth IRA?

3664. Can an individual correct a Roth conversion? What is a recharacterization?

RMD Rules Might See Big Changes in Next Round of Retirement Reform

The latest round of retirement reform provisions might include big changes for required minimum distributions (RMDs). Most taxpayers must start taking distributions from traditional retirement accounts when they turn 72. Under the new proposal, the RMD beginning age would increase to age 75. Further, the law would exempt taxpayers with account balances under $100,000 from the RMD rules entirely. In other words, those taxpayers would not be required to take annual distributions from 401(k)s and IRAs. The law would also reduce the penalty for incorrect RMDs from 50 percent of the shortfall amount to 25 percent—and as low as 10 percent if the taxpayer took advantage of the IRS self-correction procedures to correct the mistake. Access to qualified longevity annuities would also be expanded—giving taxpayers an option to minimize their RMDs in future years by purchasing a deferred annuity within their retirement plan. For more information on the current RMD rules, visit Tax Facts Online. Read More

Related Questions:

3683. What can be done before the IRA required beginning date in order to minimize required minimum distributions?

3684. How are minimum distribution requirements calculated if an individual owns more than one IRA?

The Texas A&M graduate programs for risk management for areas like wealth management, tax risk management, financial risk, economic crimes, ESG risk, is accepting applications for fall. Over 500 candidates are currently enrolled in the graduate courses yet maximum enrollment per course section is maintained at 30 so that each student receives meaningful feedback throughout the course from the fulltime academic and professional part-time faculty. Check out the tax risk management program here as an example of the curriculum and courses: https://law.tamu.edu/distance-education/international-tax

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Uncategorized | Leave a Comment »

International Tax Law and Policy – Certificate starts August 23rd (online)

Posted by William Byrnes on June 15, 2021


The Certificate in International Tax Law and Policy is designed for international tax professionals (including accountants, economists, and financial leaders) to deliver specialized legal training for an in-depth understanding of the international tax risk management field’s changing complex legal aspects. 

This graduate-level Certificate in International Tax Law and Policy will prepare new and experienced international tax professionals to effectively address complex legal and policy challenges with respect to global tax risk. Specifically, participants will be exposed to (i) important U.S. and international laws, regulations and policies in the international tax risk management field, and (ii) advances in theory and practice, as well as applications of law, regulation and policies through case studies through a module-based structure. Individuals who complete the program will be able to synthesize scenarios, practice, and legal regulation in the international tax risk management field, providing analysis or judgments for consideration to organizational leadership with a nuanced perspective.

The Certificate in International Tax Law and Policy provides an industry-responsive curriculum with a focus on the legal aspects of global tax risk as it applies to policies, business, and economic factors. Courses are offered by asynchronous distance learning to provide a flexible schedule for working professionals. Interactive coursework includes case study assignments and regular interaction with classmates through zoom meetings, videos, audio casts, chat rooms, discussion boards, and group breakout sessions.  For more information, please go to law.tamu.edu.

Select three of the following courses:

  • LAW 625 Transfer Pricing l – Methods, Econometrics, and Tangibles
  • LAW 626 Transfer Pricing II – Services and Intangibles
  • LAW 627 International Tax Risk Management I – Data, Analytics, and Technology
  • LAW 647 International Taxation and Treaties I
  • LAW 649 International Taxation and Treaties II
  • LAW 719 Domestic Tax Systems Risk Management
  • LAW 720 International Tax Risk Management II – Data, Analytics, and Technology

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence June 14, 2021

Posted by William Byrnes on June 14, 2021


The Texas A&M graduate programs for risk management for areas like wealth management, tax risk management, financial risk, economic crimes, ESG risk, is accepting applications for fall. Over 500 candidates are currently enrolled in the graduate courses yet maximum enrollment per course section is maintained at 30 so that each student receives meaningful feedback throughout the course from the fulltime academic and professional part-time faculty. Check out the tax risk management program here as an example of the curriculum and courses: https://law.tamu.edu/distance-education/international-tax

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

ARPA Expands Child Tax Credit for 2021 

The ARPA expanded and enhanced the child tax credit for the 2021 tax year.  For tax years beginning after December 31, 2020 and before January 1, 2022, the child tax credit amount increased from $2,000 to $3,000 per qualifying child.  The credit amount is also fully refundable for the 2021 tax year only (under TCJA, $1,400 was refundable).  The $3,000 amount is also further increased to $3,600 per qualifying child under the age of six years old as of December 31, 2021.  For more information on the child tax credit, visit Tax Facts Online. Read More

Eligibility for 2021 Child Tax Credit and Advance Child Tax Credit Payments

A taxpayer can receive advance Child Tax Credit payments even if earning zero income in 2020 or 2021, if eligible for the credit otherwise. 

IRS online tool to help low-income families register for monthly Child Tax Credit payments

The IRS unveiled an online Non-filer Sign-up tool designed to help eligible families who don’t normally file tax returns register for the monthly Advance Child Tax Credit payments. The IRS will begin disbursing advance Child Tax Credit payments on July 15. After that, payments will be disbursed on a monthly basis through December 2021. In June 2021, the IRS will send each eligible taxpayer a “Letter 6417” that informs the amount of the estimated Child Tax Credit monthly payments.

This tool, an update of last year’s IRS Non-filers tool, is also designed to help eligible individuals who don’t normally file income tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

The IRS will automatically determine eligibility for most families

Eligible families who already filed or plan to file 2019 or 2020 income tax returns should not use this tool. Once the IRS processes their 2019 or 2020 tax return, the information will be used to determine eligibility and issue advance payments. Families who want to claim other tax benefits, such as the Earned Income Tax Credit for low- and moderate-income families, should not use this tool and instead file a regular tax return.

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence June 3, 2021

Posted by William Byrnes on June 4, 2021


Happy Summer, readers! This week’s newsletter is dedicated to helping clients—both employers and employees—maximize their health-related benefits and tax credits (even when those benefits are only available for a limited time). Do you have questions about situation-specific COBRA eligibility, little-known HSA tricks or the ever-evolving EEOC vaccine guidance for employers? Read on to see if we’ve got the answers this week. 

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

EEOC Updates Vaccine Incentive Guidance for Employers

The EEOC has posted an update to its vaccine guidance for employers. Under the new guidance, employers are permitted to offer incentives to employees who voluntarily provide confirmation that they have received the COVID-19 vaccine from a third party. Requesting these confirmations will not be treated as disability-related inquiries under the ADA or requests for genetic information under GINA. Employers should be aware that these incentives are treated differently than incentives offered for employer-provided vaccines. If the incentive is actually for the purpose of encouraging an employee to receive the vaccine from the employer or an agent, employers should continue to use caution against offering an incentive that can be construed as “coercive”. That’s because employees must provide certain health information before receiving the vaccine—and employees should not be pressured to disclose medical information to their employers. For more information on the available tax credit for employers who offer paid vaccine leave to employees, visit Tax Facts Online. Read More

Related Questions:

773. What happens when the employee has exhausted the paid time off under the Families First Coronavirus Response Act (FFCRA)? Does the employee have the right to return to work?

8895. What is a “de minimis” fringe benefit?

Am I Eligible for Federal COBRA Assistance? Case-Specific IRS Guidance

The IRS guidance on the availability and implementation of the ARPA 100 percent COBRA premium assistance provides some useful guidance on specific scenarios that employers and employees may now be facing. Generally, individuals remain assistance-eligible individuals (AEIs) during eligibility waiting periods if the period overlaps with the subsidy period. For example, the individual will be an AEI during periods outside the open enrollment period for a spouse’s employer-sponsored health coverage. Employers who change health plan options must place the AEI in the plan that’s most similar to their pre-termination plan, even if it’s more expensive (and the 100 percent subsidy will continue to apply). Importantly, employers who are no longer covered by federal COBRA requirements may still be required to advance the subsidy (for example, if the employer terminated employees so that the federal rules no longer apply). If the employer was subject to COBRA when the individual experienced the reduction in hours or involuntary termination, the employer must offer the subsidy. For more information on the COBRA premium subsidy, visit Tax Facts Online. Read More

Related Questions:

0121. COBRA Subsidies Back on the Table for 2021

371. When must an election to receive COBRA continuation coverage be made?

Maximizing Post-Pandemic HSA Benefits

HSAs and other tax-preferred health benefits have taken on a whole new meaning in the wake of the pandemic. It’s important that clients fully understand the rules so that they aren’t leaving valuable benefits on the table. In 2022, annual HSA contribution limits will rise to $3,650 for self-only coverage or $7,300 for family HDHP coverage. (HDHPs are health insurance plans that have a minimum annual deductible of $1,400 for self-only coverage ($2,800 for family coverage).). Taxpayers aged 55 and up can contribute an extra $1,000 per year. Taxpayers don’t have to fund an employer-sponsored HSA. Even if the client has been laid off or furloughed, clients with HDHP coverage can open an HSA at their bank and fund the account independently. Additionally, clients who have lost their jobs continue to have access to the funds in their old HSA, and can even transfer that HSA to a new provider. In other words, as long as the client remains covered by a HDHP, there is no “use it or lose it” rule. The funds simply roll over from year to year and continue to grow tax-free. For 2021, that same benefit has been extended to health FSAs. With an HSA, however, the rollover benefit is even more substantial because once the participant reaches age 65, the account can be accessed without penalty for any reason—much like a typical retirement account. The funds are simply taxed as ordinary income upon withdrawal, like a 401(k) or IRA. For more information on HSA advantages, visit Tax Facts Online. Read More

Related Questions:

388. What is a Health Savings Account (HSA) and how can an HSA be established?

391. Who is an eligible individual for purposes of a Health Savings Account (HSA)?

DOL Released Final Rule on Considering Non-Financial Factors in Selecting Retirement Plan Investments The DOL released a final rule on whether environmental, social and governance (ESG) factors can be considered when retirement plan fiduciaries are selecting plan investments without violating their fiduciary duties.  Plan fiduciaries are obligated to act solely in the interest of plan participants and beneficiaries when making investment decisions.  The final rule confirms the DOL position that plan fiduciaries must select investments based on pecuniary, financial factors.  Fiduciaries are required to compare reasonably available investment alternatives–but are not required to scour the markets.  The rule also includes an “all things being equal test”–meaning that fiduciaries are not prohibited from considering or selecting investments that promote or support non-pecuniary goals, provided that they satisfy their duties of prudence and loyalty in making the selection.  For more information, visit Tax Facts Online. Read More We are curious for your feedback on the rule and its impact on your function as a financial advisor, if any? Email me at williambyrnes-gmail

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Posted in Uncategorized | Tagged: , , , | Leave a Comment »

Transfer Pricing Risk Management Zoom-Based Case Studies Start Tuesday, Jan 18, run until May 5 (graduation May 6 on campus)

Posted by William Byrnes on January 8, 2021


Based on weekly case studies created by the faculty, supported by reading/text materials, pre-recorded videos with PPTs, and audio podcast files made by the faculty – twice-weekly Zoom (optional) live sessions (recorded for those unable to attend) of 90 – 120 minutes wherein students may work with teams through the case studies generally from an assigned stakeholder perspective. Access to the extensive Texas A&M library for case study research includes by example: Lexis, Westlaw, IBFD, Kluwer-Cheetah, Thomson OneSource, BvD (Moodys), S&P CapIQ, FITCH, among several others. Apply for Texas A&M’s courses here.

Professor William Byrnes’ leverages the expertise of weekly case study experts that draw from a variety of disciplines including accounting, economics, finance, international business, management, and law. The textbook is authored by Professor William Byrnes and provided within the course [William Byrnes, Practical Guide to Transfer Pricing, 4th ed, 2022 version, published by Matthew Bender via LexisNexis and available in the law library in hardcopy].

Transfer pricing is the valuation of cross-border transactions between units of a multinational enterprise. This course introduces students to both theoretical and practical aspects of transfer pricing. This course deep dives into the legal issues (regulations and jurisprudence); accounting systems and variances among (managerial, financial, tax, and public accounting); financial data analytics through the lens of economic methods and profit level indicators; functional analysis and global value chain; contrasts with the OECD Transfer Pricing Guidelines and UN Transfer Pricing Manual. Each week, an industry-based case study is undertaken in a team-based learning approach of student groups generally consisting of three team members each.  The industry case studies include, as examples, agriculture (coffee supply chain), technology services, and petroleum.

Part I and Part II of this course both address strategy, compliance, and risk management.  Transfer Pricing Part I focuses on the topics of comparability, the transfer pricing methods, functional analysis and global value chain analysis, and transfer pricing analysis for tangibles. Transfer Pricing Part II focuses on the transfer pricing methods and analysis for intangibles and for services. Topics more specifically that are addressed in this course via its textbook, video and audio lectures, weekly team-based case studies, and weekly live sessions, include the arm’s length standard, comparability analysis, risk analysis for tangibles and intangibles, transactional methods (CUP, CUT, Cost Plus, Resale Minus, Commodity), profit methods (e.g. comparable profits method, transactional net margin method, profit level indicators, key performance indicators, commensurate with income), functional analysis (supply chain, global value chain analysis, DAEMPE functions), industry economic data gathering and analysis, cost-sharing arrangements, profit splits and residuals, platform contributions, and safe harbors.  Documentation, advance pricing agreement procedures, and mutual agreement procedures are topics addressed in the courses of “International Tax Risk Management I” and of “FATCA, CRS, and CbCR”. Apply for Texas A&M’s courses here.

Course Topics and Calendar

Week 1 January 17 Arm’s Length Standard case study by Dr. Bruno da Silva

Jan 18 Tuesday at 9am – 10:30am (2-minute student introductions, orientation to teamwork and case studies, expectations and obligations regarding participation asynchronously or synchronously, discuss the syllabus, set up first-week case study)

Friday at 9am – 10:30am (presentations, peer feedback)

Week 2 Jan 25: CUP & Comparables, Eden Hofert – the Christmas Tree case (Canadian)/Compaq by Dr. Lorraine Eden

Jan 26 Tuesday at 9am – 10:00am (2-minute student introductions, orientation to teamwork and case studies, expectations and obligations regarding participation asynchronously or synchronously, discuss syllabus, set up first week case study)

Jan 29 Friday at 9am – 10:30 (presentations, peer feedback)

Week 3 Jan 31: Cost Plus & Resale Minus (Byrnes’ Starbucks case study) by Dr. George Salis

Feb 1 Tuesday at 9am – 10:00am

second session at 9am – 10:30 (presentations, feedback)

  • Watch background and overview videos of big data & econometrics as it is used in transfer pricing.
  • Read textbook Chapter 7 then read chapter 6.
  • Contrast the analysis within the Cost Plus Method and Resale Minus Method cases.
  • Each team has a stakeholder role in Byrnes’ case study of Starbucks cost inclusion and exclusion, agriculture supply chain, and coffee global value chain.

Week 4 Feb 7: Comparable Profits Method & TNMM by Dr. George Salis

Feb 8 Tuesday at 9am – 10:00am (discussion about Byrnes’ case study and the CPM)

second session at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 8 and 9.
  • Watch second set of videos of big data & econometrics.
  • Review the CPM/TNMM examples.
  • Teams prepare the Case Study.

