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

Posts Tagged ‘Taxation’

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

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TaxFacts Intelligence Weekly of Aug 1, 2019 – Actionable Analysis for Financial Advisors

Posted by William Byrnes on August 5, 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


Tuition Waiver for International Tax Online Courses (more information here)

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, and provide weekly feedback on content, support, and general experience in exchange for waiving the tuition and providing the books free.  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 Expands List of Preventative Care Coverage Not Subject to HDHP Deductibles
Pursuant to the executive order directing the agencies to expand the use of HSAs and HDHPs for individuals suffering from certain chronic conditions, the IRS has released Notice 2019-45, which expands the definition of “preventative care” to include certain treatments and medications related to chronic illnesses. Generally, HDHPs may now provide these forms of care on a pre-deductible basis without jeopardizing the plan’s status as an HDHP and the participant’s ability to use HSA funds in connection with that HDHP. The agencies have indicated that they will review the new list, which includes items deemed to be “low cost”, every five to ten years. The new table, contained Notice 2019-45, includes items such as glucometers for patients suffering from diabetes and beta blockers for patients suffering from congestive heart failure. For more information on HDHPs, visit TaxFacts Online. Read More

IRS Releases Premium Tax Credit-Related Inflation Adjustments for 2020
The IRS has released the Affordable Care Act (ACA) premium tax credit-related inflation adjusted numbers for use in 2020. In 2020, the percentage used to determine whether an individual is eligible for employer-sponsored health insurance that is affordable is 9.78% (down from 9.86% in 2019). This means that individuals who contribute more than 9.78% of their household income toward health insurance in 2020, he or she may be eligible for premium tax credit assistance. For more information on determining when health coverage is deemed affordable for ACA purposes, visit Tax Facts Online. Read More


IRS Announces Compliance Campaign Directed at S Corps
The IRS has announced that one of the areas it will be focusing its compliance efforts upon in the coming year involves S corporations that were formerly C corporations. The primary issue of focus will be the built-in gains tax. In general, the built-in gains tax applies to C corporations that convert to S status at a time when they have net unrealized built-in gain, and then sell assets within five years after converting to an S corporation. The tax should be paid at the S corporation level, but the IRS has determined that the tax is often not paid. While this does not necessarily mean that audit resources will be directed toward these entities, it does mean that the IRS has determined that it is necessary to dedicate training and resources toward the goal of ensuring proper compliance with the built-in gains tax. For more information on situations where S corporations may be taxed at the entity level, visit Tax Facts Online. Read More


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Getting its “fair share” from the U.S., U.K. implements 2% tax on gross revenues of Google, Amazon, and Facebook

Posted by William Byrnes on July 11, 2019

From April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users. Large multi-national enterprises with revenue derived from the provision of a social media platform, a search engine or an online marketplace (‘in scope activities’) to UK users.

The Digital Services Tax will apply to businesses that provide a social media platform, search engine or an online marketplace to UK users. These businesses will be liable to Digital Services Tax when the group’s worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.

If the group’s revenues exceed these thresholds, its revenues derived from UK users will be taxed at a rate of 2%. There is an allowance of £25m, which means a group’s first £25m of revenues derived from UK users will not be subject to Digital Services Tax.

The provision of a social media platform, internet search engine or online marketplace by a group includes the carrying on of any associated online advertising business. An associated online advertising business is a business operated on an online platform that facilitates the placing of online advertising, and derives significant benefit from its connection with the social media platform, search engine or online marketplace. There is an exemption from the online marketplace definition for financial and payment services providers.

The revenues from the business activity will include any revenue earned by the group which is connected to the business activity, irrespective of how the business monetises the platform. If revenues are attributable to the business activity and another activity, the business will need to apportion the revenue to each activity on a just and reasonable basis.

Revenues are derived from UK users if the revenue arises by virtue of a UK user using the platform. However, advertising revenues are derived from UK users when the advertisement is intended to be viewed by a UK user.

A UK user is a user that is normally located in the UK.

