Tax Consequences of Selling a Concentrated Stock Position in 2012 vs 2013
By Rimon Admin | Aug 21, 2012
Rimon, P.C. and Bernstein commissioned a study on tax consequences of diversifying and divesting concentrated stock holdings in 2012 versus 2013 to get a sense for the impact of changing tax rates, including new healthcare taxes, on selling and diversifying private stock. The study explores the upfront tax difference in executing trades this year versus next year, and the impact that difference can have over the longer-term. This raises important questions we should all be asking regarding planning for an efficient transaction, deployment into new investments – private or public – and multi-generational or charitable planning. Read the case study here.
“Employees” v. “Independent Contractors”: A Benefits Perspective
By Thomas M. White | Mar 20, 2012
The Internal Revenue Code provides significant tax benefits to employers that sponsor tax-favored retirement and health and welfare plans. For example, in calculating an employer's income tax, the current cost of providing benefit coverage may be deducted from taxable income, although plan participants are not currently taxed on the benefits at that time. However, these tax benefits are available only if the employer sponsoring the plan does not discriminate against its rank and file employees. Determining who are in the group of covered employees for discrimination testing is critical to the analysis.
House Passes Changes to Carried Interest Taxation
By Rimon Admin | Jun 10, 2010
On May 28th, the House passed H.R. 4213, the "American Jobs and Closing Tax Loopholes Act." The Act addresses an array of issues, but has particular signficance for certain partnership and LLC "carried interests" for investment fund managers. If it goes through, the Act would prevent investment fund managers of venture capital, private equity, hedge and real estate funds from paying taxes at capital gain rates on investment management services income received as carried interest in an investment fund.
Under the proposed changes, return on invested capital in the form of carried interest would continue to be taxed at capital gain tax rates. But to the extent that carried interest does not reflect a return on invested capital, investment fund managers would eventually be required to treat seventy-five percent of the remaining carried interest as ordinary income.
The proposed changes would not take effect until 2011. However, for the bill to become effective it must also be passed by the Senate, an outcome which is not certain to occur.
An LLC Can be Treated as an S-Corporation for Tax Purposes
By Michael Moradzadeh | Feb 02, 2010
An LLC can be treated as an S-Corporation for tax purposes if it makes an S-Corporation election as long as the entity meets the IRS criteria to be taxed as an S-Corp, files an S-Corp election and gets approved by the IRS to be taxed as an S-Corporation. Without an S-Corporation election, single member LLCs default to be taxed as sole proprietors and a multi-member LLCs defaults to be taxes as partnership since they are considered “disregarded entities”. However, if a single or multiple member LLC agreement meets the IRS criteria to be classified as a small business corporation, the S-corporation election is filed and gets approved by the IRS, then for tax purposes, not legal purposes the entity is an S Corp not a LLC.
The Criteria for Being Classified as an S-Corporation
By Michael Moradzadeh | Feb 01, 2010
In order to be classified as an S-Corporation, a company must: be domestic, have no more than 100 shareholders, have one class of stock, all shareholders must be individuals, decedents’ estates, bankruptcy estates, trusts or tax-exempt charitable organizations, or wholly owned by another S corporation, and all shareholders must be residents of the United States (as defined by the tax code not immigration laws). Shareholders of an S-Corporation can not be financial institutions that use a reserve method of accounting for bad debts, companies taxable as insurance companies, taxable mortgage pools, or domestic international sales corporations. So, if a business entity meets these criteria it can be considered an S corporation by the IRS and taxed as an S corporation as long as the S corporation election forms are properly filled-out and approved by the IRS. Many states including California automatically give business entities an S-corporations tax status if it was approved by the IRS.
The tax benefits of making an S-Corporation Election?
By Michael Moradzadeh | Jan 31, 2010
Many small business owners incorporate their businesses not only for legal protection, but also to reduce owners’ payroll taxes through S-Corp tax election with the IRS. One advantage of an S-Corp is that it gives business owners the ability to reduce their self-employment taxes. Any small business owner who has not made an S-Corp election and uses Schedule C for their personal tax return for 2010 is subject to both employer and employee FICA and Medicare payroll taxes at 15.3% up to $106,800, 2.9% Medicare for Schedule C net income greater than $106,800, and California SDI for 1.1% up to 93,316. If a business owner pays himself/herself a “reasonable salary”, the rest of the net income is not subject to these payroll taxes.
UK Reporting of Undiscosed Foreign Accounts
By Yaacov P. Silberman | Oct 28, 2009
On September 1, 2009, the Government of the United Kingdom implemented the New Offshore Disclosure Opportunity (“NDO”).
The NDO allows those individuals with unpaid UK taxes relating to previously undisclosed income and/or capital gains linked to offshore accounts and/or assets to settle related tax liabilities at a favorable 10% penalty rate. Ordinarily, penalties are charged at up to 100% of the tax due.
The NDO provisions apply to all UK residents and certain non-UK domiciled individuals (who themselves may be or once were subject to tax in the UK) who have an interest in any Offshore Accounts, Trusts or Corporate entities that would otherwise be subject to UK tax.
Start-up package
By Michael Moradzadeh | Oct 14, 2009
Check out our start-up package: Rimon Law Startup Package.
It gives an entrepreneur a big picture view of legal issues they should consider when they start/grow their company
Important Tax Issues for Companies with U.S. and Israeli Operations
By Rimon Admin | Sep 17, 2009
If you are a company with operations in both the United States and Israel, you should be aware of several very important U.S. and Israeli Tax issues when you engage in cross border operations. I have set forth below several of the main issues. This list is not exhaustive and only reflects briefly the main tax issues. Other issues such as employment, banking, intellectual property rights, custom duties etc. will be addressed in other communications.
U.S. Reporting of Undisclosed Foreign Accounts
By Rimon Admin | Sep 01, 2009
The IRS has now implemented a special approved penalty framework for resolving the civil side of offshore voluntary disclosures and this approved penalty framework is effective till September 23, 2009 at which time the IRS intends to re-evaluate the approved penalty framework. Under the approved penalty framework, the taxpayer has to file correct or amended tax returns for tax years 2008 back to 2003.