Week 5 Feb 14: functional analysis & global value chain, profit split methods by Dr. George Salis

Feb 15 Tuesday at 9am – 10:00am (discussion about Byrnes’ case study and the CPM, GVC)

second session at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 11 and 12, skim chapters 97 and 98
  • Watch videos about FA and GVC.
  • Review the GVC examples (chapters from textbook regarding coffee, technology, tobacco).
  • Team’s prepare the Case Study.

Week 6 Feb 21 Best Method – Snowin’ and Blowin’ case study by Dr. Lorraine Eden

Feb 22 Tuesday at 9am – 10:30am

Feb 25 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 15 and 16
  • Watch video.
  • Team’s prepare the Case Study.

Week 7 Feb 28 Capstone summation and tax risk technology presentations

March 1 Tuesday at 9am – 10:30am (counsel litigation discussion)

March 4 Friday at 9am – 10:30 (tech provider training)

March 7-11 Spring Break for distance education graduate programs

Week 1 of Course 2 (week 8 of both courses) March 14: Intangibles Royalty Rates CUT and CPM by Dr. Debora Talutto

March 15 Tuesday at 9am – 10:30am (counsel litigation discussion)

second session (presentations, peer feedback)

  • Read textbook chapter 10
  • Analyze the CUT cases
  • Case Study presentation

Week 9 March 21: Intangibles Buy In/Out Cost Sharing Arrangements, Platform Contribution Transactions by Dr. George Salis

March 22 Tuesday at 9am – 10:30am

second session (presentations, peer feedback)

  • Read textbook chapter 13
  • Analyze the CSA/PCT cases
  • Case Study presentations

Week 10 March 28: Digital; Unitary Apportionment; Pillar 1; EU State Aid

by Dr. Bruno da Silva dasilva.brunoaniceto@gmail.com

March 29 Tuesday at 9am – 10:30am

April 1 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 44 and 75
  • Review Pillar One
  • Case Study presentation

Week 11 April 4 Digital –Amazon, Internet of Things (IOT) by Dr. Lorraine Eden and Dr. Niraja Srinivasan

April 5 Tuesday at 9am – 10:30am

April 8 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read OECD Pillar 1 comment letters in the course folder
  • Read Lorraine Eden’s articles
  • Read Chapter 46

Week 12: April 11 Services by Hafiz Choudhury

April 12 Tuesday at 9am – 10:30am

April 15 Friday at 9am – 10:00 (presentations, peer feedback)

Week 13 April 18: Restructuring (and extractive industry experience) by Hafiz Choudhury

April 19 Tuesday at 9am – 10:30am

April 22 Friday at 9am – 10:30 (presentations, peer feedback)

  • Read textbook chapters 27, 43
  • In the second week, the investors find out that the state owned off take customer is not utilizing the full capacity of the FSRU

Week 14 April 25 Capstone presentations for comment letters

April 26 Tuesday at 9am – 10:30am

April 29 Friday at 9am – 10:00 (presentations, peer feedback)

  • Review past comment letter submissions
Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Posted in Courses, Uncategorized | Tagged: | Leave a Comment »

U.S. / E.U. International Tax Risk Management Zoom Team-Based Case Studies Start Jan 19 – April 25 (14 weeks)

Posted by William Byrnes on December 9, 2020


Based on weekly case studies created by the faculty, supported by reading/text materials, pre-recorded videos with PPTs, and audio podcast files made by the faculty – twice-weekly Zoom live sessions (recorded as well) of 90 – 120 minutes wherein students in teams work through the case studies generally from an assigned stakeholder perspective. Access to the extensive Texas A&M library for case study research includes by example: Lexis, Westlaw, IBFD, Kluwer-Cheetah, Thomson OneSource, BvD (Moodys), S&P CapIQ, FITCH, among several others. Apply for Texas A&M’s courses here.

  • Transfer Pricing Risk Management I Tangibles, Methods, Economics, and Data
  • Transfer Pricing Risk Management II: Intangibles, Services, Pillar 1/Digital, Formulary
  • U.S. Tax Risk Management (Data, Analytics & Technology)
  • E.U. Tax Risk Management

U.S. Tax Risk Management (Data, Analytics & Technology) syllabus

E.U. Tax Risk Management syllabus

  • Week 1 March 8, 2021 E.U. General Framework of Compliance Tax Risk Management Dr. Eva Andrés (Barcelona)
  • Week 2 March 15, 2021 Parent Subsidiary Directive, Interest, Royalties. Dr. Santiago Ibañez Marcilla
  • Week 3 March 22, 2021 The European Union proposal on a carbon border tax and its compatibility with the World Trade Organization rules Dr. Xavier Fernández Pons
  • Week 4 March 29, 2021 Free Movement of Capital (investment funds) and others Fundamental Freedoms. Dr. Eva Andrés & Dr. Andreu Olesti
  • Week 5 April 5, 2021 Cross-Border Losses – Dr. Bruno Da Silva
  • Week 6 April 12, 2021 ATAD, DAC 6, Abuse – Dr. Bruno da Silva
  • Capstone Week April 19-25: Build a client case study, wrap up

Transfer Pricing Risk Management: Tangibles, Methods, Economics, and Data (William Byrnes course materials) syllabus

  • Week 1 January 19 Arm’s Length Standard (v Formulary Approach) Dr. Bruno Da Silva & William Byrnes
  • Week 2 Jan 25 CUP & Comparables Dr. Lorraine Eden
  • Week 3 Feb 1 Cost Plus & Resale Minus Dr. George Salis
  • Week 4 Feb 8: Comparable Profits Method & TNMMDr. George Salis
  • Week 5 Feb 15 Profit Split Dr. George Salis
  • Week 6 Feb 22 Best Method Dr. Lorraine Eden
  • Capstone Week March 1

Transfer Pricing Risk Management: Intangibles and Services (William Byrnes course materials) syllabus

Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Posted in Courses, Uncategorized | Tagged: , | Leave a Comment »

TaxFacts Intelligence December 1, 2020

Posted by William Byrnes on December 1, 2020


This week we analyze important end of tax year issues for businesses and Social security recipients. First, the SBA has announced a new streamlined forgiveness application for PPP loans of $50,000 or less (which is most of them). This is important for both the businesses that received the PPP funds and for the banks that will have to process the forgiveness applications; both should see their workloads greatly reduced. We also see the new Social Security COLA numbers for 2021, which as expected do not contain any dramatic changes.

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Streamlined PPP Loan Forgiveness for Small Loans

Many small businesses that received Paycheck Protection Program (PPP) loans are now near or past the end of their “covered period”–meaning that it’s time to apply for loan forgiveness.  Determining eligibility for loan forgiveness is much more complex than expected.  The Small Business Administration (SBA) has released a streamlined application that can be used by business owners who borrowed $50,000 or less.  For more information on the PPP loan program, visit Tax Facts Online. Read More

2021 Inflation-Adjusted Limit for Excepted Benefit HRAs

In 2019, the IRS created a new “excepted benefit” HRA structure.  Unlike the also-new individual coverage HRAs, employers can offer both the excepted benefit HRA and group health insurance coverage to the same employee.  The employee is not required to actually enroll in the group health coverage. For 2021, the contribution limit for these savings vehicles is $1,800 per year. For more information on the new HRA rules, visit Tax Facts Online. Read More

2021 Cost-of-Living Adjustments for Social Security Recipients

The Social Security Administration has announced the cost of living adjustments applicable for 2021, including a 1.3 percent increase in monthly benefits paid to Social Security recipients (the COLA increase for 2020 was 1.6 percent). Social Security “COLA” adjustments are tied to the consumer price index each year.  Based on the 1.3 percent increase, it is estimated that the annual Social Security earnings cap will be increased from $137,700 to $142,800 for 2021.  For more information on the Social Security tax, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin on January 18 spring semester. See the international tax course list by > weekly topic here. < Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

  • Rank 11th “Best Public Colleges” Money’s Best Colleges Report, 2019
  • Texas A&M ranks #1 in Texas, #1 in the SEC, and #12 in the U.S. in Washington Monthly’s 2020 overall college rankings based on the quality of education, accessibility, graduation rates, student involvement, and research: see tx.ag/WashMonth20

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Nov 25, 2020

Posted by William Byrnes on November 25, 2020


This week we analyze the proposed regulations from the DOL on determining who is (and is not) an independent contractor. This has become a hot issue in light of the new rules that California has passed for companies operating there and the impact that they may have on “gig economy” companies. California’s rules are still tied up in litigation, and it remains to be seen how the new DOL rules might affect them. We also have updates on new rules for bonus depreciation for partnerships and withholding on periodic retirement and annuity payments.

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

DOL Proposes New Test for Determining Independent Contractor Status

The DOL released a proposed rule that would address when a worker will be treated as an independent contractor for tax purposes. A new economic reality test would apply and consider (1) the nature and degree of the worker’s control over the work and (2) the worker’s opportunity for profit or loss. If the worker sets their own schedule, chooses assignments, works with little or no supervision and can work for others, the circumstances weigh in favor of independent status. For more information on employment classification, visit Tax Facts Online. Read More

Final Bonus Depreciation Rules Give Partnerships a Valuable Tax Break

The IRS final bonus depreciation rules made one change that could prove valuable to partnerships. The 2017 tax reform legislation allows certain used property to qualify for bonus depreciation. However, anti-churning rules apply to prevent abuse. Under the 2019 proposed rules, a partner was treated as having a prior interest in property if the partner was a partner in a partnership at any time that the partnership owned the property. The final regulations revoked the look-through rule because of the administrative burden of enforcement. Under the final rules, taxpayers are not considered to have previously owned property if that property is disposed of within 90 days of its placed-in service date, as long as the asset is not purchased and placed in service again within the same tax year. For more information on the bonus depreciation rules, visit Tax Facts Online. Read More

IRS Releases Final Regs on Withholding on Periodic Retirement and Annuity Payments

The IRS has finalized regulations that clarify tax withholding rules for periodic retirement and annuity payments. Pre-tax reform, the default withholding rate was based on a married taxpayer with three withholding exemptions. Post-reform, the personal exemption has been suspended and Congress directed the Treasury to provide updated withholding rules The IRS has also announced that it intends to release a revised 2021 Form W-4P. The regulations apply to payments made after December 31, 2020. For more information, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin on January 18 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Ranked in top 20 public universities by Wall Street Journal / Times Higher Education (2020)

#1 endowment for U.S. public universities, #7 overall

#1 of U.S. public universities for a superior education at an affordable cost

#1 for most CEOs employed by Fortune 500

Rank 11th “Best Public Colleges” Money’s Best Colleges Report, 2019

Texas A&M ranks #1 in Texas, #1 in the SEC, and #12 in the U.S. in Washington Monthly’s 2020 overall college rankings based on the quality of education, accessibility, graduation rates, student involvement, and research: see tx.ag/WashMonth20

Posted in Uncategorized | Leave a Comment »

What will be the biggest tax implications for tax season 2021 for your financial advisory clients? free TaxFacts webinar

Posted by William Byrnes on November 17, 2020


Wed, Nov 18, 2020 1:00 PM – 2:00 PM CST (Dallas time) Register for the Webinar Here


Between an election year and a worldwide pandemic, 2020 has left tax and financial planners with a LOT to consider, and the new year is just around the corner. Join the expert-authors behind Tax Facts in this free, live webinar as they discuss important questions many will have about the state of tax in 2021, including potential changes, implications, and more.

It can be difficult to keep up with the latest industry changes – make sure you’re prepared for next year and how certain policies may affect your clients and their retirement plans, both immediately and long-term!

If you have questions about the webinar, please contact Dana Wan at dwan@alm.com. Register for the Webinar Here

Byrnes & Bloink’s Tax Facts Offers a Complete Web, App-Based, and Print Experience: Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. All four volumes of Tax Facts in print PLUS

  • Tax Facts Intelligence weekly newsletters
  • weekly strategy articles for client advisory
  • weekly transcribed debate discussion for client soft-skill discussion
  • among other weekly client advisory critical updates

Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

From Tax Facts Online Q3757. What is the limit on elective deferrals to employer-sponsored plans?

By way of example, here is the recently updated Tax Facts Q&A on the 2021 retirement plan contribution limits. Look for more great updates from Tax Facts soon! Read More

From Tax Facts Weekly September 10, 2020: The Trump payroll tax deferral has been announced, and we have details below. It’s optional, and there are a lot of questions about how it will work now and in early 2021 when the deferred payroll taxes would be due (assuming no legislative changes occur between now and then). We also have an interesting update from the DOL on how schools’ reopening plans might impact employees’ right to paid leave under the Families First Coronavirus Response Act (FFCRA). Given the wide variety in schools’ opening plans there may be some interesting scenarios to play out related to staff paid leave if they are affected by the Corona virus.

Trump Payroll Tax Deferral Program Now Available

Beginning September 1, employers have the option of deferring the employee portion of the payroll tax through December 31, 2020. Employers can choose to stop withholding the 6.2% employee portion of the Social Security tax for employees who earn less than around $4,000 bi-weekly (pre-tax), but are required to continue contributing the employer half. However, employees should note that under current IRS guidance, deferred payroll taxes must be repaid during the period beginning January 1, 2021 and ending April 30, 2021. Taxes that are not repaid during that period will accrue interest and penalties, and employers can pass those amounts on to employees who have not repaid their deferral amounts. While it remains possible that Congress could pass legislation to forgive any payroll taxes that are deferred during 2020, it is far from certain. For more information on payroll tax relief provided in response to COVID-19, visit Tax Facts Online. Read More

DOL Releases New Guidance in Response to School Reopening Plans

The DOL has released additional FAQ on how a school’s reopening plans might impact employees’ right to paid leave under the Families First Coronavirus Response Act (FFCRA). The IRS examined various scenarios and provided clarification on each. If the child’s school remains closed to in-person instruction (so that only remote learning is offered), the employee has a qualifying reason to take FFCRA leave. If the school offers a hybrid program, so that students attend school in-person on certain days and receive remote instruction on other days, employees have a qualifying reason, but only with respect to the days that their children are not eligible for in-person instruction. If it is completely up to the family whether to send the child to school every day or keep the child home for remote instruction, the employee does not have a qualifying FFCRA leave reason. This is true regardless of whether the family keeps the child home out of fear of contracting COVID-19. For more information on the availability of FFCRA leave, visit Tax Facts Online. Read More

IRS Provides Relief for Victims of Hurricane Laura

The IRS has extended various deadlines for victims of Hurricane Laura. Victims located in FEMA-designated disaster areas qualify to extend tax filing and payment deadlines that occurred starting August 22, 2020 through the end of the year. Taxpayers who extended their 2019 federal income tax filing deadline to October 15 now have until December 31, 2020. For information on the casualty loss rules, visit Tax Facts Online. Read More

Posted in Retirement Planning, Taxation, Uncategorized | Tagged: , | Leave a Comment »

Estate Planning Update 2020-21 (Lexis)

Posted by William Byrnes on October 22, 2020


Texas Estate Planning Publication Update (2020) [Lexis permalink is here]

Highlights

Current Developments: In this Release 27 of Texas Estate Planning, Prof. William Byrnes analyzes the latest developments and decisions in the federal and Texas courts, including the 2017 Tax Cuts and Jobs Act, the Bipartisan Budget Act of 2018, the SECURE Act of 2019, as well as legislation and consideration resulting from the 2020 COVID-19 pandemic that impact estate planners.