Where one of the parties to a transaction on an online marketplace is a UK user, all the revenues from that transaction will be treated as derived from UK users. This will also be the case when the transaction involves land or buildings in the UK. However, the revenue charged will be reduced to 50% of the revenues from the transaction when the other user in respect of the transaction is normally located in a country that operates a similar tax to the Digital Services Tax.

Businesses will be able to elect to calculate the Digital Services Tax under an alternative calculation under the ‘safe harbour’. This is intended to ensure that the tax does not have a disproportionate effect on business sustainability in cases where a business has a low operating margin from providing in-scope activities to UK users

The total Digital Services Tax liability will be calculated at the group level but the tax will be charged on the individual entities in the group that realise the revenues that contribute to this total. The group consists of all entities which are included in the group consolidated accounts, provided these are prepared under an acceptable accounting standard. Revenues will consequently be counted towards the thresholds even if they are recognised in entities which do not have a UK taxable presence for corporation tax purposes.

A single entity in the group will be responsible for reporting the Digital Services Tax to HMRC. Groups can nominate an entity to fulfil these responsibilities. Otherwise, the ultimate parent of the group will be responsible.

The Digital Services Tax will be payable and reportable on an annual basis.

Draft legislation

Explanatory notes


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Guidance on receiving the 20% deduction from qualified business income; many rental real estate owners may claim deduction

Posted by William Byrnes on January 25, 2019

The Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).

The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act (TCJA) allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income.  Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.

The QBI deduction is available in tax years beginning after Dec. 31, 2017, meaning eligible taxpayers will be able to claim it for the first time on their 2018 Form 1040.

The guidance, released today includes:

  • A set of regulations, finalizing proposed regulations issued last summer, A new set of proposed regulations providing guidance on several aspects of the QBI deduction, including qualified REIT dividends received by regulated investment companies
  • revenue procedure providing guidance on determining W-2 wages for QBI deduction purposes,
  • notice on a proposed revenue procedure providing a safe harbor for certain real estate enterprises that may be treated as a trade or business for purposes of the QBI deduction

The proposed revenue procedure, included in Notice 2019-07, allows individuals and entities who own rental real estate directly or through a disregarded entity to treat a rental real estate enterprise as a trade or business for purposes of the QBI deduction if certain requirements are met.  Taxpayers can rely on this safe harbor until a final revenue procedure is issued.

The QBI deduction is generally available to eligible taxpayers with 2018 taxable income at or below $315,000 for joint returns and $157,500 for other filers. Those with incomes above these levels, are still eligible for the deduction but are subject to limitations, such as the type of trade or business, the amount of W-2 wages paid in the trade or business and the unadjusted basis immediately after acquisition of qualified property. These limitations are fully described in the final regulations.

The QBI deduction is not available for wage income or for business income earned by a C corporation.

For details on this deduction, including answers to frequently-asked questions, as well as information on other TCJA provisions, visit IRS.gov/taxreform

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Keeping Clients From Double Tax on Their Retirement Income

Posted by William Byrnes on January 6, 2014

For many clients today, post-retirement relocation has become the ultimate goal. Unfortunately, these clients have often failed to consider the state tax implications that may arise when they tap into retirement funds in a new state—a state in which the funds were not actually earned. This type of scenario could result in the client becoming subject to taxation in both the state in which the income was received and the state in which the income was earned—even though the client has relocated—especially in the case of funds received pursuant to a nonqualified deferred compensation plan.

With careful planning, however, the client may be able to use federal rules to avoid taxation…. read the analysis of Professor William Byrnes and Robert Bloink that may apply to your clients-at Think Advisor 1


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IRS Gives High-Income Taxpayers a Break on New 3.8% Tax

Posted by William Byrnes on January 2, 2014

The IRS has finally given high-income taxpayers a break with the release of the final regulations governing the new 3.8% tax on net investment income.

These final rules mark a dramatic shift from the IRS’s previous position. By adding flexibility to the rules, the IRS’s unanticipated amendments ease the sting of the investment income tax.

Read Professor Robert Bloink and William Byrnes’ analysis of the shift in the IRS’ position at > Think Advisor <  

tax planning case studies for individuals and small business available on Tax Facts online

Posted in Taxation, Wealth Management | Tagged: , , , , , , , | 3 Comments »

Net unrealized appreciation tax break: Still a tax break in 2013?

