Tax Law

    • 17 Jun 2011

    New Jersey Corporate Tax Planning and the Apportionment Sales Factor

    A State Tax Practice Insights Commentary by Irwin Mittelman INSIGHT In recent years, there have been major changes that have affected apportionment for corporations doing business in New Jersey. In 1995, the corporate apportionment factor was changed to double-weight the sales factor, thus making it fifty percent of the overall allocation factor. The most recent change, made by legislation enacted in 2011, will...
    • 24 Oct 2011

    Unfolding AML/CTF (Anti-Money Laundering/Counter-Financing of Terrorism) Complex System

    By Dionysios S. Demetis Anti-Money Laundering (AML) and the Counter-Financing of Terrorism (CFT of CTF) have undoubtedly emerged as two important contemporary themes that have generated considerable attention over the past two decades. In their core, they constitute the broader responses to the phenomena through which they have gained their existence to begin with; namely, money laundering (ML) and the financing...
    • 12 Dec 2011

    Tax Tips for Forestland Owners

    By Darwin L. King and Edward D. King * Timber Tax Overview - The Big Picture ... The IRS has three possible classifications or categories for forestland owners. The timber owner may be holding the property as either a hobby, an investment, or as a for-profit business. There are different tax regulations affecting each of these categories. If the taxpayer is holding the property as a hobby the land is typically...
    • 4 Jun 2008

    Knight v. Commissioner: Calculating Estate Costs and Itemized Deductions

    Phillip R. Fink, J.D., Professor of Accounting at the University of Toledo and noted author, provides an analysis of the landmark Supreme Court case of Knight v. Comm'r, 552 U.S. 181 (U.S. 2008) , interpreting IRC Section 67(e)(1) regarding the deduction of costs for the administration of an estate or trust in computing the adjusted gross income for estates and trusts in the context of the 2-percent floor on miscellaneous...
    • 31 Mar 2010

    The Even More Curious Case of Xilinx, Inc. v. Commissioner and the Future of Transfer Pricing

    Editor's Note : The Ninth Circuit's revised opinion of March 22, 2010 agrees with the Tax Court's finding that the cost of employee stock options should not be included as a shared cost in a transaction governed by arm's length principles. Previously, the court's decision of May 27, 2009 ( Xilinx, Inc. v. Comm'r, 567 F.3d 482 (9th Cir. 2009) ) had been withdrawn by the court without comment. Xilinx...
    • 23 Jun 2010

    Economic Substance Codification and Multinational Cross-Border Transactions

    U.S. multinationals need to focus on the codification of the Economic Substance Doctrine in the recently enacted Health Care and Education Reconciliation Act of 2010, P.L. 111-152 (H.R. 4872) ... U.S. multinationals with contemplated or pending transactions [need] to act quickly to put in place a practical cross-border risk-management plan. ... The new law provides no guidance with respect to determining the relevance...
    • 25 Jun 2010

    Valuing Privately Held Assets in Troubled Times

    USC Gould School of Law 2010 Tax Institute: Valuing Privately Held Assets in Troubled Times The Dow Industrial Average lost one-third of its value in 2008. Examining the drop in value of large to smaller public companies, the valuation professional can better understand how much more a private company's value can fall. Private company equity interest valuations from autumn 2008 through the spring of 2009 suggest...
    • 25 Jun 2010

    Structuring Alternatives for Buying and Selling Privately Held Businesses

    USC Gould School of Law 2010 Tax Institute: Structuring Alternatives for Buying and Selling Privately Held Businesses The tax increases scheduled to occur after December 31, 2010 should help breathe life back into the area of mergers and acquisitions. With an eye to that day,... two possible structuring alternatives [are] available to those planning a taxable acquisition or disposition of a privately held business...
    • 30 Jun 2010

    Like Your Health Plan? You Can Keep It (Maybe)

    ... [T]he 2010 Health Reform Act (Patient Protection and Affordable Care Act, 111 P.L. 148 (March 23, 2010) as amended by the Health Care and Education Affordability Reconciliation Act of 2010... imposes numerous new requirements on employer-provided group health plans, ranging from new prohibitions on preexisting condition exclusions, and dollar limits on coverage, to new requirements for benefit explanations. .....
    • 2 Jul 2010

    Recognition of Accountant-Client Privilege for Federal and State Tax Purposes

    In light of recent cases, such as U.S. v. Textron, Inc. , 577 F. 3d 21 (1st Cir. 2009), cert. den. No. 09-750, May 24, 2010, and Comm. of Revenue v. Comcast Corporation & Continental Teleport, Inc., 453 Mass. 293; 901 N.E.2d 1185; 2009 Mass. LEXIS 31 (March 3, 2009), practitioners are faced with the reality of determining the extent to which privilege, whether attorney-client privilege or work product privilege or...
    • 25 Aug 2010

    Online Travel Companies and Hotel Occupancy Tax Litigation

    Over the past several years, a spate of litigation has arisen throughout the country concerning the application of hotel occupancy taxes to online bookings. The cases focus on whether online hotel reservation and travel companies are required to collect and remit transient occupancy tax ("occupancy tax") on the amount they charge a customer when reserving a hotel room. ... Many of the occupancy tax ordinances...
    • 8 Jul 2010

    Supreme Court's Decision on the Patent Eligibility of Process Claims

    Editor's Note : Bilski v. Kappos, 2010 U.S. LEXIS 5521 (U.S. June 28, 2010) changes the landscape on the patentability of business methods and has direct relevance to the viability of patenting for tax strategies. The impact of Bilski in this regard may not be entirely clear. However, in Bilski the Supreme Court did reject the precept that the "Machine-or-Transformation" Test is the only standard required...
    • 8 Jul 2010