Release 27 of Texas Estate Planning includes 21 chapter revisions of the latest rulings, regulations, cases, and inflationary adjustments, as well as the amendments and additions to law by the biennial 2019 86th Texas legislative session, the Tax Cuts and Jobs Act, the Bipartisan Budget Act of 2018, the SECURE Act of 2019, and CARES Act of 2020. Highlights of this release include:

The SECURE Act. The SECURE Act that took effect in 2020 specifically targets estate planning opportunities for individual retirement accounts. The impact is analyzed in Chapter 1.

T.D. 9884; Treas. Reg. § 20.2010-1(c)The I.R.S. confirmed that gifts made during 2018 through 2025 will attach the transfer tax exemption amount applicable on the date of the gift, and thus allow credit for the higher pre-2026 amount post-2026 even though the transfer tax exemption will have reverted to the pre-2018 amount (adjusted for inflation). The impact is analyzed in Chapter 2.

State Imposition of Tax on Trust Income. Some states attempt to tax trust income based on the residency of the beneficiary. In North Carolina Department of Revenue v. The Kimberly Rice Kaestner 1992 Family Trust, the State of North Carolina imposed an income tax on accumulated income of an irrevocable trust created in New York because of the residency of three beneficiaries in North Carolina. The U.S. Supreme Court in a decision based on the specific facts of the case held that the tax violated the Due Process Clause. See Chapter 31.

Impact of Tax Cuts and Jobs Act Exclusion. The IRS for 2018 reported that it received 34,092 total estate tax returns and 245,584 gift tax returns. Of the estate tax returns for 2018, the IRS reported that it received 5,484 taxable returns (which most likely relate to deaths in 2017) reporting $106 billion of estate gross assets and a tentative estate tax liability of $34 billion. The Urban Institute Tax Policy Center estimates that for 2020 only 1,900 estate tax returns will have tax owing of a total $16 billion.

Tax Cuts and Jobs Act Exclusion. The Tax Cuts and Jobs Act of 2017 (“TCJA”) increases from 2018 until 2026 the transfer tax exemption to $10 million per individual indexed for inflation so that for 2020 the amount is $11.58 million or $23.16 million per married couple. The 2020 annual gift tax exclusion for gifts made to a non-citizen spouse is $157,000. In 2026, the transfer tax exemption reverts back to the 2017 level indexed for inflation (in 2018 it would have been $5.6 million). All chapters have been updated to reflect these changes as well as the inflation adjustments of Rev. Proc. 2019-44.

U.S. Estate Tax Regime On High Net Wealth Immigrants. Chapter 7 analyzes planning strategies to mitigate exposure of foreign assets to U.S. estate tax.

IRS Settlement Offer For Microcaptives. See Chapter 5.

Author and Contributors

Professor William Byrnes of Texas A&M University School of Law and author of ten Lexis legal treatises is the author of Texas Estate Planning. He has assembled a team of preeminent subject matter experts as chapter contributors, including: Tena Fox (Leach & Fox), Terry Leach (Leach & Fox), Patrick McCormick (Drucker Scaccetti), Benjamin Terner (The Einstein Group), Kim Donovan Uskovich (Kelly Hart), and James Weller (Greenway Capital Advisors).

Interested in the two volumes of Estate Planning book? See here

Posted in Pensions, Retirement Planning, Taxation, Uncategorized, Wealth Management | Tagged: | Leave a Comment »

USA and EU international tax case studies start on January 19

Posted by William Byrnes on October 19, 2020


U.S. Tax Risk Management (Data, Analytics & Technology) (Zoom Wednesday and Sunday at 8am Central Standard Dallas time zone)

E.U. Tax Risk Management 3 credits (Zoom Wednesday and Sunday at 8am Central Daylight Dallas time zone)

  • Week 1 March 8, 2021 General Framework & Fundamental Freedoms
  • Week 2 March 15, 2021 P/S + Interest / Royalty
  • Week 3 March 22, 2021 M&A directive
  • Week 4 March 29, 2021 Free Movement of Capital (investment funds) 
  • Week 5 April 5, 2021 Cross-Border Losses
  • Week 6 April 12, 2021 ATAD, DAC 6, Abuse
  • Capstone Week April 19: tax compliance and technology

Weekly course materials include the written materials, pre-recorded videos, PPTs, and audio files (listen at the gym or when driving). Access to the extensive Texas A&M library for case study research includes as examples: Lexis, Westlaw, IBFD, Kluwer-Cheetah, Thomson OneSource, BvD (Moodys), and S&P CapIQ.

Courses are limited to maximum 20 participants: Application HERE

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Posted in Courses, Uncategorized | Tagged: | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence (October 15, 2020)

Posted by William Byrnes on October 15, 2020


Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

This week we have new info on the definition of “business interest” as it relates to the 2017 tax reform and CARES Act modifications. The IRS has released both final and proposed regs on the matter, and there are new rule changes regarding some of the ancillary costs that can come with debt issuance, such as commitment fees and guaranteed payments that are broadly categorized as “substitute” interest costs. We also see new regs on the elimination of qualified transportations benefits and updated deadlines for Form 1095.

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. <

Final Business Interest Regs Relax Definition of “Business Interest” 

The IRS has released final regulations and a new set of proposed regulations on the deduction for business interest, which was modified by the 2017 tax reform legislation.  The new proposed IRS regulations on the business interest expense implement many of the new CARES Act provisions designed to help small business owners in 2020 and future years. While the final regulations largely mirror earlier proposed rules, one significant change relaxes the previous definition of “business interest”.  Under the proposed regulations, interest included commitment fees, debt issuance costs, guaranteed payments and other “substitute” interest costs.  Under the final rules, commitment fees and debt issuance costs are excluded from the definition of interest. For more information on the business interest deduction and the 2020 CARES Act changes, visit Tax Facts Online. Read More

IRS Proposes Regs on TCJA Elimination of Qualified Transportation Benefits

The IRS issued proposed regulations on the 2017 tax reform legislation’s elimination of deductions for certain employer-provided transportation benefits.  Under the proposed rules, if the employer owns or leases the parking facility, the employer can elect to apply a general rule, or one of three simplified methods, for calculating the amount of nondeductible expenses.  Taxpayers may elect to apply the general rule or a simplified methodology for each taxable year and for each parking facility.  For more information on the simplified methods, visit Tax Facts Online. Read More

IRS Provides New ACA Transition Relief for Employer Reporting

As usual, the IRS has released transition relief to extend the deadline for providing Form 1095-C to individuals from February 1, 2021 to March 2, 2021.  However, unlike other years, the IRS has indicated that absent comments indicating a need for future extensions, this will be the last year the extension applies.  The due date to furnish the Forms 1095-B and 1095-C to requisite individuals is extended from February 1, 2021 to March 2, 2021.  Form 1094-C and Form 1095-C that must be provided to the IRS are not subject to the extension.  The employer must furnish these filings to the IRS by March 1, 2021 if the filing is on paper and March 31, 2021 if the employer is filing electronically.  For more information, visit Tax Facts Online. Read More

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Posted in Retirement Planning, Taxation, Uncategorized, Wealth Management | Tagged: | Leave a Comment »

Pillar 1 and 2 Reports from the OECD

Posted by William Byrnes on October 13, 2020


Texas A&M University School of Law’s online international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See example case study team based discussions, library access, meet the faculty via the YouTube link weekly topic here. Courses are limited to maximum 30 participants.

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

Transfer Pricing Risk Management: Tangibles, Methods, Economics, and Data (William Byrnes lead professor, weekly leader below, several other guests join for discussions and case studies)

Team-based case studies are live each Monday and Friday at 9am Central time.

  • Week 1 January 13 Arm’s Length Standard (v Formulary Approach) Dr. Bruno Da Silva
  • Week 2 Jan 20 CUP & Comparables Dr. Lorraine Eden
  • Week 3 Jan 27 Cost Plus & Resale Minus Dr. George Salis
  • Week 4 Feb 3: Comparable Profits Method & TNMMDr. George Salis
  • Week 5 Feb 10 Profit Split Dr. George Salis
  • Week 6 Feb 17 Best Method Dr. Lorraine Eden

Transfer Pricing Risk Management: Intangibles and Services (William Byrnes lead professor) Team-based case studies are live each Monday and Friday at 9am Central time.

  • Week 1 March 2 Intangibles Royalty Rates CUT, CPM Dr. Debora Correa Talutto
  • Week 2 March 16 CSA Intangibles Buy In/Out Dr. George Salis
  • Week 3 March 23 Digital Business Unitary Apportionment Dr. Bruno Da Silva
  • Week 4 March 30 Digital Value Chain, Internet of Things Dr. Lorraine Eden
  • Week 5 April 6 U.S. v OECD v UN Manual case study Extractive Industries, Financing Hafiz Choudhury
  • Week 6 April 13 Restructuring the Business, Services case study Hafiz Choudhury
  • Week 7 Capstone Hand-On Week with Financial databases “Tax Technology and the future of Transfer Pricing” Dr. Debora Correa Talutto April 20 – 26: Thomson OneSource, BvD (Moodys), and CrossBorder AI Solutions Dr. Debora Correa Talutto & William Byrnes

U.S. Tax Risk Management (Data, Analytics & Technology) 3 credits (Tuesday and Sunday at 8am Central Standard Dallas time zone)

  • Week 1 January 10, 2021 Outbound / FDII Melissa Muhammad (IRS LB&I) melissamuhammadesq@gmail.com
  • Week 2 January 17, 2021 Inbound / BEAT Melissa Muhammad
  • Week 3 January 24, 2021 [check the box] Form 1120 Documentation: Neelu Mehrotra: EY mehrotra.neelu@gmail.com
  • Week 4 January 31, 2021 [Subpart F & GILTI, PTEP ] Form 5471 Documentation: Neelu Mehrotra: EY
  • Week 5 February 7, 2021 M&A or topic and Neelu Mehrotra: EY
  • Week 6 February 14, 2021 FTCs; wrap-up: Melissa Muhammad

E.U. Tax Risk Management 3 credits (Tuesday and Sunday at 8am Central Dallas time zone)

  • Week 1 February 28, 2021 General Framework & Fundamental Freedoms
  • Week 2 March 7, 2021 P/S + Interest / Royalty
  • Week 3 March 21, 2021 M&A directive
  • Week 4 March 28, 2021 Cross-Border Losses
  • Week 5 April 4, 2021 Free Movement of Capital (investment funds)
  • Week 6 April 11, 2021 ATAD, DAC 6, Abuse – Dr. Bruno da Silva
  • Capstone Week: Build a client case study, wrap up

Posted in Uncategorized | Leave a Comment »

14 weeks of U.S. international tax, EU tax, and transfer pricing case studies starts January 11

Posted by William Byrnes on October 6, 2020


Texas A&M University School of Law’s online international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See example case study team based discussions, library access, meet the faculty via the YouTube link weekly topic here. Courses are limited to maximum 30 participants.

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

 

Transfer Pricing Risk Management: Tangibles, Methods, Economics, and Data (William Byrnes lead professor, weekly leader below, several other guests join for discussions and case studies)

Team-based case studies are live each Monday and Friday at 9am Central time.

  • Week 1 January 13 Arm’s Length Standard (v Formulary Approach) Dr. Bruno Da Silva 
  • Week 2 Jan 20 CUP & Comparables  Dr. Lorraine Eden
  • Week 3 Jan 27 Cost Plus & Resale Minus  Dr. George Salis
  • Week 4 Feb 3: Comparable Profits Method & TNMM Dr. George Salis
  • Week 5 Feb 10 Profit Split Dr. George Salis
  • Week 6 Feb 17 Best Method Dr. Lorraine Eden 

Transfer Pricing Risk Management: Intangibles and Services (William Byrnes lead professor) Team-based case studies are live each Monday and Friday at 9am Central time.

  • Week 1 March 2 Intangibles Royalty Rates CUT, CPM  Dr. Debora Correa Talutto
  • Week 2 March 16 CSA Intangibles Buy In/Out Dr. George Salis
  • Week 3 March 23 Digital Business Unitary Apportionment Dr. Bruno Da Silva
  • Week 4 March 30 Digital Value Chain, Internet of Things Dr. Lorraine Eden
  • Week 5 April 6 U.S. v OECD v UN Manual case study Extractive Industries, Financing Hafiz Choudhury
  • Week 6 April 13 Restructuring the Business, Services case study Hafiz Choudhury
  • Week 7 Capstone Hand-On Week with Financial databases “Tax Technology and the future of Transfer Pricing” Dr. Debora Correa Talutto April 20 – 26: Thomson OneSource, BvD (Moodys), and CrossBorder AI Solutions Dr. Debora Correa Talutto & William Byrnes

U.S. Tax Risk Management (Data, Analytics & Technology) 3 credits (Tuesday and Sunday at 8am Central Standard Dallas time zone)

  • Week 1 January 10, 2021 Outbound / FDII Melissa Muhammad (IRS LB&I) melissamuhammadesq@gmail.com
  • Week 2 January 17, 2021 Inbound / BEAT Melissa Muhammad
  • Week 3 January 24, 2021 [check the box] Form 1120 Documentation: Neelu Mehrotra: EY mehrotra.neelu@gmail.com
  • Week 4 January 31, 2021 [Subpart F & GILTI, PTEP ] Form 5471 Documentation: Neelu Mehrotra: EY
  • Week 5 February 7, 2021 M&A or topic and Neelu Mehrotra: EY
  • Week 6 February 14, 2021 FTCs; wrap-up: Melissa Muhammad 

E.U. Tax Risk Management 3 credits (Tuesday and Sunday at 8am Central Dallas time zone)

  • Week 1 February 28, 2021 General Framework & Fundamental Freedoms
  • Week 2 March 7, 2021 P/S + Interest / Royalty
  • Week 3 March 21, 2021 M&A directive
  • Week 4 March 28, 2021 Cross-Border Losses
  • Week 5 April 4, 2021 Free Movement of Capital (investment funds)
  • Week 6 April 11, 2021 ATAD, DAC 6, Abuse – Dr. Bruno da Silva
  • Capstone Week: Build a client case study, wrap up

Posted in Uncategorized | Leave a Comment »

Will New York’s businesses suffer because the state tax system rejected adopting the CARES Act tax reliefs?

Posted by William Byrnes on April 15, 2020


  • Deloitte covers New York’s new budget that purposefully ‘decouples’ from the CARES Act tax relief for New York based business and other states’ business that have income within New York.
  • BDO explains it here as well.
  • Pillsbury here.

Anything that improves the employment of tax professionals, I am for.  Thus, states with their own tax codes that do not correspond to the federal Internal Revenue Code, at least for my students and alumni, are OK by me.  Unless I own a business.  Then it’s maddeningly complex, and compliance expensive, to operate in several tax regimes.

Not saying that the CARES Act provisions made good tax policy sense.  But unless New York state (and city) has something better to offer, the Covid-19 meltdown does not seem like an opportune time to ‘stick it’ to Congress’ because Congress seems to enact ineffectual tax provisions. Not that the typical New York voter understands or cares about 163(j) relief or NOL. And arguably, most voters do not feel sympathy for the large business and investment partnership vehicles (at least until I remind them that it is their retirement accounts that own the majority of the publicly held businesses and investment vehicles, and thus they’ll be working a little longer than they hoped for).