Posted by William Byrnes on September 4, 2013

The tax break provided for net unrealized appreciation (NUA) on 401(k) account distributions once provided a powerful tax savings strategy for clients with large 401(k) balances — allowing some clients to reduce their taxes on these retirement funds by as much as 20 percent.

Today, as high-net-worth clients are increasingly seeking strategies to help minimize their tax burdens in light of higher 2013 tax rates, the NUA strategy may have become more complicated than ever.   Read the full analysis of William Byrnes & Robert Bloink at > Life Health Pro <

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More States Moving to Estate Tax Repeal

Posted by William Byrnes on November 18, 2011

In recent times, federal estate tax is receiving most of the attention. Nevertheless, most of the death tax activity affecting Americans occurs at the state level.

The reality is, fewer states (twenty-two plus D.C) currently have a “death tax”—referring collectively to estate and inheritance taxes. Recently,  a number of those states  increased their exemption amount to exclude a large majority of their residents from the tax. One state—Ohio—is on the verge of repealing its estate tax altogether.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

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

Posted in Wealth Management | Tagged: , , , , , , , | 1 Comment »

Advisor/Trustee Ends Up Responsible for a Trust’s Tax Bill?

Posted by William Byrnes on March 19, 2011

You’d better think twice before agreeing to act as trustee for your clients’ trusts, since doing so can cost you far more than the goodwill and fees it generates.

We all know that, depending on the circumstances, a trust, its grantor, or its beneficiaries can be held responsible for tax liability stemming from trust income.

What about its trustee?

Although trustees are not usually personally responsible for a trust’s taxes, a trustee can be stuck with the tax bill if the trustee breaches his or her fiduciary duty to the beneficiaries. A U.S. District Court recently considered a trustee’s liability for GST taxes when the trust’s beneficiaries claimed that the trustee failed to keep them informed of their potential liability for taxes stemming from trust distributions.

The trustees’ mistake in this case could cost them over $1 million.  Read the full analysis by linking to AdvisorFX!

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“Wage” War: Round One

Posted by William Byrnes on February 24, 2011

The topic Self-Employment Tax on wages versus distributions has reared its head again – as shown by the recent Federal District Court case involving David E. Watson.

The C.P.A. recently disputed and lost to the Government’s position which recharacterized dividend and loan payments from David E. Watson, P.C. (a Subchapter S corporation) to its sole shareholder and employee, David E. Watson.  The IRS assessed additional employment taxes, interest and penalties against Watson for each of tax years in which Watson’s salary was significantly lower than his total distributions.

Read the analysis at AdvisorFYI (sign up for a 2 week online free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Foreign Trust Disclosure

Posted by William Byrnes on February 9, 2011

Although trusts can be taxpayers, Sections 671 to 679 of the Internal Revenue Code contain the so-called ‘grantor trust rules’, which treat certain trust settlors (and sometimes persons other than the settlor) as the owner of a portion or all of a trust’s income, deductions and credits for US tax purposes. A trust where the settlor (or other person) is treated as the owner of the trust assets for US tax purposes is referred to as a ‘grantor trust’. The grantor trust rules apply to both foreign and domestic trusts, but in different ways.

Under the grantor trust rules, a US person who transfers property to a foreign trust is generally treated for income tax purposes as the owner of that portion of the trust attributable to the transferred property, even if the trust would not have been a grantor trust had it been domestic.

This is the result for any tax year in which any portion of the foreign trust has a US beneficiary.  A foreign trust is treated as having a US beneficiary for a tax year unless (i) under the terms of the trust, no part of the trust’s income or corpus may be paid or accumulated during the tax year to or for the benefit of a US person, and (ii) if the trust is terminated at any time during the tax year, no part of the income or corpus could be paid to or for the benefit of a US person.  The Internal Revenue Service (IRS) regulations under Section 679 of the Internal Revenue Code generally treat a foreign trust as having a US beneficiary if any current, future or contingent beneficiary of the trust is a US person.  To read this article excerpted above, please access AdvisorFYI.


