Archives for September 2016

Estate Tax Planning Strategy – Minority Interest Valuation

September 27, 2016 by Frank

The Treasury Department has issued new proposed regulations that, if adopted as proposed, will effectively eliminate a common estate planning tool used to transfer wealth among family members. That tax planning tool is the Family Limited Partnership (“FLP”) or Family Limited Liability Company.

Let’s start with the basics. A family creates a FLP which provides a centralized vehicle through which the family can not only manage a portion of its wealth, but also provide a governance structure through which the younger generation can learn the art of running a family business (if the FLP holds the family business) from the senior generation. The older generation receives both general and limited partnership interests for the assets transferred to the FLP. At some point in the future, [Read more…] about Estate Tax Planning Strategy – Minority Interest Valuation

Refinancing – Preparation Steps

September 20, 2016 by Frank

Whenever interest rates begin or are expected to change significantly, individuals immediately begin to think of refinancing their existing mortgage. That is a good approach to take. However, there are other considerations to ponder before going to the mortgage company and applying for a refinancing.

Mortgage lenders want to verify that you have sufficient income to service the debt. Standard industry practice is to request to see your individual income tax returns for the last 2-3 years. If you are self-employed, that means the lender also wants to see the tax returns for your business. If you are a sole proprietor, your personal tax return will suffice because the income and expenses of your business are reported on Sch. C of Form 1040, your personal income tax return. However, if your business is in the form of an S Corporation or partnership, the lender will also ask to see those returns (Form 1120S and Form 1065, respectively).

Lenders can often be difficult to work with [Read more…] about Refinancing – Preparation Steps

NJ Proceeds to Terminate Reciprocal Tax Agreement with PA

September 13, 2016 by Frank

NJ Governor Chris Christie announced that, effective January 1, 2017, NJ is unilaterally terminating the state’s reciprocity agreement with PA. Under the current agreement, taxpayers were allowed to pay income tax in the state where they lived, not where they worked. Accordingly, PA residents who are employed in NJ will need [Read more…] about NJ Proceeds to Terminate Reciprocal Tax Agreement with PA

Talk Is Cheap! Or . . . You Get What You Pay For

September 6, 2016 by Frank

Taxpayers often mistakenly believe that they can rely upon Internal Revenue Service (IRS) advice. After all, if the IRS is providing the advice, why would it challenge a taxpayer’s return that incorporated that advice? To the contrary, the IRS is seldom held accountable for the advice it provides to taxpayers. Let’s look at some of the more commonly-recognized IRS tax advice resources.

Oral Advice: Taxpayers can telephone the IRS or visit an IRS office (if you can find one that is open to the public) to obtain advice. Unfortunately, oral advice from the IRS is the least reliable type of guidance. As the saying goes, you get what you pay for. Taxpayers who depend upon IRS oral advice could find themselves [Read more…] about Talk Is Cheap! Or . . . You Get What You Pay For