New York based business in particular may come to understand when the CPA / tax advisor informs that on the federal return Covid-19 stimulus relief is allowable but not so on the NY state return. Some NY based businesses are going to feel that their state didn’t have their backs.  Other businesses that are large enough and able because of industry to relocate operations have time a plenty at this moment to think about such relocation.  (Texas will be open for business again soon).

Should a New York business look toward the SBA loan to the tax provisions like the employee retention tax credits? New York’s decoupling (where a state goes its own way) may impact the analysis.  In general, leaving aside the decoupling issue, for a business with by example 400 employees, a $5,000 credit per employee is worth $2,000,000 of tax-free tax credit that can be more beneficial than an SBA Loan.  The SBA loan is not straight forward and regardless, is not in general allowed for business above 500 employees.  The taxpayer must choose either one or the other – the PPP (forgivable employee retention) SBA loan or the employee retention tax credit.  For small employers with less than say 250 employees (not exactly ‘small’ in most American minds) the answer is probably the SBA loan.  But above 250, careful consideration and analyzing the benefits/outcomes of each program must be weighed.

For a business with by example 400 employees, a $5,000 credit per employee is worth $2,000,000 of tax-free tax credit that may be more beneficial than an SBA Loan depending on the ‘facts and circumstances’ of the business. The SBA loan is not straight forward and regardless, is not in general allowed for the business above 500 employees. The SBA loan is allowed, for the small businesses that qualify, for up to 2.5 times a business’ average monthly payroll costs, up to $10 million.  So by example, just to put some numbers to this statement, if a business has 400 employees, and each employee is paid $3,000 a month with benefits (basically 22 days a month at $15 / hour with full medical), the monthly payroll will be $1.2 million. 2.5 times is thus $3 million even. A forgiven tax-free $3 million is great.

The $5,000 worth of employee retention tax credit is only worth $2 million for the 400 employees, right?  Not necessarily.  Maybe but we need to work through the numbers of the business. Another way to look at the value of the tax credit is that it is worth the tax rate cost to generate the income for the taxpayer for which the tax credit offsets the tax due.  Say this taxpayer is a pass-through and pays an effective 33% (after the Internal Revenue Code Section 199A “20% deemed business income deduction” reduces the 37% highest rate, and factoring in the state tax burden).  So the taxpayer’s $2 million credit offsets the tax on $6 million income (assuming the state recognizes the credit).

So now another step in the potential analysis. Let’s say the business recovers and both businesses earn $6 million income.  The business with the SBA loan has $3 million taxfree after forgiveness plus $4 million aftertax, thus $7 million.  The tax credit business has $6 million tax-free. The tax credit company appears worse off but not by the initial $3 million SBA loan, right?  Many other factors are required for the analysis to weigh both paths.  The 2-year deferred payroll tax, whether the business will generate net earnings this year, the SBA additional forgiveness potential for non-employee expenses, whether the SBA loan money has already run out, how long to monetize the tax credits, .. these issues come to mind.

Watch the webinar below or the one forthcoming Thursday, April 16th (Register now for our webinar on Thursday, April 16, at 2:00 EDT)

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Uncategorized | Leave a Comment »

SBA Information on How Much Money, To Whom, to Which States

Posted by William Byrnes on April 14, 2020


Byrnes and Bloink analyze the SBA loans, Tax Credit, and Retirement Planning Impact for Small Business because of Covid-19 economic stimulus (Families First, CARES Acts, IRS Notices) on Thursday, April 16th (Register now webinar)

Texas A&M University School of Law has launched a Covid-19 expert response team.  Listen to Professor Neal Newman and William discussing the Covid-19 SBA forgiveness loans, deferral on paying the employer’s Social Security tax, and the Employee Retention Tax Credit (YouTube). Find the response team members from all disciplines here: Download Texas A&M Coronavirus_Experts

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Retirement Planning, Taxation, Uncategorized | Tagged: , , | Leave a Comment »

SBA (Forgivable) Employee Retention Loan or Tax Credit for Employee Retention? Which is best for my business?

Posted by William Byrnes on April 14, 2020


The IRS provided concrete responses to the COVID-19 virus in the tax field. First, the IRS has now formally extended the income tax filing deadline for tax year 2019 to July 15, as well as the FBAR form, FATCA form, and several other reporting forms initially left out of the IRS extension. Because this is an extension of the actual filing deadline (not just an extension of time to pay owed taxes) it also pushes a number of related deadlines (e.g. for qualified plan contributions) back to July.  April 15ths Estimated Tax Payments for 2020 (the first one) is also postponed. But not the estimated tax payment due June 15th as of yet (I expect Treasury to postpone it as well.  September 15 and January 15, 2021 are the 3rd and 4th required estimated tax payments.

President Trump also signed the Families First Coronavirus Response Act, which creates a paid sick leave program and related tax credits for small businesses, as well as the CARES Act calling for forgivable SBA loans (without tax consequences) or a $5,000 tax credit per employee retained for medium and large size businesses.

Byrnes and Bloink comment from Tax Facts: For a business with by example 400 employees, a $5,000 credit per employee is worth $2,000,000 of tax-free tax credit that can be more beneficial than an SBA Loan.  The SBA loan is not straight forward and regardless, is not in general allowed for business above 500 employees.  The taxpayer must choose either one or the other – the PPP (forgivable employee retention) SBA loan or the employee retention tax credit.  For small employers with less than say 250 employees (not exactly ‘small’ in most American minds) the answer is probably the SBA loan.  But above 250, careful consideration and analyzing the benefits/outcomes of each program must be weighed. Watch the webinar below or the one forthcoming Thursday, April 16th (Register now for our webinar on Thursday, April 16, at 2:00 EDT)

Texas A&M University School of Law has launched a Covid-19 expert response team.  Find the response team members from all disciplines here: Download Texas A&M Coronavirus_Experts  Listen to Professor Neal Newman and William discussing the Covid-19 SBA forgiveness loans, deferral on paying the employer’s Social Security tax, and the Employee Retention Tax Credit (YouTube).

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Uncategorized | Leave a Comment »

What will be the impact of the 2017 Tax Cuts Act, Covid-19 (coronavirus), a Zombie Apocalypse, on Estimated Tax due by April 15?

Posted by William Byrnes on March 15, 2020


If a zombie apocalypse does not emanate from the illness known as Covid-19 caused by the coronavirus, then we still need to plan for our 2020 tax payments.  It is likely that taxpayers with business or investment income will be able to reduce the 2020 quarterly estimated tax payments that will be due April 15 this year, June 15, September 15, and January 15 of 2021.  Why?

2019 was a good income year for most taxpayers earning investment and business income.  But 2020 will likely be a depressed income year, maybe even a recession (for those not eaten by zombies). Thus, estimated tax payments to avoid a penalty, generally, 90% of the tax that is estimated to be due for 2020, should be much reduced from the 2019 level paid. (Contrarian investor taxpayers that shorted the market may actually need to make higher estimated taxpayers because the contrarians are likely to have a great capital gain year).

What are the changes enacted in the Tax Cuts and Jobs Act of 2017 that, because of the coronavirus, impact 2020’s estimated tax payments?

  • A taxpayer’s ability to reduce tax because of a net operating loss (“NOL”) in 2020 has been reduced by the TCJA. An NOL resulting in 2020 cannot be applied to taxes paid in the previous two-years of 2019 and 2018 to claw those taxes back.  Before the TCJA, the NOL “carry-back” of two-years was allowed.  NOLs may still be carried forward.  Excess NOL in 2020 may be used to reduce 2021’s income and thus tax due.

However, the TCJA even modifies how much NOL may be used to reduce 2020’s taxable income.  Starting in 2018, the TCJA modified the tax law on “excess business losses” by limiting losses from all types of business for noncorporate taxpayers. An “excess business loss” is the amount of a taxpayer’s total deductions from business income that exceeds a taxpayer’s “total gross income and capital gains from business plus $250,000 for an individual taxpayer or $500,000 for married taxpayers filing a joint return.”  Said another way, the business loss in 2020 is limited to a maximum of $250,000 for an individual taxpayer. Yet, the remainder does not evaporate like a vampire stabbed with a stake in the heart.  The remainder may be carried forward to 2021.  The remainder is called a “net operating loss” or NOL.

But the TCJA has another limitation for the carry forward of an NOL.  The NOL may only be used in 2021 to reduce the taxpayer’s taxable income by 80%.  The remainder NOL in 2021, if any, that resulted from 2020’s original loss and 2021’s limitation to just 80% of taxable income may again be carried forward, to 2022, yet again subject to the 80% of taxable income limitation.  The NOL may keep rolling forward indefinitely, subject to the 80% limitation until it is all used.

  • High net wealth taxpayers that generate gross receipts greater than $26 million may be subject to the TCJA’s limitation of interest expense for 2020. The TCJA included a rule that limits the amount of interest associated with a taxpayer’s business income when the taxpayer has on average annual gross receipts of more than $26 million since 2018.  The limitation does not apply to a taxpayer whose business income is generated from providing services as an employee, and a taxpayer that generates business income from real estate may elect not to have the limitation apply.

The amount of deductible business interest expense that is above a taxpayer’s business interest income is limited to 30% of the taxpayer’s adjusted taxable income (called “ATI”).  For 2020, ATI will probably be significantly lower than in 2019 and 2018. A taxpayer calculated ATI taking the year’s taxable income then reducing it by the business interest expense as if the limitation did not apply. The remaining amount is then further reduced by any net operating loss deduction; the 20% deemed deduction for qualified business income, any depreciation, amortization, or depletion deduction, and finally, any capital loss.  The business interest expense allowable for 2020 is 30% of that remainder.  The lost business income resulting from the coronavirus in 2020 may lead the remainder to be zero, and 30% of zero is zero.  Like the NOL above, the business interest expense if not usable in 2020 does not vanish. It carries forward to 2021 and each year thereafter, applying the same limitation rules each year.

  • Many taxpayers may end 2020 in a capital loss position if the stock market does not fully recover by December.  If a taxpayer’s capital losses are more than the year’s capital gains, then $3,000 of that loss may be deducted from the taxpayer’s 2020 regular income.  Remaining capital loss above the $3,000 may be carried forward to apply against 2021 income, and so on until used up.
  • The IRS may offer taxpayers more time beyond the April 15th deadline to file and pay 2019’s tax in 2020.  The filing and payment for 2019, and estimated tax for 2020, is due on or before April 15. But the IRS has indicated that it may extend that deadline.  A taxpayer may, regardless, file a request for a six-month extension on or before April 15, 2020, that is automatically granted if filed on time. But any tax owing for 2019 will still be due April 15, 2020, after which interest begins to be charged by the IRS to the taxpayer’s tax debt.   Check the IRS website here for whether, because of the coronavirus, it has extended the payment deadline beyond April 15, 2020.  Can the IRS extend the deadline, legally? Yes. Because Congress enacted a section of the Internal Revenue Code (our tax law) “§ 7508A” which is aptly named “Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions”.  The President declared an official national emergency (see here).
  • Taxpayers are not required to exhaust the deductible required by a high-deductible health plan (called “HDHP”) before using the HDHP to pay for COVID-19 related testing and treatment.

I have four tax policy suggestions for Congress that it can include in a taxpayer coronavirus relief bill. I welcome acronym suggestions for this proposed bill’s name, especially a creative bill name whose acronym is “Zombie” or “Eat Brains”. The four tax relief suggestions that will mitigate damage caused by Covid-19 are:

Proposal 1 (stop medical bankruptcy): In 2020 the itemized deduction for medical expenses is reduced by 7.5% of a taxpayer’s AGI.  For 2020, I propose eliminating the 7.5% reduction of medical expenses attributed to the coronavirus or any 2020 flu (or zombie bite), such as hospitalization.  Medical diagnosis should suffice. Not going to be used by many people.  But the people who do use will really need it – those that do not awake as zombies that is.

Proposal 2 (stop restaurant bankruptcy): The administration proposes the suspension of the Social Security and Medicare payroll tax to jump-start consumer spending, presumably after the removal of quarantine orders to stay indoors or at least six feet away from each other. Not very targeted.  Someone like me may just shift the payroll tax relief and use it instead to upward adjust my 403(b) retirement savings for 2020, taking advantage of my full $19,500 contribution allowance for 2020 (and because I am 50 years old or older – add another $6,000 retirement ‘catchup’ to that $19,500 for a full $25,500),  Not only have I not spent the money to help the economy rebound, I have reduced my tax due for 2020 because my retirement contributions reduce my taxable income.  I have saved tax twice!! While I quite like that idea personally, I feel empathy for all the local restaurant owners who may go bankrupt unless I go out to eat at more local restaurants once I assured that 2020 was not the year of the zombie apocalypse.

A better-targeted proposal to save our nation’s local restaurants and the local farmers that supply them is to allow taxpayers an itemized deduction up to $1,000 for an individual and $2,000 for a married filing jointly 2020, beyond the standard deduction, of 100% of restaurant meals expense between June 1 and October 31, at U.S. restaurants with the last three years gross annual receipts averaging less than [$5 million – whatever is reasonable so that big chains are not included, Small Business Administration uses a maximum of $8 million for full-service restaurants (NAICS 722511)- I’m OK with that].  I know – many reasons not to do this, such as Americans will become hooked on eating out at local restaurants. Wait, why is that a bad thing?  And we will need to address the tax abusers who will order one slice of pizza and 20 bottles of wine, to go. So maybe the maximum meal receipt must be set at $100 per meal receipt per adult. That should allow plenty of food for a couple, and alcohol, and leave enough for the children to still have mac & cheese. Plus it requires ten different restaurant trips. Local restauranteurs and the local farmers can hold out hope that 2020 will not require filing for bankruptcy protection.  November is Thanksgiving when people eat out anyway, at least in the restaurants that have remained open.  By the way, I am purposely leaving business out of this.  Business has a 50% business meal deduction anyway. And my policy suggestion is about Americans being social and not talking business at the dinner table (and perhaps not politics either).

Proposal 3 (stop hotel bankruptcy): And let’s not forget about locally-owned hotels with average gross receipts below $8 million (SBA uses $35 million for hotels and $8 million for B&B Inns so maybe I am way off base with just $8 million – see NAICS subsector 721 Accomodation). A $500 itemized deduction for 2020 for a U.S. hotel stay (not Air BnB homes or apartments, actually licensed hotels/BnB Inns) for an individual or couple between June 1 and October 31. Might not buy a weekend at the Ritz but the Ritz probably exceeds the small business amount of revenue a year.  Is it sound tax policy? Huey Long (I’m from Louisiana) promised a chicken in every pot and a car in every yard.  I promise a get-a-way weekend at a small(ish) hotel.

Proposal 4 (keep employees employed): A tax credit (I am not sure the right amount, let the Labor Secretary decide, something around $5,000 an employee) to employers of less than 500 employees who do not reduce the monthly payroll of the employees, or fire any employees, between June 1 and September 30. October 1 employers start thinking about Christmas hiring for the shopping season.  I can imagine some mathematically-inclined employees thinking “I am going to walk into my boss’ office and projectile vomit because the cost of losing the tax credits for firing me is too high.” OK, so firing ‘for cause including projectile Zombie vomiting on the boss ‘ will be allowed without loss of the tax credit.  Now if a business wants to expand and hire a lot of employees up to 500 that’s great.  I propose that all employees employed and start fulltime work before June 1st qualify for a reduced $4,000 tax credit (basically $1,000 a month of employment for June through September).