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Selected Provisions and Analysis of the Tax Relief Act of 2010

Posted by William Byrnes on January 18, 2011

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

Understand the Act’s Implications for You and Your Clients

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

Summary Table of Contents

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

Product Information:

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

Publication Date: January 2011

Publication Number: 1350011

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

To order:

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

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Exclusions from Gross Income—Gifts

Posted by William Byrnes on December 23, 2010

Why is this Topic Important to Wealth Managers? Discusses gifts and the general income tax implications gifts have to those who are the beneficiaries.  Also discusses gifts as they relate to estate taxes.

As Christmas and Holiday time approaches, some clients who may be expecting large sums from Santa or other sources as gifts, may be interested to know the tax laws on gifts generally; today’s blogiticle present’s our “re-gifting” of an old idea, Section 102 of the Internal Revenue Code.

For those who haven’t had an opportunity to read the Code lately, (some estimate the Code and Regulations are close to 80,000 pages) there are still a few “friendly” sections that remain which serve as a reminder of a time gone by.  Side Note:  These authors have not yet evaluated the shortest Code section in terms of actual words, but if we were to, our guess is that Section 102 would be in the running at 212 words.

Section 102(a) reads: “Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.”  It is worth noting, if we go back to Section 61, and the starting point for gross income, that Section 61(a) states:  “Except as otherwise provided in this subtitle gross income means all income from whatever source derived…”   The “[e]xcept as otherwise provided” is applicable here to amounts received as a gift, bequest, devise, or inheritance, which are specifically excluded from gross income.  In other words, a taxpayer can give another taxpayer a gift of $1,000,000 and the latter will not recognize a penny of income for tax purposes, so long as it is really a gift, bequest, devise or inheritance.  To read this article excerpted above, please access www.AdvisorFX.com

For further discussion on the gift tax generally see, AdvisorFX: Nature and Background of the Federal Gift Tax (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Brazilian Taxation and Investment (in-depth video-conference course) January 24th – March 31st

Posted by William Byrnes on December 21, 2010

Coat of arms of Brazil

Image via Wikipedia

This 10 week live video conference course on Brazil will be taught in English (but all attendants may use Portuguese to ask and respond to questions) by several renown Brazilian specialists who have extensive out-of-country experience, working as international counsel for large multinational companies, big 4 firms, and government,  by concentrate on the Brazilian corporate structures, tax & financial systems, regulations and compliance, focusing on the practical aspects of doing business in Brazil.  We will also discuss the impact of the recent changes in tax/corporate laws and regulations.

Please contact Associate Dean Prof. William Byrnes if you are interested in enrolling in this executive education course.   wbyrnes@tjsl.edu (or my gmail williambyrnes@gmail.com) or skype: professorbyrnes or telephone + 1 619 374 6955

Tax System:

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

General Overview of Brazilian Indirect Taxes

  1. VAT;
  2. Other Indirect Taxes;

Foreign Investments:

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

Mergers & Acquisitions;

  1. Corporate aspects;
  2. Tax implications;

Financial System:

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

Foreign Companies:

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

Transfer Pricing

Industrial Property Rights

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Offshore Planning’s Impact on Calculation of U.S. Income Tax Liability

Posted by William Byrnes on October 5, 2010

Why is this Topic Important to Wealth Managers? Discusses how international planning can impact clients’ tax position domestically.  Provides discussion on a number of common international tax concepts as they relate to U.S. taxpayers.

In previous blog this week, it has been briefly discussed that there may be a number of reasons a client may consider offshore planning, generally.  Today we will focus on one major component of offshore considerations, the impact of world-wide income on U.S. taxpayers. It is generally accepted that U.S. taxpayers are expected to pay income taxes on income earned from sources worldwide.  This concept is commonly referred to as “outbound” taxation.

It is the case that many sovereign nations will also have taxes on personal and/or corporate income that an individual or corporation could become subject to, creating in effect “double taxation.”  And some foreign nations choose to have very low or no tax rate on certain types of income, or on corporations in general, thus allowing foreign income to potentially escape foreign taxation (and current U.S. taxation in the year that it is earned).

