It's a Trap! Beware the Anti-Toggle Rule under I.R.C. § 409A... [ read ]
Companies often utilize deferred compensation arrangements to incentivize their workers to use their best efforts to grow the value of those companies. If a company provides a worker with a legally binding right to payment that will be received in a future year, that arrangement generally constitutes a nonqualified deferred compensation plan. As such, the plan must satisfy all of the requirements under I.R.C. § 409A in order to avoid potentially disastrous tax consequences to the worker.
Payroll and Human Resources Departments Beware: An Update on an Identity Theft Scam... [ read ]
On March 1, 2016 the IRS issued IR-2016-34, alerting "payroll and human resources professionals to beware of an emerging phishing email scheme that purports to be from company executives and requests personal information on employees." Recent information indicates that cybercriminals have increased the use of this phishing email in 2017. Identity theft and phishing are both on the 2017 IRS Dirty Dozen List.
Community and Separate Property Regimes: Educating the Mobile Client and the Multijurisdictional Attorney... [ read ]
Most clients and many attorneys are unfamiliar with the concept of community property-that is, how it works and how it affects a broad spectrum of legal practices including family law, tax law and estate planning. For attorneys with diverse clients and multijurisdictional practices, ignorance of community property law can be costly. This article provides an introduction to the community property system and highlights topics to discuss with clients planning a move either to or from a community property state.
Golden Opportunities - Maximizing Long-Term Capital Gain Treatment and Deferral of Taxable Gain Recognition from Partnership Sales... [ read ]
It is commonly known that sales of partnerships can give rise to ordinary income (subject to a current maximum tax rate of 39.6%) and long-term capital gain (subject to a current maximum tax rate of 20%). This is true regardless of whether the transaction consists of the partnership's sale of its assets or the partners' sale of their ownership interests in the partnership. Tax professionals can assist their clients in maximizing the long-term capital gain recognized from a sale of a partnership by negotiating an allocation of more of the sales proceeds to long-term capital gain assets and less of the sales proceeds to "hot assets," such as inventory, accounts receivables, and depreciation recapture.
IRS Extends Disclosure Deadline for Newly "Listed" Syndicated Conservation Easement Deals... [ read ]
At the close of 2016, the IRS' contempt for syndicated conservation easement deals reached its peak with the IRS identifying such transactions as "listed transactions." See prior MC Talks Tax blog post dated December 27, 2016, "The IRS Adds Conservation Easements to the List of Tax Avoidance Transactions."
Enhanced IRS Scrutiny of Compensation in Closely-Held Businesses (Video Included)... [ read ]
The IRS is stacking-up victories in its attack against compensation arrangements of closely held business, with C corporations, S corporations, and partnerships all potentially facing an IRS challenge. Now is the time to engage your owner-operated business clients in a discussion about compensation and ways to potentially enhance existing arrangements and bolster defenses in the event of an IRS challenge.
IRS Scores a Tax Court Win in its All-or-Nothing Approach to the Self-Employment Taxation of Limited Partners... [ read ]
Last year IRS Chief Counsel declared that a "partnership is not a corporation" and that the "wage and reasonable compensation rules which are applicable to corporations…do not apply." Therefore once a partner is no longer a "passive investor," his or her entire distributive share of partnership income is subject to self-employment tax. IRS Chief Counsel Advice 201640014
An Issue for Real Estate Developers and Their Tax Advisors to Keep An Eye On... [ read ]
On April 10, 2017, the IRS Chief Counsel's Office issued an Action on Decision (AOD 2017-3) refusing to acquiesce to the Tax Court's and 9th Circuit's decisions in Shea Homes Inc. v. Commissioner, 834 F.3d 1061 (9th Cir. 2016), aff'g 142 T.C. 60 (2014). Because of the potential tax benefits associated with the Shea Homes decision, real estate developers and their tax advisors should keep an eye on any future developments.
The Government Settlement Transparency & Reform Act (S.803): Are the Tax Benefits of Corporate Settlements in Jeopardy?... [ read ]
On April 3, 2017, Senators Jack Reed (D-RI) and Chuck Grassley (R-Iowa) introduced bipartisan legislation that may impact or deny tax deductions for settlement payments regarding corporate regulatory violations. In recent years, the federal government has increased enforcement efforts against corporations for regulatory violations, whether it be for healthcare, banking, or environmental violations. Although the federal government carries a big stick when it comes to regulatory enforcement (i.e. onerous civil fines and potential criminal penalties), there are also carrots that can often facilitate and expedite settlements with corporations.
TIGTA Report: The IRS Putting Innocent Small Business Owners at Risk in Currency Structuring Seizures and Forfeitures... [ read ]
On March 30th, the Treasury Inspector General for Tax Administration (TIGTA) released a report titled "Criminal Investigation Enforced Structuring Laws Primarily Against Legal Source Funds and Compromised the Rights of Some Individuals and Businesses." The TIGTA report (the Report) analyzed and made recommendations regarding how IRS Criminal Investigation (CI) administered cases involving possible currency structuring violations of Title 31 U.S.C. Section 5324(a).