These four proposals are enough to keep the economy, restaurants, hotels, and employees out of recession and bankruptcy.  But I have more proposals not currently part of the current bill, but common sense dictates should be (well, maybe not).  Why have we heard nothing from the House to encourage donations of toilet paper rolls to local shelters?   And why hotels and restaurants, but not spas?  I’ll leave it to the politicians (and lobbyists) to argue about.  Meanwhile, I look forward to receiving your comments while I set up my anti-zombie chicken wire barricade around the yard.

I’ll be covering these and related issues in my weekly Tax Facts Intelligence Newsletter.

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Tax Policy, Taxation, Uncategorized | Tagged: , , , , , | Leave a Comment »

State Aid: What is the Arm’s Length Return for Starbucks Netherlands?

Posted by William Byrnes on October 28, 2019


For the complete paper see https://ssrn.com/abstract=3464990

The crux of the legal issue is the EU Commission’s contention, required as the third Starbucks_Coffee_Logo.svgcondition for a finding of State aid, that the Netherlands-Starbucks APA conferred a selective advantage on Starbucks’ Netherlands manufacturing subsidiary (SMBV, aka the “roasting operation”) that resulted in a lowering of SMBV’s tax liability in the Netherlands as compared with what SMBV would have paid under the Netherlands’ general corporate income tax system dealing with third parties.

And the crux of the dispute that determines the legal issue outcome is whose choice of transfer pricing method (the Commission or The Netherlands/Starbucks) is the most reliable.

However, the most interesting aspect of the controversy is how to allocate the residual between SMBV and Starbucks intermediary IP management limited partnership? In a broader framework, not part of the analysis contemplated by the applicable 1995 OECD Transfer Pricing Guidelines, is how to allocate the residual among Starbucks’ global value chain. For the complete paper see https://ssrn.com/abstract=3464990

Posted in Transfer Pricing, Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly of September 13, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on September 14, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Texas A&M University School of Law has launched its International Tax online curriculum for graduate degree candidates. Admissions is open for Spring (January) semester for the transfer pricing courses.  Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

IRS PLR Approving CLAT Structure Provides Option for High-Net Worth Estate Planning

The IRS has recently released a private letter ruling approving a charitable lead annuity trust (CLAT) structure that may prove useful in estate planning for high net worth clients. In the case at issue, the taxpayer proposed to set up a revocable trust where the trust would first pay certain debts and expenses and then distribute the trust assets to other individuals and trusts if the taxpayer predeceased his spouse. Should the spouse die first, the trust would have paid the relevant debts, made distributions to individuals and trusts and then transfer the remaining assets to the CLAT, which would then pay a 5% annuity to the charity based upon the initial trust’s fair market value. The IRS approved this structure even though in most cases, the CLAT must have a payout stream that lasts a predetermined number of years to qualify for tax preferential treatment (deduction of the present value of annuity payments for the estate). Here, the IRS determined that it would eventually be possible to calculate that specified payout term once the CLAT was funded from the revocable trust after payment of debts, expenses and distributions to other beneficiaries. For more information on charitable lead trusts, visit Tax Facts Online. Read More

Recent Ninth Circuit Case Highlights Importance of Disclosing Transactions Substantially Similar to “Listed Transactions”

The IRS identifies certain types of transactions as having the potential for tax avoidance, and thus requires that taxpayers disclose these transactions affirmatively in order to avoid penalties. The IRS can impose penalties for failing to disclose a listed transaction, but also has authority to impose penalties for failure to disclose a transaction that it deems to be “substantially similar” to a transaction that is specifically listed. The case at hand involved a situation where a company participated in a group life insurance term plan in order to fund cash-value life insurance that the sole shareholder and employee owned. While the structure at issue was not specifically listed, the IRS determined that the transaction was substantially similar to other listed transactions and imposed a $10,000 penalty for every year that the taxpayer failed to disclose the transaction. For more information on the exemptions that may apply in cases involving prohibited transactions, visit Tax Facts Online. Read More

Reminder to Clients: 401(k) Exceptions for Early Withdrawal Liability Differ From IRAs

Most clients understand that they may be entitled to claim an exemption from the generally applicable 10 percent early withdrawal penalty if retirement accounts are tapped prior to age 591/2 where the funds are used for certain specified purposes. However, a recent Tax Court case highlights the need for clients to understand that the exceptions vary depending upon whether the account is a 401(k) or an IRA. In this case, the taxpayer used 401(k) account funds withdrawn early to fund the purchase of her home and attempted to claim an exception to the penalty. However, the exception for purchasing a home only applies in the case of IRA funds–and the courts strictly apply the exception even in cases where the error resulted from an honest mistake. Because of this, it’s important that clients be advised as to the detailed requirements that apply depending upon the type of account involved. For more information on the exceptions to the early withdrawal penalties, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant

Posted in Uncategorized | Leave a Comment »

Seeking inaugural cohort of tax professionals to pilot Texas A&M’s International Tax online curriculum starting August 26, 2019

Posted by William Byrnes on July 29, 2019


Texas A&M University School of Law will launch August 26, 2019 its International Tax online curriculum for graduate degree candidates. Admissions is open for the inaugural cohort of degree candidates to pilot the launch of the Fall semester introductory courses of international taxation and tax treaties.

How do I apply for the inaugural cohort? Only for this inaugural cohort, completed applications may be submitted directly, via the below-expedited process, to the law school’s admission office until noon central daylight time (CDT – Dallas) on August 22, 2019.   A completed Fall application must include four items:

(1) the completed and signed law school application (application fees and letters of recommendation are waived for Fall 2019 international tax);

(2) statement of interest for the international tax program that includes mention of prior tax or related experience.

(3) resume/CV reflecting at least three years of employment as a tax advisor or five years employment in a related field; and

(4) an official transcript from the highest academic degree awarded by an accredited University sent to Texas A&M University: Official electronic transcripts can be sent to law-admissions@law.tamu.edu  FedEx, UPS, DHL express mail can be sent to Attn: Office of Graduate Admissions 1515 Commerce Street Fort Worth, TX 76102-6509

To apply for the inaugural cohort opportunity, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax

What is the proposed curriculum of 12 international tax courses?

International Taxation & Treaties I (3 credits)                  International Taxation & Treaties II (3 credits)

Transfer Pricing I (3 credits)                                          Transfer Pricing II (3 credits)

Tax Risk Management (3 credits)                                  FATCA & CRS (3 credits)

International Tax Planning (3 credits)                             Country Tax Systems (3 credits)

U.S. Int’l Tax (3 credits)                                                 EU Taxation (3 credits)

VAT/GST/Sales (3 credits)                                            Customs & Excises (3 credits)

Ethics in Decision Making (1 credit required to graduate)

What distinguishes Texas A&M’s International Tax curriculum?

Since the original 1994 curriculum focus on tax risk management and methodology, the curriculum and the program operational structure continue to evolve based on in-depth industry research. “The central function of the tax office has evolved from strategy and planning into risk management”, says William Byrnes, professor of law and associate dean at Texas A&M University. “This evolution has been accelerated by trends — primarily globalization, transparency and regulatory reform — and by the OECD (through the project on Base Erosion and Profit Shifting, or BEPS), the United States (through the Foreign Account Tax Compliance Act) and the European Union.”

In 2019, Hanover Research on behalf of Texas A&M undertook an extensive long-form survey, including interviews, of 146 tax executives about the needs and value-added of Texas A&M’s new international tax curriculum. The surveys 2019 tax professionals included: 29% U.S. and 71% foreign resident. Half the participants were tax professionals of AmLaw 100 firms (27%) or of Big 4 accounting (21%). The other half of participants were tax professionals of large multinational tax departments in the following industries: Finance / Banking / Insurance; Consulting; Business / Professional Services; Computers (Hardware, Desktop Software); Telecommunications; Aerospace / Aviation / Automotive; Healthcare / Medical; Manufacturing; Food Service; Internet; Mining; Pharmaceutical / Chemical; Real Estate; and Transportation / Distribution. Four percent of survey participants were executive-level government tax authority staff.

Besides the actual design of the course curriculum, two interesting outcomes from the industry interviews are:

  • The faculty and graduate degree candidates must be multidisciplinary, including both tax lawyers and non-lawyer tax professionals (e.g. accountants, finance executives, and economists) engaged together in learning teams with practical case studies and projects that are “applicable in a real-world context”.
  • The curriculum must include the perspectives of tax mitigation and of tax-risk management with exposure to state-of-the-industry data analytics.

In its Tax Insights magazine that is distributed globally to clients, the Big 4 firm EY stated: “Texas A&M University is among the pioneers of change in tax education”.

Texas A&M professor William Byrnes explains: “A risk management approach to tax means that the new model will by definition be multidisciplinary. Financial and managerial accounting– and law– will still be important, of course. But students will also need new “hard” skills involving big data and communications technologies and “soft” skills geared to working in multicultural settings both at home and abroad.” Says Byrnes, “You don’t want to have people who are living in the ‘Stone Age’ (pre-2015) trying to work in a 2016-onward world.” 

What is the proposed course schedule during an academic year?

Fall 2019 Part A (6 week term)                                    Fall 2019 Part B (6 week term)     

International Taxation & Treaties I                                  International Taxation & Treaties II 

Spring 2020 Part A (6 week term)                              Spring 2020 Part B (6 week term)

Transfer Pricing I                                                             Transfer Pricing II

Summer 2020 concurrent 6 week term

Tax Risk Management & Data Analytics             FATCA & CRS

Fall 2020 Part A                                                           Fall 2020 Part B

International Tax Planning                                             Country Tax Systems

International Taxation & Treaties I                                  International Taxation & Treaties II

Spring 2021 Part A                                                      Spring 2021 Part B

U.S. Int’l Tax                                                                 EU Taxation

Transfer Pricing I                                                           Transfer Pricing II

Summer 2021 concurrent term

VAT/GST/Sales             Customs & Excises

Tax Risk Management               FATCA & CRS

When are the semesters?

Fall:                 August 26 until December 14, 2019

Spring:             January 9 until April 30, 2020

Summer:          May 18 until July 11, 2020

Who is leading and creating this International Tax curriculum?

The International Tax curriculum has been developed and is led by Professor William Byrnes (Texas A&M University Law).  In 1994, Professor William Byrnes founded the first international tax program leveraging online education and in 1998 founded the first online international tax program to be acquiesced by the American Bar Association and the Southern Association of Colleges and Schools.  He is recognized globally as an online education pioneer focused on learner outcomes and best practices leveraging state of the art educational technology.  William Byrnes is also an international tax authority as LexisNexis’ leading published author of nine international tax treatises and compendium, annually updated, and a 10 volume service published by Wolters Kluwer.  His LinkedIn group International Tax Planning Professionals has over 25,000 members and is the largest international tax network on LinkedIn.

If you want to ask questions about the curriculum or how the online courses are as effective as residential ones, reach out to Professor William Byrnes at williambyrnes@law.tamu.edu.

How much time per week does a course require?

Each course unfolds over six weeks, designed to require 15 to 20 hours of input each week. This weekly input includes reviewing materials, listening to podcasts, watching video content, participating in discussion forums, engaging in live class sessions, and working with classmates on team-based learning projects. Working with the colleague groups on real-world case studies is critical to the educational experience.  Potential applicants must have available three to five hours per week to spend developing and working with colleagues on group case studies using communications technologies like Zoom video.

What is the title of this graduate degree?

For lawyers, it is a Master of Laws (LL.M.) and for accountants, tax professionals and economists, it is a Master of Jurisprudence (M.J.).  The degree is awarded by Texas A&M University via the School of Law. Completion of a curriculum, which is like a ‘major’ for university studies, is also recognized with a frameable certificate issued by the School of Law.

What are the minimum requirements of the application for each degree?

  • All applicants must have previous domestic tax or accounting professional experience reflected on the CV of work experience.
  • The Master of Laws (LL.M.) is awarded to successful graduates who hold a law degree from a law school or faculty of law that is accredited by the American Bar Association or if a foreign law degree then accredited by a governmental accreditation body and that allows the graduate eligibility for that country’s practice of law.
  • The Master of Jurisprudence (M.J.) is awarded to all other successful graduates. Applicants for the Master of Jurisprudence must hold a prior degree from an accredited academic institution in business, accounting, finance, economics, or related business field.

What are the program requirements to graduate?

The Master of Laws candidates must complete at least 24 credits to be eligible to graduate.  The Master of Jurisprudence candidates must complete at least 30 credits to be eligible to graduate.

All candidates must complete the Ethics in Decision Making course to be eligible to graduate, which presents networking opportunities with candidates of the Risk management and Wealth Management curricula. Master of Jurisprudence candidates must also complete an Introduction to U.S. Law course which will include networking among all law graduate curricula.

Candidates must complete at least six courses specific to a curriculum in order to be eligible for a degree. Without permission, candidates are allowed to enroll in up to two courses from another curriculum.

How many months to graduate?

Normally, candidates will enroll in two courses during Fall and Spring semester, focusing on one course each term (Fall and Spring have two terms of six weeks each).  Candidates may enroll in one or two courses for the Summer semester, which is only one six-week term.  Thus, most candidates will reach eligibility to graduate within two years.  Candidates have the flexibility as to how many or few courses to enroll each term, subject to university graduate program rules. Candidates may complete the program in one year to as long as four years.  Each course in a curriculum is offered once per year.

Are these degrees eligible for the Aggie Ring and membership in the Texas A&M Former Student Network (Texas A&M alumni)?

Yes, all international tax graduates will become a member of the Texas A&M family.  Texas A&M is renown for the loyalty and engagement among its former students within the Texas Aggie clubs established throughout the world. Texas A&M has graduated over 500,000 “Aggies” who are eligible to wear the Texas A&M ring to identify each other throughout the world. See https://www.aggienetwork.com/

Will there be on-campus opportunities?

Yes.  Graduation, with on-campus activities hosted at the law school, is May 1, 2020.  October 24-25, 2019 is a networking conference of the risk, wealth, and international tax graduate students piggybacking on Texas A&M’s Financial Planning conference: Thursday night networking banquet and Friday conference activities. See https://financialplanning.tamu.edu/events/conference/  Saturday, October 26, 2019 is a Texas A&M football game at the on-campus Kyle stadium that two years ago underwent a $485 million renovation. The graduate program office has inquired about a block of tickets in the same section for students interested in purchasing a ticket and staying over for the game.  Texas A&M football games are sold out with a capacity of over 100,000 seats and thus, Friday night hotel reservations in College Station should be made ASAP.  Other opportunities will be announced during the program year.

What is Texas A&M University?

Texas A&M, the second largest U.S. public university, is one of the only 60 accredited U.S. members of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity), and one of the only 17 U.S. universities that hold a triple U.S. federal designation (Land, Sea, and Space).  As one of the world’s leading research institutions, Texas A&M is at the forefront in making significant contributions to scholarship and discovery: research conducted in fiscal year 2017 at Texas A&M represented an annual expenditure of more than $900 million.  The Texas A&M University system’s operating budget exceeds $4.6 billion and Texas A&M’s combined endowments are 7th largest among universities in the world.