What are some rules that that Congress has attempted to avoid double taxation or subject foreign income to U.S. taxation?

Check out the full blogticle at AdvisorFYI.

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The Changing Landscape of the Foreign Tax Credit Regime

Posted by William Byrnes on October 1, 2010

The tax landscape is changing for the amount U.S. multinational corporations may claim through the foreign tax credit.  This change is the result of the Statutory Pay-As-You-Go Act of 2010 that requires any increased spending must be offset by a corresponding increase in revenue.  The foreign tax credit modifications narrowly escaped becoming the offsetting revenue raising provisions of the Unemployment Compensation Extension Act of 2010 that extended unemployment benefits.  However, the success was short-lived, as these modifications were added to Pub. L. No. 111-226, the Education, Jobs and Medicaid Assistance Act  of 2010. This legislation provides $10 billion of elementary and secondary education funding to protect teacher jobs from being cut.  Nearly $10 billion over ten years is expected to be raised by altering various rules that corporations leverage to calculate their foreign tax credits and foreign-source income, providing the necessary revenue offset for this law.

In the article, we will examine the concept behind foreign tax credits offered in the United States; the history of foreign tax credits in the United States; the changes to the foreign tax credits; and the public policy behind the bill and the potential effects upon multinational corporations.  To download the free article, please link to LexisNexis here at Tax Law Community

You may post any questions or comments below  – Prof. William Byrnes

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Gift Tax Return Disclosures—Adequate or Else

Posted by William Byrnes on October 1, 2010

A recent IRS Chief Counsel Advice addressed the importance of making adequate disclosures to the IRS when filing a gift tax return, demonstrating the dangers of a tight lip. There, a taxpayer failed to disclose the method and valuation discounts used to value gifted stock.  As a result, the taxpayer was unable to seek the protection from gift tax changes based upon the three year statute of limitations.

The statute of limitations for the IRS to question an item on a gift tax return is essentially unlimited if a gift is not “adequately disclosed” on the return, so taxes—and fees and interest—can be imposed on the inadequately disclosed gift any time after the return is filed.

For the complete analysis of this development regarding the disclosures required on a gift tax return by our Experts Robert Bloink and William Byrnes, please read the article via your AdvisorFX subscription at Gift Tax Return Disclosures—Adequate or Else?

For in-depth analysis of this topic, see Advisor’s Main Library Section 7. Gift Taxes D—Valuation For Gift Tax Purposes and from a tax perspective see Tax Facts Q 1534 What are the requirements for filing the gift tax return and paying the tax?

After reading the analysis, we invite your questions and comments by posting them below, or by calling the Panel of Experts.

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Wealth Managers Plan Under Uncertain Tax Conditions

Posted by William Byrnes on September 17, 2010

Why is this Topic Important to Wealth Managers? Provides discussion on current situation of federal tax “stand-off” as it relates to clients’ planning objectives.  Gives insight into market participants current choices in dealing with the Tax Cut dilemma.

Congress’ inaction is causing concern for many high net worth taxpayers. Clint Stretch, managing principal of tax policy at Deloitte Tax LLP in Washington says, “uncertainty over taxes means some individuals are ‘vulnerable to hysteria’ ”. And that some financial advisers are urging clients into “unnecessary or unwise transactions.” [1] With “[a]n estimated 315,000 U.S. taxpayers earn more than $1 million, according to the Joint Committee on Taxation”, it leaves a lot of room for opportunity and error.

Read the analysis at AdvisorFYI

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Bush Tax Cuts Linger Long After Sunset

Posted by William Byrnes on September 16, 2010

Why is this Topic Important to Wealth Managers? Provides an overview of how the pending tax cut provisions will affect the national economy and your clients as a part of it.  Discusses generally the relationship between tax and Congressional budget as they relate to the taxpayer burdens.

In the face of bailouts, new legislation and regulation, and a stalling economy, one area, taxes, is certainly being discussed among the public scuttlebutt.  Specifically, the Bush Era Tax Cuts are the center of attention because they will sunset or expire, without further legislative action by the end of this year.

