Tax and Private Client Blog

Tax and Private Client Blog

Beware of the BEAT: Taxing Certain Deductible Payments Made to Related Foreign Persons

The Tax Cuts and Jobs Act (the “Act”) added section 59A to the Code to impose a new “base erosion” minimum tax on large corporations to prevent companies from stripping earnings out of the U.S. through payments to foreign affiliates that are deductible for U.S. tax purposes. This new tax is describes as a base erosion and anti-abuse tax, or “BEAT.”

Tax Reform Tidbit: Deferring Gain Using Qualified Opportunity Zones

The recently enacted Tax Cuts and Jobs Act adds a new section 1400Z to the Internal Revenue Code. Section 1400Z provides taxpayers the opportunity to defer gain on the sale or exchange of an asset if such gain is reinvested in a Qualified Opportunity Zone Fund (a “QO Fund”) within 180 days.

Anonymous Bank Accounts Will Become Harder to Establish

Starting May 11, 2018, the United States Financial Crimes Enforcement Network (“FinCEN”) will require covered financial institutions (e.g., banks, broker-dealers, mutual funds and futures commission merchants) to enhance their due diligence practices with respect to new accounts opened on or after May 11, 2018 (the “FinCEN Rule”).

The Party is Over: Meals and Entertainment Expenses are No Longer Favored by the Tax Code

The Tax Cuts and Jobs Act (the “Act”) changed the deductibility of entertainment expenses and modified the language in the Internal Revenue Code Section 274 to limit the deduction of business meals.

The Impact of Recent Tax Changes on LLCs and other Tax Partnerships

The enactment of the Tax Cuts and Jobs Act in December 2017 (the “Tax Reform Act”) and the promulgation of regulations implementing the Bipartisan Budget Act of 2015 represent significant changes that must be accounted for when structuring a tax partnership. Tax partnerships include limited liability companies, limited partnerships, limited liability partnerships and general partnerships.

The Tax Reform Act – Newly Added Section 83(i) and Tax Deferral for Private Company Equity Awards

The Tax Cuts and Jobs Act (the “Act”) has received considerable attention with respect to the lowering of the corporate tax rate to 21% and new tax brackets for individual filers. What has not been as frequently discussed is newly added Section 83(i) and the impact that it may have on private employers offering equity-based compensation to employees. More specifically, the newly added Section 83(i) permits certain employees to defer federal income tax associated with certain equity awards for as long as 5 years.

Gifts and Gift Tax Primer

As we reported in late December 2017, the Tax Cuts and Jobs Act (the “Act”) made important changes to United States estate and gift tax exemptions. As of January 1, 2018, the new law more than doubled an individual’s estate and lifetime gift tax exemption to $11,180,000. This amount will increase every year to adjust for inflation. However, nothing lasts forever and on January 1, 2026, the exemption reverts back to the December 31, 2017 exemption amount ($5,490,000 per individual).

Unreported Offshore Accounts - IRS Announces Tax Amnesty Program to End on September 28, 2018

IRS Ending Popular Amnesty Program for U.S. Taxpayers with Foreign Accounts

Puerto Rico – Tax Haven for High-Net Worth Americans and Cryptocurrency Holders

An increasing number of Americans have been expatriating from the United States and surrendering their US passports due to high income tax rates. While it generally makes sense from a U.S. federal income tax perspective for high income U.S. taxpayers to consider expatriating from the United States, many people don’t want to give up their citizenships or green cards simply to reduce their federal income tax liabilities.

Taxation of Cryptocurrency

The Internal Revenue Service (IRS) has been cracking down on taxpayers for failure to report cryptocurrency transactions. At the end of 2017, it succeeded in its nearly two-year efforts to order Coinbase, Inc. to produce taxpayer information on unreported transactions.