Texas A&M is ranked 1st among national public universities for a superior education at an affordable cost (Fiske, 2018); ranked 1st of Texas public universities for best value (Money, 2018); and ranked 1st in nation for most graduates serving as CEOs of Fortune 500 companies (Fortune, 2019).  During the program, a candidate learns Texas A&M’s traditions and six core values that are grounded in its history as one of the six U.S. senior military colleges: Loyalty, Integrity, Excellence, Leadership, Respect, and Selfless Service.

Which government and professional organizations accredit Texas A&M University?

For the complete list, see https://www.tamu.edu/statements/accreditation.html

What are the other curricula’s courses that are available to international tax candidates? 

Risk Curriculum                                              Wealth Curriculum

Enterprise Risk & Data Analytics                        Taxation of Business Associations

Information Security Management Systems        Securities Regulations

Counter-Terrorism Risk Management                 Financial & Portfolio Management

Cybersecurity                                                   Income Tax Financial Planning

Anti-Money Laundering & Bank                          Principles of Wealth Management

Principles of Risk Management                          Estate Planning, Insurance, and Annuities

Foreign Corrupt Practices Act                            Advanced Wealth Management

Fiduciary & Risk Management                            Non-Profit & Fiduciary Administration

White-Collar Crime                                            Retirement & Benefits

Legal Risk Management                                    Insurance Law (& Alternative Risk Transfer)

Financial Innovations

What is the tuition? Normal Texas A&M University tuition and available financial aid applies after the Fall term and is available at https://tuition.tamu.edu/ Texas A&M University is a public university of the state of Texas and is ranked 1st among public universities for its superior education at an affordable cost (Fiske, 2018) and ranked 1st of Texas public universities for best value (Money, 2018). 

Posted in Courses, Uncategorized | Tagged: , , | 2 Comments »

Texas A&M Law Solicits Bids for ONLINE GRADUATE PROGRAMS Service Providers, deadline August 2

Posted by William Byrnes on July 25, 2019


Status Details
Open
The Texas A&M University School of Law seeks proposals from qualified vendors for the creation of On-Line Graduate Programs per the Request for Proposal herein.
Close 8/2/2019 2:00 PM CDT
Number TAMU-RFP-1418
Contact Clyde Oberg CO@TAMU.EDU

Posted in Uncategorized | Leave a Comment »

Texas A&M Hiring Senior Associate Vice President positions

Posted by William Byrnes on July 10, 2019


The Division of Research at Texas A&M University is seeking applications for one or more positions at the Senior Associate Vice President (AVP) level.

The retirement of the Executive Associate Vice President for Research (EAVP) provides an opportunity to realign and expand the portfolios overseen by the EAVP and the two current Senior AVPs.  Senior AVPs report directly to the Vice President for Research and each has a portfolio of administrative, compliance, and research advancement responsibilities. Responsibilities to be covered by the appointment of new Senior AVP(s) include:

  • Oversight of the Comparative Medicine Program (CMP), as well as supervision of the Attending Veterinarian. The CMP is the centrally administered support service for research and teaching programs at Texas A&M and provides high quality animal care consistent with the standards established by the Guide for the Care and Use of Laboratory Animals and all pertinent local, state, and federal laws. The Attending Veterinarian is responsible for the health and well-being of all animals used for research, teaching, and testing at Texas A&M.
  • Leadership of The Texas A&M University System’s expanding emphasis on interdisciplinary life sciences, health, biomedical activities, and multidisciplinary research initiatives for the Division.
  • Oversight of the membership of compliance committees (IACUC, IRB, IBC).
  • Oversight of facilities-related issues for the Division; and developing campus-wide policies for research space.
  • Oversight of the development and recognition of University researchers at all levels.
  • Development of external partnerships.
  • Serving as the University’s Research Integrity Officer (RIO).

Ideal candidates will communicate effectively and work well with all segments of the University and its external constituencies. In addition, these positions require a demonstrated commitment to diversity, equity, and inclusion. Experience implementing and designing processes and projects is ideal. Familiarity with faculty-associated rules, guidelines, and administrative procedures is preferred.

Applications should include a cover letter with a clear statement of why the applicant believes they are qualified for the position, a description of key relevant experience, a vision statement for the position and its role in the Division of Research, a vita, and names and contact information of three references. For full consideration, applications should be received no later than July 22, 2019. These positions will remain open until filled. Applications should be submitted through email to Dr. Mark Barteau.

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly of June 27

Posted by William Byrnes on June 28, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Jun 27, 2019

IRS Clarifies Employer Withholding Obligations for Retirement Account Distributions to Non-U.S. Destinations

The IRS has released long-awaited proposed regulations clarifying the income tax withholding obligations when distributions from employer-sponsored plans (including pension, annuity, profit sharing, stock bonus or deferred compensation plans) are made to destinations outside the U.S. While U.S. payees can elect to forgo withholding, non-U.S. payees cannot. In general, the participant cannot elect to forgo withholding with respect to these distributions even if the participant provides a U.S. residential address, but directs funds to be delivered to a destination outside the U.S. If the participant provides a non-U.S. residential address, withholding obligations cannot be waived even if the participant directs that the funds be distributed to a U.S. financial institution. When the participant provides no residential address, withholding obligations cannot be waived. For more information on retirement plans and nonresident taxpayers, visit Tax Facts Online. Read More

Administration Releases Final Regs Expanding HRA Use

The regulations expanding the use of HRAs to purchase individual health insurance in the marketplace have now been finalized. The regulations largely follow the proposed regulations, but differ in that they place limits on the ability of an employer to vary HRA contributions by age. For more information on the new rule, visit Tax Facts Online. Read More

Buy-Sell Agreement Did Not Create Second Class of Stock for S Corp Qualification Purposes

The IRS recently ruled that, for purposes of the “one class of stock rule”, it would disregard a buy-sell agreement that provided if the S corporation shareholder-employee was terminated for cause, the company could repurchase his or her shares at the lesser of (1) fair market value or (2) the price paid for the shares (a forfeiture price, which could have been zero). To qualify as an S corporation, the entity must only have one class of stock, a determination that is primarily based on whether the shares confer equal rights as to distribution and liquidation proceeds. The Treasury regulations, however, provide that buy-sell and redemption type agreements will be disregarded for purposes of the one class of stock rule unless its principal purpose is to avoid the one-class rule and the agreement establishes a purchase price significantly above or below the fair market value of the stock when the parties entered the agreement. Bona fide buy-sell agreements providing for redemption or repurchase of S corporation shares in the event of death, divorce, disability or termination of employment are always disregarded, regardless of price. S corporations should review their buy-sell agreements to ensure that they satisfy guidance as to the one-class rule. For more information on the one class of stock rule, visit Tax Facts Online. Read More

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly June 6 – 12 by William Byrnes & Robert Bloink

Posted by William Byrnes on June 6, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

IRS Releases 2020 HSA Inflation-Adjusted Amounts

The IRS has released Revenue Procedure 2019-25, which provides the 2020 inflation adjusted amounts for taxpayers who contribute to health savings accounts (HSAs). For 2020, the annual contribution limit for taxpayers with self-only coverage under an HDHP is $3,550 ($7,100 for family coverage). Relatedly, a high deductible health plan (HDHP) for 2020 is one with an annual deductible of not less than $1,400 for self-only coverage ($2,800 for family coverage), with annual out-of-pocket expenses for self-only coverage that do not exceed $6,900 ($13,800 for family coverage). For more information on the contribution limits that apply to HSAs, visit Tax Facts Online. Read More

PBGC Releases Final Regulations on Valuation and Notice Requirements for Insolvent Multiemployer Plans

Under the final regulations, insolvent plans that are receiving financial assistance or terminated via amendment, but expected to become insolvent, must only perform actuarial valuations once every five years if the plan provides nonforfeitable benefits of $50 million or less. Under prior law, valuations were required every three years and the nonforfeitable benefit threshold was $25 million. In the alternative, the plan may, within 180 days, submit their current SPD, most recent actuarial report and certain other information to allow the PBGC to complete the valuation. Additionally, plan sponsors of insolvent or terminated plans now must file information about their withdrawal liability payments and withdrawal of employers who have not yet been assessed withdrawal liability with the PBGC within 180 days of the earlier of the end of the plan year in which the plan terminates or becomes insolvent. This filing is due annually. For more information on multiemployer pension plans, visit Tax Facts Online. Read More

IRS Expands Determination Letter Program

The IRS has released guidance expanding the determination letter program for individually designed cash balance plans and certain plans that have merged. Revenue Procedure 2019-20 now allows both hybrid plans and merged plans to obtain a favorable determination letter. Hybrid plans can submit determination letter applications during the 12-month period beginning September 1, 2019 and ending August 31, 2020. During this period, the IRS will not penalize these plans for plan document failures related to the final hybrid plan regulations and will cap the penalty amounts for certain other good faith amendments. Merged plans that survive after two plans have merged into a single individually designed plan. To be eligible, the plan merger must occur no later than the end of the plan year after the corporate merger transaction took place and the application for the determination letter program must be submitted after the date of the plan merger, but no later than the end of the plan year after the plan merger. For more information on plan qualification requirements, visit Tax Facts Online. Read More

LL.M. or M.Jur. Curriculum in Wealth Management at Texas A&M Law

Our Wealth Management program gives you the knowledge and skills you need to advise wealthy clients and help manage their assets. Because wealth management involves professionals with various backgrounds, we’ve designed the program with both lawyers and non-lawyers in mind. This program is offered completely online, which gives professionals the flexibility they need to learn and to meet the increasing need of being versed in the legal aspects of financial transactions and in the legal aspects of financial investment and portfolio management. Contact us to learn more

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on April 10, 2019


IRS Explains Impact of SALT Cap on Taxpayers Receiving State and Local Tax Refunds

The IRS has provided guidance explaining the relevance of the “tax benefit rule” for taxpayers who receive a refund of state and local taxes in years when the post-reform limit on deducting state and local taxes (the “SALT cap”) is in effect. For more information on the impact of the SALT cap, visit Tax Facts Online. Read More

Federal Court Invalidates DOL Rules Expanding Association Health Plans

A Washington, D.C. federal court struck down the final regulations released by the DOL in effort to expand the availability of association health plans for various smaller employers and owner-employees, which would have given these groups access to less expensive plans that offered fewer benefits and did not satisfy ACA requirements. The fate of the actual expansion of association health plans remains unclear, however, as the DOL has indicated it will explore all available options and continue to work toward expanding access. For more information on the tax rules for self-employed business owners’ health coverage, visit Tax Facts Online. Read More

Employer Stock & 401(k) Plans: The Bad, the Ugly…and the Potentially Good?

In recent years, many employers have begun shying away from offering employer stock to employees as 401(k) investments. Fiduciary liability concerns and lack of diversification, especially amid dramatic decreases in value in some cases, have made the strategy risky for some companies. However, this does not mean that any client who currently holds employer stock in a 401(k) should immediately liquidate all employer stock. Clients should first be advised that the potential to take advantage of a net unrealized appreciation (NUA) strategy could provide a more valuable way to sell off employer stock. For more information on the NUA strategy, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant
For questions, contact Customer Service at 1-800-543-0874.

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

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

Request for Applications: Associate Dean of Faculties, Texas A&M University

Posted by William Byrnes on March 26, 2019


Dear Faculty,

The Office of the Dean of Faculties seeks applications for the position of Associate Dean of Faculties.  This is an internal search with an expected completion by the end of the Spring semester.

The Associate Dean of Faculties reports to the Dean of Faculties and Associate Provost and plays a major role in the proactive planning for the Office of the Dean of Faculties, representing faculty needs and issues. The Associate Dean of Faculties works with multiple university constituencies to facilitate an environment in which each faculty member can achieve his or her maximum potential. The Associate Dean of Faculties oversees and/or collaborates in administrative aspects of key faculty-related processes such as recruiting, hiring, evaluation, tenure and promotion, and grievances. This position is part-time (50-70% time) and it is limited to senior tenured faculty members. The Associate Dean of Faculties is expected to maintain a faculty appointment, with associated responsibilities in teaching and/or research.

The ideal candidate will have the ability to communicate effectively and evaluate all requests objectively. The individual must also be able to work well with all segments of the University and external constituencies and have demonstrated a commitment to diversity, equity and inclusion. The applicant must possess the ability to verbalize the office goals to both large and small groups. Experience implementing and designing processes and projects is ideal.  Familiarity with faculty associated rules, guidelines, and administrative procedures is helpful. Further, acumen and expertise with database management and data presentation are important.

The position description can be found at dof.tamu.edu/Associate-DOF.

Applications should include a cover letter with a clear statement of why the applicant believes he or she is qualified for the position, a description of key relevant experience, and a vision statement for the position and its role in the Office of the Dean of Faculties; a vitae; and names of three references. For full consideration, applications should be received no later than COB Wednesday April 3, 2019. The position will remain open until filled. Applications should be submitted through email todof@tamu.edu.

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly (Nov 2)

Posted by William Byrnes on November 2, 2018


TAX REFORM DEVELOPMENTS by William Byrnes & Robert Bloink

IRS Guidance Provides Market Discount Not Included Under Section 451
The IRS has released guidance on the treatment of market discount under the new accounting rules created by the 2017 tax reform legislation. For accrual basis taxpayers, income must be included in gross income when all events have occurred to fix the right to the income and the amount can be determined with reasonable accuracy. Post-reform, this “all events test” is satisfied when the taxpayer takes the item into account as revenue on an applicable financial statement. For more information on the rules governing accrual-based accounting post-reform, visit Tax Facts Online and Read More.

OTHER TAX REFORM DEVELOPMENTS

IRS Releases New Model Notice Implementing Tax Reform Rollover Changes for Safe Harbor Retirement Plans
The IRS has released a new safe harbor model tax notice under IRC Section 402(f), which is important for plans that use these notices for eligible rollover distributions (however, alternative notice formats should also be updated). The model notice incorporates the new rollover deadline for qualified plan loan offsets–the deadline has been extended from 60 days to the taxpayer’s tax filing deadline. The new self-certification procedures for waiver of the 60-day rollover deadline are also reflected in the notice (these were introduced in 2016) For more information on the rules governing qualified plan rollovers, including tax reform’s changes, visit Tax Facts Online and Read More.

Tax Court Finds Capital Gain Income Counted in Determining Premium Tax Credit Eligibility Although the Affordable Care Act (ACA) rules may seem to have taken a back burner following the repeal of the individual mandate, most ACA provisions remain in force and clients continue to claim the premium tax credit. A recent Tax Court summary opinion highlights the importance of continuing to understand the ACA rules. In the case, a taxpayer’s gross income from most sources was very low, allowing the taxpayer and her son to qualify for premium tax credit assistance. However, to make ends meet, they sold several of their personal belongings in the same year, generating capital gain income. Because the capital gain income exceeded 400% of the poverty line, they were required to repay all advance premium tax credit payments. For more information on the premium tax credit, visit Tax Facts on Individuals and Small Business Online and Read More.
LITIGATION WATCH

Court Rules Stock in Former Parent No Longer Qualified as “Employer Securities” for ERISA Purposes
A district court in Texas recently ruled that stock in a former parent ceased to qualify as an “employer security” following a spinoff, so that the ERISA exemption from the duty to diversify investments and the duty of prudence no longer applied. The plan at issue was a defined contribution plan that also contained an employee stock ownership plan (ESOP), which was formed after a spinoff. The plan held both newly issued employer stock, as well as stock in the former parent company that was transferred from an old plan. The court rejected the defendants’ argument that the ERISA exemption applied, finding that stock does not retain its character as employer securities indefinitely. For more information on the tax treatment of employer securities in retirement plans, visit Tax Facts Online and Read More.