Read the full analysis at AdvisorFYI

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What’s the Correlation Between Capital Gains Rates and GDP?

Posted by William Byrnes on September 15, 2010

Although, Reagan’s administration saw higher growth in total, and annually, on average, than  that of the previous and post 8 years of his term, his administration’s numbers are still below the 50 year trend, as well as the terms of some other Presidents, notwithstanding the unsupportive data on the short term effects of the tax cuts.  However, there is a lack of conclusive evidence, therefore, to determine that a decrease in capital gains tax rates will have the short or long term affect of increasing total GDP.  Yet, neither will an increase in the rate increase tax revenues.

We invite you to read the study and analysis at AdvisorFYI

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Estate and Gift Taxes, Tax Cuts and More

Posted by William Byrnes on September 14, 2010

Why is this Topic Important to Wealth Managers?  Author Ben Terner of the Panel of Experts offers detailed information that has a direct affect on clients’ planning objectives as it relates to estate and gift tax.   Provides a general discussion as well as detailed analysis of the current law and the affect of Congress’ current indecision.

Generally, “[g]ross income does not include the value of property acquired by gift, bequest, devise, or inheritance.” [1] Which means gift income or inheritance income received by the beneficiary is not taxable income to the individual who receives property by such gift, bequest, devise, or inheritance. [2] “Although the donated or inherited property itself is not taxable, income derived from such property is includable in gross income.” [3]

Read the analysis at AdvisorFYI

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Bush Tax Cuts Set to Expire

Posted by William Byrnes on September 13, 2010

Why is this Topic Important to Wealth Managers? Provides a basic overview of the tax cut provisions that are in effect but set to expire by the end of this year.  Helps financial professional understand implications regarding client’s estate and personal plans in consideration of the Bush Tax Cuts.

As busy as Congress has been over the last year, it’s “finally turning its attention to the expiring 2001 and 2003 tax cuts”, says Robert Rubin who is co-chairman of the Council on Foreign Relations and former Secretary of the U.S. Treasury.  Read the entire analysis at AdvisorFYI

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Immigration, Tax Planning, & AML Compliance for High Net Wealth Families & Executives

Posted by William Byrnes on June 6, 2010

The course instructors will “bridge the gap” between the often complex and quite intricate realm of international tax, estate planning, and immigration law. There is an obvious “nexus” between working professional immigrants, “high net worth immigrants,” and their financial dealings as to taxation and estate planning.  The course will first provide a survey of the foundational principles of U.S. international tax and estate planning.  The course will then provide a survey of relevant immigration visa categories, their status requirements, and “triggers” that have international tax and/or estate planning consequences.  Then the course will apply the legal principles with US case scenarios in order to establish a greater understanding between the “nexus” of international tax and immigration laws.

Next the instructors will lecture on the international movement of high net wealth executives and families: tax and immigration issues and strategies.  Finally the instructors will analyze the often overlooked overlap amongst financial reporting requirements, with a particular emphasis on the Patriot Act and related requirements.

Instructors: Prof. Fred Ongcapin is an Adjudications Officer (Policy) for the Policy and Regulation Management Division, Citizenship and Immigration Services, U.S. Department of Homeland Security, Headquarters Office, Washington D.C. In his current position he has authored and led to the publishing of numerous national policy guidance memos and formal regulations as to immigration law for the U.S. Department of Homeland Security. He also provides regular statutory and policy guidance concerning immigration policy for Citizenship and Immigration Services field offices throughout the country due to his subject matter expertise in immigration law. On several occasions, Fred has represented Citizenship and Immigration Services before senior policy level liaison meetings with the U.S. Department of State, U.S. Department of Justice, and certain Congressional Committees on Immigration.

Prof. Marshall Langer, the globally renown international tax author, lecturer and practitioner. Famed for Langer’s Practical International Tax Planning and for Rhoades & Langer U.S. International Tax and Treaties. Prof. Langer retired Of Counsel at the firm of Shutts & Bowen, London, England, and Miami, Florida.