    Reporting Foreign Financial Assets

    ...[A] U.S. person who holds a foreign bank account or foreign securities account must report that account (unless it is under $10,000 at all times during the year) on Form TD F 90-22.1 - the infamous FBAR return. Failure to file that form carries with it potentially Draconian penalties. Congress, however, has concluded that FBAR data are not enough... [Under] 26 USCS § 6038D ,... [renders reportable any] "specified...
    • 12 Jul 2010

    Click, Buy, Report: Colorado's Use Tax Reporting Law for Out-of-State Retailers

    Internet retailer protection from sales tax collection, reporting and payment requirements is commanding increased attention of state departments of revenue. Colorado HB 1193 is the most recent state legislation to focus on out-of-state Internet retailers. HB 1193 imposes strict reporting requirements on out-of-state sellers, creating administrative duties for retailers, as well as constitutional issues. Similar California...
    • 15 Jul 2010

    Determining Passive Activity Loss Taxpayer Groupings

    The cornerstone for the proper application of the passive activity rules is the determination of what constitutes an "activity." The determination of an "activity" is critical because virtually every passive activity rule is applied on an activity-by-activity basis.. In practical application, the regulations lack clarity and certainty. ... IRC Section 469, 26 USCS 469, does not define the term...
    • 26 Jul 2010

    Delaware Statutory Trusts: The Best Features of this New Form of Entity

    Delaware's law on statutory trusts recently became the model for the entire country to follow. Practitioners and investors increasingly use the unique features of this newest form of entity for tax deferral, asset protection and other advantages. ... Since 2000, practitioners and investors have increasingly used the form for tax deferral, asset protection and balance sheet advantages, in real estate, securitization...
    • 28 Jul 2010

    States Use Jeopardy Assessments as Effective Collection Mechanism

    There are situations in which state tax authorities determine that ordinary assessment and collection efforts will be ineffective. Although most practitioners do not experience application of the jeopardy assessment provisions often, it is important to maintain an awareness of the provisions, since the circumstances in which they are applied contain many pitfalls for practitioners ... Almost all of the states statutorily...
    • 4 Aug 2010

    Defense Contract Audit Agency Tightens Audit and Auditor Independence Practices

    The Defense Contract Audit Agency (DCAA) has been the target of Government Accountability Office (GAO) criticism that has resulted in changes in the way they conduct business and interact with contractors. ... During 2008 and 2009, the Defense Contract Audit Agency (DCAA) was criticized by the Government Accountability Office (GAO) on many points. According to the GAO, DCAA audits and cost-related assignments selected...
    • 11 Aug 2010

    When Assets Given to a GRAT Decline in Value

    Sometimes estate plans fail to address the possibility that assets will drop in value. [W]hat happens when this occurs in the context of a grantor retained income trust (GRAT)[?] ... How a GRAT is Supposed to Work A gift to a GRAT is structured as a gift of an asset to an irrevocable trust from which the settlor keeps the right to an annuity for a specified number of years. Each year, on the anniversary date...
    • 12 Aug 2010

    QPRTs and PRTs: Planning Strategies for Transferring Family Homes

    As an alternative to gifting direct interests in a family home to children, a donor can establish an intervivos trust for the benefit of children or other family members and make gifts of interests in the property to such a trust during life. There are many different types of trusts that a donor should consider...[, including] a Qualified Personal Residence Trust (QPRT) and a Personal Residence Trust (PRT). ... ...
    • 16 Aug 2010

    Pension Funding Relief -- Temporary or Here to Stay?

    The Pension Protection Act of 2006 [PPA, Pub. L. No. 109-280] was enacted in part to strengthen the minimum funding rules for defined benefit (DB) pension plans. The subsequent financial crisis and recession led to vigorous lobbying by employers for relief from the new rules. On June 25, 2010, after lengthy partisan wrangling, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries...
    • 18 Aug 2010

    USC Gould School of Law 2010 Tax Institute: Tax Planning Strategies for Transferring Family Homes -- Dynasty Trusts by Nancy G. Henderson

    If a property owner intends for property to remain in trust for the use and enjoyment not only of the owner's children, but for future generations of descendants, a "dynasty trust" can be an excellent vehicle to accomplish this objective. Careful consideration must be made as to the effect of the generation-skipping transfer tax upon the donor, the trust, and the trust beneficiaries. In this Analysis, Nancy...
    • 19 Aug 2010

    Disposition of Less Than the Whole: The Need to Identify the Securities Sold

    Authored by Andrew W. Singer Beginning January 1, 2011, brokers previously required to report to the Internal Revenue Service the gross proceeds from sales of stock by their customers are also required to report the adjusted basis of the stock sold and whether gain or loss on the sale is long-term or short-term. The Energy Improvement and Extension Act of 2008, which amended 26 USCS § 6045 (IRC Section 6045) to...
    • 16 Sep 2010

    Taxation of Short Sales and Foreclosures

    Short sale and foreclosure tax inquiries focus on how much gain and cancellation of indebtedness (COD) to recognize. Gain is the amount realized over the amount invested. Net worth increase is income realized, unless statutory or case law allows exclusion from income. The maximum 15% federal tax on gain and 35% on COD income will be 20% and 39.6% in 2011, respectively. Look for gain and COD income exclusion downsides...
    • 27 Oct 2010

    Bilski v. Kappos: A New Chapter in Tax Strategy Patentabililty

    Bilski v. Kappos , 130 S. Ct. 3218 (U.S. 2010) has given significant clarity to the status of tax strategy patents. To understand why this is so, one must start with an analysis and clear understanding of State St. Bank & Trust Co. v. Signature Fin. Group , 149 F.3d 1368 (Fed. Cir. 1998) as well as cases leading up to the Bilski Supreme Court decision. ... Tax strategy patents are often described as patents...