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly (Oct 31)

Posted by William Byrnes on October 31, 2018


Tax Reform Developments by William Byrnes & Robert Bloink

IRS Official Explains Link Between Business Expense and Fringe Benefit Rules for Tax-Exempt Entities Post-Reform
The 2017 tax reform legislation disallowed deductions for certain transportation-related benefits, including parking expenses, transit passes, commuter vehicles, as well as other types of employee fringe benefits. The law also modified the rules governing unrelated business income, so that tax-exempt entities that provide these benefits may now be subject to the unrelated business income tax (UBIT) on the benefits’ value. An IRS official recently explained that because of the close ties between Section 512 (UBIT) and Section 274 (fringe benefit rules), tax-exempt entities that are considering o fringe benefits to employees should look to the Section 274 expensing rules. For more information on tax reform’s impact on tax-exempt entities, visit Tax Facts Online and Read More.

Section 199A QBI Deduction Introduces Potential Compensation Planning Issues
The Section 199A deduction for the qualified business income of certain pass-through entities presents potential compensation planning issues for both small and large businesses. For example, partnerships and S corporations may wish to reevaluate guaranteed payments to partners and wages to S corporation shareholders. Larger companies may benefit from converting subsidiaries to pass-through entities and using interests in these entities to compensate certain executives where the deductibility of compensation would otherwise be limited by the post-reform restrictions contained in IRC Section 162(m). For more information on the Section 199A QBI deduction, visit Tax Facts Online and Read More.
OTHER IMPORTANT TAX DEVELOPMENTS

IRS Extends Key Tax Filing Deadlines for Victims of Hurricane Michael in Florida and Georgia
The government has declared areas impacted by Hurricane Michael to be major disaster zones, and in recognizing this, the IRS has extended several key filing deadlines for individuals who reside or have businesses in the affected areas. The filing deadline has been extended for individuals who had extended their 2017 filing deadline to October 15, and the January 15, 2019 estimated tax filing deadline has been extended to February 28, 2019. Impacted entities required to file a Form 5500 also have until February 28, 2019 to file if the form was originally due on or after October 7, 2018 and before February 28. For more information on casualty loss deductions in major disaster zones, visit Tax Facts Online and Read More.

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on September 21, 2018


TAX REFORM DEVELOPMENTS

IRS Provides Guidance Updating Accounting Method Changes for Terminated S Corporations
The 2017 tax reform legislation added a new IRC section that now requires eligible terminated S corporations to take any Section 481(a) adjustment attributable to revocation of the S election into account ratably over a six-year period. Under newly released Revenue Procedure 2018-44, an eligible terminated S corporation is required to take a Section 481(a) adjustment ratably over six years beginning with the year of change if the corporation (1) is required to change from the cash method to accrual method and (2) makes the accounting method change for the C corporation’s first tax year. For more information on the rules governing S corporations that convert to C corporation status post-reform, visit Tax Facts Online and Read More.
OTHER IMPORTANT DEVELOPMENTS

IRS Guidance on Interaction between New Association Health Plan Rules and ACA Employer Mandate
The IRS recently released new guidance on the rules governing association health plans (AHPs), which permit expanded access to these types of plans, and the Affordable Care Act (ACA) employer mandate. The guidance provides that determination of whether an employer is an applicable large employer subject to the shared responsibility provisions is not impacted by whether the employer offers coverage through an AHP. Participation in an AHP does not turn an employer into an applicable large employer if the employer has less than 50 employees. For more information on the employer mandate, visit Tax Facts Online and Read More.

OCC Explains Employee Tax Consequences of Employer’s Belated Payment of FICA Tax on Fringe Benefits
The IRS Office of Chief Counsel (OCC) released a memo explaining the tax consequences of a situation where the employer failed to include $10,000 of fringe benefits. The employer paid the FICA taxes associated with the benefits in 2018, although the benefits were provided in 2016. The guidance provides that the payment in 2018 did not create additional compensation for the employee in 2016. If the employer collects the amount of the employee portion of the FICA tax from the employee in 2018, the employer’s payment is not additional compensation. However, if the employer does not seek repayment, the payment of the employee’s portion is additional compensation. For more information on FICA tax issues in the employment benefit context, visit Tax Facts Online and Read More.
LITIGATION WATCH

Employer Amendments to VEBA Did Not Result in Adverse Tax Consequences
The IRS recently ruled that an employer could amend its voluntary employees’ beneficiary association (VEBA) to provide health benefits for active employees in addition to retired employees without violating the tax benefit rule or incurring excise taxes. In this case, the VEBA provided health benefits for collectively bargained retired employees. When the VEBA became overfunded, the employer proposed transferring the excess assets into a subaccount for collectively bargained active employees. The IRS found that this proposed amendment would not violate the tax benefit rule because, the new purpose of providing health benefits to active employees under a collective bargaining agreement was not inconsistent with the employer’s earlier deduction. For more information on VEBAs, visit Tax Facts Online and Read More.
Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Richard Cline, J.D.
Senior Director, Practical Insights
Robert Bloink, J.D., LL.M.
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Alexis Long, J.D.
Senior Contributor
Connie L. Jump
Senior Manager, Editorial Operations
Danielle Birdsail
Digital Marketing Manager
Patti O’Leary
Senior Editorial Assistant
Emily Brunner
Editorial Assistant
For questions, contact Customer Service at 1-800-543-0874.

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

Make Sure You’ve Made a Completed Gift

Posted by bonddad on August 28, 2018


In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors and contributor to the Income Seeker section of Thestreet.com.

The determination of gift tax liability rests on whether the donor has “so parted with dominion and control of the property as to leave him, “no power to change its disposition, whether for his own benefit or for the benefit of another, the gift is complete.” (Treas. Reg. §20.2511.2(b)).  The mosts obvious example occurs when the donor simply gives money to an individual or organization.  For example, the donor writes a check (or, as is more common now, makes a debit card transfer) to a charity.  Once the money leaves his account, the gift is complete.

Things can get a bit dicier when it comes to using trusts.  A revokable trust results in an incomplete gift because the trustor can simply terminate the trust, reverting the trust property back to his control.  But an irrevocable trust doesn’t necessarily result in a completed gift.  Consider the following facts:

  1. Can the trustor change the trustee?  If so, it’s possible the trustor could nominate a more aggreeable trustee that the trustor can bend to his will.  This could result in a determination that the donation to the trust was an incomplete gift.
  2. Does the trustor retain a power of appointment over the property?  If so, the gift is incomplete, at least to the degree of the power.

As with all things, the devil is in the details.

 

 

Posted in Uncategorized | Leave a Comment »

Global Tax Guides

Posted by bonddad on August 13, 2018


Sorry for the lack of posting over the last few months.  William and I (along with several others) have been updating Matthew Bender’s Texas Estate Planning, which William has either uploaded or will upload soon.  

Here are a few key links to the global tax guides issued by some of the major accouting firms.  I’ve always found these guides to provide an excellent overview of various countries’ tax regimes.

E&Y Global Tax Guide

PWCs Global Tax Summaries

PKF Global Tax Guides

 

Posted in Uncategorized | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on July 24, 2018


Tax Reform May Require Additional Disclosures for Withholding Purposes
The IRS released a draft Form W-4 designed to reflect the new changes to the tax code imposed by the 2017 tax reform legislation, including the elimination of the personal exemption. The new form is more complex and detailed than previously existing forms, because employers can no longer use the personal exemption to calculate withholding. The form itself is not yet finalized, and it is possible that changes following a very brief comment period. For more information on the suspended personal exemption, visit Tax Facts Online and Read More.
Small Business Valuation Discounts Less “Valuable” Post-Reform
With the enlargement of the estate tax exemption for 2018-2025, many planners are now seeking to reverse strategies that would have permitted clients to claim valuation discounts in their estate plans. Valuation discounts are primarily important in reducing the value of a client’s taxable estate–usually in the small business context. However, if the client is unlikely to be subject to the estate tax at all, use of a valuation discount can cause the client to forgo a portion of the basis adjustment to which his or her heirs would otherwise be entitled. Clients who do not expect to be subject to the estate tax may wish to revisit their estate planning. For more information on minority discounts in the small business context, visit Tax Facts Online and Read More.
OTHER TAX DEVELOPMENTS

Need to Know Information for Kids With Summer Jobs
Many teenagers and college students are likely to be working this summer, and it is important that both the parent and kids should know with respect to potential tax liabilities. First, kids should pay attention to their withholding to ensure that they aren’t under or over paying–any over-withholding will be returned in the form of a refund, and most minors should claim 0 or 1 allowances on their Form W-4. Kids also should be aware that some states will require even very low income workers to file state income tax returns, so even if the kid expects to be exempt at the federal level, a state filing may be required. Finally, if the kid has started his or her own summer business–such as a lawn mowing business–business-related expenses may be tax deductible, so should be carefully documented for tax time. For more information on the kiddie tax, visit Tax Facts Online and Read More.

Last Call for IRS Offshore Voluntary Disclosure Program is Looming
The September 28, 2018 closing date for the IRS’ offshore voluntary disclosure program (OVDP) is looming. Many advisors agree that the September 28 deadline is the last date for potential participants to submit an “initial submission” that requests admission, and note that a pre-clearance request is likely insufficient. The initial submission requires more detailed information, such as the history of any foreign accounts, assets and past reporting, as well as the source of any foreign funds and an estimate of foreign account value. For more information on foreign account reporting requirements, visit Tax Facts Online and Read More.
LITIGATION WATCH

Metlife Lawsuit Highlights Missing Plan Participant Issue
Metlife has recently been sued because of its failure to pay retirement benefits to pension plan participants that it claims it can no longer locate, highlighting the importance of the “missing participant” issue in the financial community. Metlife’s liability stems from a pension risk transfer transaction, where the pension plan itself purchased a group annuity contract from Metlife in order to reduce its pension liabilities. It then became Metlife’s responsibility to make payments to plan participants. For more information on pension plan rules, visit Tax Facts Online and Read More.

Posted in Uncategorized | Leave a Comment »

New SEC Rules on Fiduciary Standard

Posted by fhalestewart on April 19, 2018


From the SEC:

SEC Proposes to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Investment Professionals

FOR IMMEDIATE RELEASE
2018-68

Washington D.C., April 18, 2018 —

The Securities and Exchange Commission today voted to propose a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers while preserving access to a variety of types of advice relationships and investment products.

Under proposed Regulation Best Interest, a broker-dealer would be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.  Regulation Best Interest is designed to make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer in making recommendations.

In addition to the proposed enhancements to the standard of conduct for broker-dealers in Regulation Best Interest, the Commission proposed an interpretation to reaffirm and, in some cases, clarify the Commission’s views of the fiduciary duty that investment advisers owe to their clients.  By highlighting principles relevant to the fiduciary duty, investment advisers and their clients would have greater clarity about advisers’ legal obligations.

Next, the Commission proposed to help address investor confusion about the nature of their relationships with investment professionals through a new short-form disclosure document — a customer or client relationship summary.  Form CRS would provide retail investors with simple, easy-to-understand information about the nature of their relationship with their investment professional, and would supplement other more detailed disclosures.  For advisers, additional information can be found in Form ADV.  For broker-dealers, disclosures of the material facts relating to the scope and terms of the relationship would be required under Regulation Best Interest.

Finally, the Commission proposed to restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor” as part of their name or title with retail investors.  Investment advisers and broker-dealers would also need to disclose their registration status with the Commission in certain retail investor communications.

Taken as a whole, the proposed rules and interpretations would enhance investor protection by applying consistent principles to investment advisers and broker-dealers: provide clear disclosures, exercise due care, and address conflicts of interest.  The specific obligations of investment advisers and broker-dealers would be, however, tailored to the differences in the types of advice relationships that they offer.

SEC Chairman Jay Clayton stated, “The tireless work of the SEC staff has proven to me that we can increase investor protection and the quality of investment services by enhancing investor understanding and strengthening required standards of conduct.  Importantly, I believe we can achieve these objectives while simultaneously preserving investors’ access to a range of products and services at a reasonable cost.  The package of rules and guidance that the Commission proposed today is a significant step to achieving these objectives on behalf of our Main Street investors.”

The public comment period will remain open for 90 days following publication of the documents in the Federal Register.

*   *   *

FACT SHEET

SEC Open Meeting
Apr. 18, 2018

The Commission proposed two rules and an interpretation to address retail investor confusion about the relationships that they have with investment professionals and the harm that may result from that confusion.  Evidence indicates that retail investors do not fully understand the differences between investment advisers and broker-dealers, which could lead them to choose the wrong kind of investment professional for their particular needs, or to receive advice that is not in their best interest.  The Commission will therefore consider strengthening the standard of conduct that broker-dealers owe to their customers, reaffirming and, in some cases, clarifying the standard of conduct that investment advisers owe to their clients, and providing additional transparency and clarity for investors through enhanced disclosure designed to help them understand who they are dealing with, and why that matters.  The rulemaking package seeks to enhance investor protections while preserving retail customer access to transaction-based brokerage accounts and a broad range of investment products.
Proposal’s Highlights
Regulation Best Interest 

A broker-dealer making a recommendation to a retail customer would have a duty to act in the best interest of the retail customer at the time the recommendation is made, without putting the financial or other interest of the broker-dealer ahead of the retail customer.

A broker-dealer would discharge this duty by complying with each of three specific obligations:

  • Disclosure obligation: disclose to the retail customer the key facts about the relationship, including material conflicts of interest.
  • Care obligation: exercise reasonable diligence, care, skill, and prudence, to (i) understand the product; (ii) have a reasonable basis to believe that the product is in the retail customer’s best interest; and (iii) have a reasonable basis to believe that a series of transactions is in the retail customer’s best interest.
  • Conflict of interest obligation: establish, maintain and enforce policies and procedures reasonably designed to identify and then at a minimum to disclose and mitigate, or eliminate, material conflicts of interest arising from financial incentives; other material conflicts of interest must be at least disclosed.

Investment Adviser Interpretation

An investment adviser owes a fiduciary duty to its clients — a duty that the Supreme Court found exists within the Advisers Act.  The proposed interpretation reaffirms, and in some cases clarifies, certain aspects of the fiduciary duty that an investment adviser owes to its clients.

Form CRS – Relationship Summary

Investment advisers and broker-dealers, and their respective associated persons, would be required to provide retail investors a relationship summary.  This standardized, short-form (4 page maximum) disclosure would highlight key differences in the principal types of services offered, the legal standards of conduct that apply to each, the fees a customer might pay, and certain conflicts of interest that may exist.