Prof. William Byrnes has been an author and editor of 10 books and treatises and 17 chapters for Lexis-Nexis, Wolters Kluwer, Thomson-Reuters, Oxford University Press, Edward Elgar, and Wilmington. He is currently working on several Concept Maps for Lexis-Nexis Tax Law Center. This year he takes over as the author of National Underwriters’ Advanced Underwriting Service – the dominant information service in the insurance/financial planning industry with tens of thousands of subscribers.

In professional practice William Byrnes was a senior manager, then associate director of international tax for Coopers and Lybrand which subsequently amalgamated into PricewaterhouseCoopers, practicing in Africa, Europe, Asia, and the Caribbean. He has been commissioned and consulted by a number of governments on their tax and fiscal policy from policy formation to regime impact.

Delivery: 14 hours of live lecture and case studies via WIMBA web-conferencing – requires no download and works on PC/Mac.

Dates:  June 8, 15, 22 (Tues) 9pm-10pm (Eastern); June 29 (Tues) 9pm – midnight (Eastern); July 22 & 29 (Thurs) 10am-11am (Eastern); Aug. 5, 12, 19, 26 (Thurs) 9pm – 10pm (Eastern); Sept. 2 (Thurs) 9pm – 11pm (Eastern)

Recordings: all lectures are made available within 1 hour after class – on-demand video streaming and MP4 download until September 5th.

Contact: Prof. William Byrnes, Associate Dean – wbyrnes@tjsl.edu +1 (619) 297-9700 x 6955 for a registration form. Payments are only made by credit card to Thomas Jefferson School of Law. The fee is $49 per lecture hour ($686 for 14 hours) and includes electronic course materials.

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Certified International Tax Analyst

Posted by William Byrnes on May 14, 2010

Professional Designation: American Academy of Financial Management

Exam preparation: International Tax Planning & Risk Management course

Topics: Treaty Structures, Transfer Pricing, Risk Score Cards, Offshore Strategies and Compliance amongst others – taught via case studies

Delivery: 40 hours of live lecture and case studies – audio headsets for web conferencing

Start: May 24 (Monday) – end August 13 (Friday)

When: New York 11am – 12:30 pm (Eastern Time)

Recordings: all lectures are made available within 1 hour on-demand

Contact: Prof. William Byrnes, Associate Dean – wbyrnes@tjsl.edu   +1 (619) 297-9700 x 6955

Materials: tuition includes full Westlaw, Lexis, CCH, IBFD, Checkpoint, Orbitax and 20 other professional databases

Accreditation: applies toward the Legum Magister (LL.M.), Juris Scientiae Magister (J.S.M),  Scientiae Juridicae  Doctor (JSD) of Thomas Jefferson School of Law (San Diego)

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Bankruptcy Taxation, Accounting and Financial Reporting course – online lectures

Posted by William Byrnes on December 15, 2009

Bankruptcy Taxation, Accounting and Financial Reporting course is related to the tax and accounting principles and financial documents required in a bankruptcy case including monthly operating statements, and disclosure statements, as well as pro-forma financial statements prepared as part of a proposed bankruptcy plan. The taxation half of the course will consider such areas as the post-confirmation carry forward of losses, and tax planning for entities in financial difficulty. In addition, this course will provide a working knowledge of accounting practice and procedures related to bankruptcy.

Faculty Professors Ole Oleson and Grant Newton

Ole Oleson Esq, served as a research and writing attorney for each of the bankruptcy judges of the Southern District of California and is currently serving as law clerk to the Chief Judge. He practiced in the Financial Services department at Brobeck, Phleger and Harrison representing institutional creditors and corporate debtors.

Grant Newton, CPA, author of Bankruptcy and Insolvency Accounting: Practice and Procedure, 6th edition and co-author of Bankruptcy and Insolvency Taxation, 2nd edition; Executive Director of the Association of Insolvency and Restructuring Advisors; Member, AICPA Task Force on Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.

Course period: January 18th – April 9th

Lectures: 36 lecture hours using webcams / headsets with sharing of applications – also recorded for later on-demand viewing

Enroll with Assoc. Dean William Byrnes  wbyrnes@tjsl.edu  (619) 374-6955

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