Investment advisers and broker-dealers, and the financial professionals who work for them, would be required to be direct and clear about their registration status in communications with investors and prospective investors.  Certain broker-dealers, and their associated persons, would be restricted from using, as part of their name or title, the terms “adviser” and “advisor” — which are so similar to “investment adviser” that their use may mislead retail customers into believing their firm or professional is a registered investment adviser.

Background

The Commission has been considering issues relating to changes in the market for investment advice, retail investor understanding of their advice relationships, and broker-dealer conflicts of interest, since the mid-1990s.  The staff studied these matters further pursuant to the Dodd-Frank Act’s mandate in Section 913.  Most recently, in June 2017, Chairman Jay Clayton sought public input on a variety of issues associated with standards of conduct for investment professionals.  Today’s proposed rules and interpretations are the outcome of the Commission and the staff’s extensive experience in and consideration of these issues

Posted in Uncategorized | Leave a Comment »

What Exactly Is A Fiduciary Standard?

Posted by fhalestewart on March 27, 2018


Last week, I noted that a court overturned the DOL’s new “fiduciary” rule.  Since its enactment, the new rule has been a point of contoversy within the investment community.

However, what exactly is a fiduciary standard?  Let’s begin by looking at the definition of fiduciary, which, according to the Merriam-Webster online legal dictionary, is

“one often in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation : one (as an agent) having a fiduciary duty to another.”

The definition contains a number of key concepts:

  1. “one … in a position of authority.”   The person on whom the law places the duty is “superior” to the other person, usually because the fidicuary has a specific skill-set that the other does not.  The fiduciary is an expert.
  2. The fiduciary “act[s] on behalf of another.”  The fiducairy must not consider himself ot his personal situation when making decisions, but instead the situation of the person for whom he is exercising his skills.
  3. The fiduciary “assumes a duty” or a “moral obligation.”  There’s an ethical component to the duty; it’s almost like a higher calling.
  4. The fiduciary must act
    1. In good faith: The Restatement of Contracts defines good faith as, “honesty in the fact of the conduct.”  Most other areas of law use similar terminology and concepts.
    2. “and with care, candor, and loyalty.”  To a certain extent, these restate the need to act for another instead of oneself irrespective of the fiduciary’s situation.
  5. The definition for obligation contains a number of phrases that imply a moral component …
    1. “binding oneself … by a moral tie.”
    2. “A duty … to follow a code.”
    3. “A course of action … imposed by conscience.”
      1. (The American Heritage Dictionary, (c) 1985).

Because the fiduciary has more knowledge or skill in a particular area, he can also take advantage of his client.  The law therefore casts the relationship between the fiduciary and his client in moral terms.

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

 

 

Posted in Uncategorized | Leave a Comment »

IRS Releases 2018 “Dirty Dozen” Tax Scam List

Posted by fhalestewart on March 22, 2018


This link will take you to a page that has a link to each of the IRS’ targeted transactions for 2018.

Here is a screen grab of the main IRS page:

IRS

Posted in Uncategorized | Leave a Comment »

Court Overturns DOL Fiduciary Rule

Posted by fhalestewart on March 20, 2018


From the NY Times:

FR1

FR2

Posted in Uncategorized | Leave a Comment »

The Arguments Against Asset Protection Trusts

Posted by fhalestewart on March 11, 2018


My colleague Jay Adkisson has written a summation of a new domestic asset protection trust case at Forbes.  Another colleague, Steve Oshins, has weighed in as well.   Mr. Adkisson argues this case is the final nail in the asset protection trust industry; Mr. Oshins argues for a less sweeping interpretation.

I counsel against these structures for a number of reasons, which are listed below in no order of importance.

1.) We have yet to see a grantor of a foreign or domestic asset protection trust (APT) win a case.  Planners who still like APTs correctly argue that these cases have a potent negative combination: blatant fraudulent transfers and unsavory characters — an admittedly very bad combination of facts.  Regardless, there are now a number of decisions where the APT failed when challenged.  Why?  That leads to point number two:

2.) APTs are bad public policy.  At the heart of any case involving an APT is a creditor enforcing a judgment.  A court upholding an APT will be opening the door to the idea that a debtor can “have his cake and eat it too;” he can be adjudicated to owe somebody money, have the financial capability to satisfy the debt, yet not do so — and, in fact, have a court say they don’t have to.  That’s a detrimental holding in a capitalist economy that depends on credit financing to fuel economic growth.  So far, courts don’t want to play.

3.) Point number 2 is derived from the Uniform Trust Code’s commentary to §505 which “… follows sound doctrine in providing that a settlor who is also a beneficiary may not use the trust as a shield against the settlor’s creditors.  The drafters of the UTC concluded that traditional doctrine reflects sound public policy.”  Several courts that have ruled against APTs have referenced this section ot the UTC.

4.) Are courts turning against asset protection planning?  It depends on where you do it, but in California they are:

As indicated by Defendant’s testimony that prior to filing his bankruptcy petition, he met with an asset protection firm, and one of his goals in doing so, was to potentially protect his assets from potential creditors . . . and while he changed his mind about using the asset protection firm, the evidence of his consideration, meeting and paying the asset protection firm supports a finding that Defendant intended to hinder or delay his nonpreferred creditors. 

One could argue that this decision should be taken with a  grain of salt because it’s from California — a valid point.  But, you can see the argument being effective regardless of the jurisdiction.  Imagine this line of questioning in a deposition or at trial:

Lawyer: And on this date, you saw John Smith, correct?

Defendant: Yes.

Lawyer: Doesn’t Mr. Smith hold himself out as an “asset protection lawyer?”

Defendant: Yes

Lawyer: why did you feel the need to consult with him?

There’s no answer to this question that can’t be spun in a negative light.

5.) Creditors have a number of well-defined and clearly articulated methods of obtaining a judgment.  Even Texas — my home and debtor’s haven — has a statutory path for creditors to obtain a judgment and satisfy it.  What usually keeps creditors from pursuing a claim is time (litigation is an inherently long and drawn-out process), money (they will probably have to pay at least a portion of their ongoing legal bills), and effort (litigation takes an inordinate amount of time away from running a business).  If a debt is small, it’s far easier to write it off as a business loss (see §165) and be done with it.  But an aggressive creditor will eventually get his money.

6.) Every time I hear someone extol the virtues of a spendthrift trust, I’m reminded of the following line from the movie, A Princess Bride: “That word doesn’t mean what you think it means.”  A spendthrift provision prevents the voluntary or involuntary alienation of the beneficiary’s interest (§502 of the Uniform Trust Code).  So, let’s assume that beneficiary John Smith owes $10,000 to Mr. X.  Mr. Smith cannot transfer his interest to Mr. X to satisfy the debt (For more, please see Nichols, Assignee v. Eaton Et Al, 91 U.S. 716, 23 L.Ed. 254 (1875) ).

But a spendthrift provision only applies to the trust; once the money is distributed, it can be attached any number of ways.  If it’s transferred to a pass-through entity such as a family limited partnership, a creditor can use a charging order to obtain his funds.  If the money is transferred to a bank account, the creditor can simply levy the bank account.  For a discussion of the procedures in my home state of Texas, please read “Post-Judgment Remedies: Garnishment, Execution, Turnover Proceedings, Receiverships Under the DTPA, and “Other Stuff” by Donna Brown.  Ultimately, this gets back to point number 5: an aggressive creditor is going to get his money eventually.

7.) Why would you choose to be shielded behind an APT’s spendthrift provision — which is a new legal concept (in legal years) — when you can use a pass-through entity like an LLC whose liability shield is very well-developed?  Brief history: the corporate limited liability shield came about sometime in the mid-1800s.  I believe New York was the first state to adopt the concept.  It caught on like wildfire and has now been praised as a key concept of a capitalist society (For an in-depth discussion, please see Stephen Presser’s book, Piercing the Corporate Veil).

Corporate limited liability is now a very well-developed legal concept developed over hundreds of cases.  This is great news for planners because we have exacting detail about what works and what doesn’t.  Why not use this area of law — that also has a number of favorable decisions — instead of APT law which so far has issued a large number of anti-APT decisions?

Again, these are presented in no order of importance.  But with yet another asset protection trust failing when challenged, I believe these points have a great deal of merit.

 

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

 

 

 

 

Posted in Uncategorized | Leave a Comment »

Foreign Asset Protection Trusts; Let the Buyer Beware

Posted by fhalestewart on March 6, 2018


This is an article that I wrote for the TaxAnalysts Service a few months ago.157tn1817-Stewart

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Part VII: Taxation of Benefits

Posted by fhalestewart on February 26, 2018


I often refer to reading the tax code as “hop, skip and jump” reading because one paragraph or section of the code will require the reader to reference several other sections in order to comprehend the meaning behind the first code section.    §402, which explains the taxability of deferred compensation, is a prime example of this approach.   Section (a) states:

Except as otherwise provided in this section, any amount actually distributed to any distributee by any employees’ trust described in section 401(a) which is exempt from tax under section 501(a) shall be taxable to the distributee, in the taxable year of the distributee in which distributed, under section 72 (relating to annuities)

Section 401(a) provides the relevant rules for a trust to obtain tax-exempt status.  By way of quick review, these include certain vesting timelines, minimum participation standards, and non-alienability requirements.  Section 501(a) is the tax code section that grants tax-exempt status to certain organizations as well as trusts specifically mentioned in §401(a).  And §72 contains the rules for annuities, which provides rules allowing the recipient to not be taxed on his return of principal.

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Pt. VII: Vesting

Posted by fhalestewart on February 19, 2018


The online Merriam-Webster dictionary defines “vesting” as “the conveying to an employee of inalienable rights to money contributed by an employer to a pension fund or retirement plan especially in the event of termination of employment prior to the normal retirement age”

The purpose of the vesting rules is to make sure that the money the employee contributes to the plan is his, and can never be taken away.  Here, there are actually two rules — one for contributions made by the employee.  These rights are “non-forfeitable” — they cannot be taken away.

The second rules apply to the employer’s contributions.  The statute contains two approved vesting schedules.  The first is the “3-year rule.”  If an employee has at least three years of service, he has a non-forfeitable right to 100% of the employer’s contributions.   The second is a schedule based on the years of service:

Untitled

Due to its somewhat stricter nature, most this schedule is more attractive from the employer’s perspective.

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Part VII: Profit-Sharing

Posted by fhalestewart on February 13, 2018


Adding a profit-sharing component to your 401(k) plan can increase your contributions while also motivating employees.  All of the previously-discussed rules apply: you can’t have a top-heavy plan, you can’t discriminate in favor of certain employees, etc…

Here’s a general description of what’s involved from the code:

A profit-sharing plan is a plan established and maintained by an employer to provide for the participation in his profits by his employees or their beneficiaries. The plan must provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death, or severance of employment. A formula for allocating the contributions among the participants is definite if, for example, it provides for an allocation in proportion to the basic compensation of each participant.

The best part is the company is not required to make contributions every year; they can also determine the total amount of their contribution in the first quarter of the year, after sitting down with their accountant and getting a good idea for the previous year’s performance.

The total contribution is limited to the lesser of 25% of compensation or $55,000 (for 2018; $54,000 for 2017, subject to cost-of-living adjustments for later years).

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Part VI: Minimum Participation Standards

Posted by fhalestewart on February 6, 2018


In general, a plan cannot specifically require that employees work for the company at least 1 year or attain the minimum age of 21.  For large employers with several divisions, this can happen accidentally.  Here are two examples from the accompanying Treasury Regulations:

Example 1. Corporation A is divided into two divisions. In order to work in division 2 an employee must first have been employed in division 1 for 5 years. A plan provision which required division 2 employment for participation will be treated as a service requirement because such a provision has the effect of requiring 5 years of service.

Example 2. Plan B requires as a condition of participation that each employee have had a driver’s license for 15 years or more. This provision will be treated as an age requirement because such a provision has the effect of requiring an employee to attain a specified age.

Second, the plan cannot exclude an employee who attains a specific age.

Finally, there are minimum participation standards, which must comply with one of the following three rules.

1.) The plan must benefit at least 70% of the “non-highly compensated” employees

2.) The plan benefits—

(i) a percentage of employees who are not highly compensated employees which is at        least 70 percent of

(ii) the percentage of highly compensated employees benefiting under the plan.

3.) The company sets up its own classification system approved by the Secretary that benefits at least 70% of the non-highly compensated individuals.

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Part V: Exemption Planning

Posted by fhalestewart on January 30, 2018


When a person declares bankruptcy, all of their property becomes part of the estate — the total assets that are used to pay existing creditors.  Here is the exact definition contained in the bankruptcy code:

(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:

      (1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.
     (2) All interests of the debtor and the debtor’s spouse in community property as of the commencement of the case that is—

        (A) under the sole, equal, or joint management and control of the debtor; or
        (B) liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor’s spouse, to the extent that such interest is so liable.

This is very similar to the definition the gross estate in the estate tax code or gross income in §61 — it’s an exceedingly broad definition, designed to include every piece of property owned by the debtor.

The code, however, does allow several specific exemptions.  Under the federal statute, the debtor may choose federal or state law exemptions.  Under federal statute, retirement plans are excluded

§522(b)(1) Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (2) or, in the alternative, paragraph (3) of this subsection.

…..

     (C) retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

 Most states allow this exemption as well.

Posted in Uncategorized | Leave a Comment »

Deferred Compensation, Part IV: Non-Discrimination

Posted by fhalestewart on January 24, 2018


According to §401(a)(4), a deferred compensation plan cannot discriminate in favor of highly compensated employees (HCEs), which is a person who either owned 5% of the business at any time during the year or made more than $80,000 (inflation-adjusted) during the preceding year.

The regulations provide two safe-harbor tests for defined contribution plans (which comprise the vast bulk of 401ks).  The first is a “unified allocation formula,” which requires all plan contributions to be allocated in one of three ways:

  • the same percentage of plan year compensation,
  • the same dollar amount, or
  • the same dollar amount for each uniform unit of service (not to exceed one week) performed by the employee during the plan year.

While the rules do allow a C-Suite executive to benefit from the plan based on their status within the company, it doesn’t allow them to benefit more than their status would allow.

The second method uses a “uniform points method” which are determined by summing “the employee’s points for age, service, and units of plan year compensation for the plan year.”

The main point that advisers should take from these rules is that the regulations contain very rigid, mechanical rules that prevent the top of the employee ranks from rigging the retirement plan to their benefit at the expense of the rank-and-file.

 

In 2009, F. Hale Stewart, JD. LL.M. graduated magna cum laude from Thomas Jefferson School of Law’s LLM Program.  He is the author of three books: U.S. Captive Insurance LawCaptive Insurance in Plain English and The Lifetime Income Security Solution.  He also provides commentary to the Tax Analysts News Service, as well as economic analysis to TLRAnalytics and the Bonddad Blog.  He is also an investment adviser with Thompson Creek Wealth Advisors. 

 

Posted in Uncategorized | Leave a Comment »

Understanding the New Tax Law

Posted by fhalestewart on January 22, 2018


For those of you who are interested in the new tax law, please see this paper from Sam Donaldson, titled, Understanding the New Tax Law.

 

SSRN-id3096078

Posted in Uncategorized | Leave a Comment »

 
%d bloggers like this: