Family Business Succession Planning presentation by Ed Arista for the Skylake Synagogue in Aventura.

Posted on: 05-16-2012 / Category: Corporate and Business, News & Events, Uncategorized, Wealth Preservation / Family Business Succession Planning presentation by Ed Arista for the Skylake Synagogue in Aventura.Ed Arista recently presented on Family Business Succession Planning as part of the Financial Success Series at the Skylake Synagogue in Aventura.  Advanced planning using effective legal structures is one of the most important ways to increase the chances that a family business will survive the transition from one generation to the next.  This is especially true when the transition happens unexpectedly or involuntarily, such as due to the death, divorce or incapacity of a member of the founding generation.  Most businesses should at the very least be organized as a Limited Liability Company with a special form of operating agreement, which is then owned by a certain type of Trust or Trusts containing specific provisions for this purpose.  Additional asset protection and estate US Tax savings can be achieved with more sophisticated legal structures.  This is especially important in light of the new estate US Tax laws going into effect on January 1, 2013 that will US Tax estates over $1 million at rates up to 55%.  Please contact us for a copy of this presentation or to learn more about legal planning to reduce US Tax ation and manage legal risks associated with lawsuits, death and incapacity.
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Family Business Succession Planning presentation by Ed Arista for the Skylake Synagogue in Aventura.

AICPA Recommends Change to Return Due Dates

An AICPA US Tax Division task force was formed to explore a legislative solution to the problem of the late receipt of Schedules K-1.
The task force reviewed the results of May 2008/May 2009 member surveys on this topic and various options for legislative change to include: 1) the possibility of 7-month statutory extensions; and 2) the use of staggered due dates for all US Tax payers involved in the Schedule K-1 process.  In 2009, the task force and other US Tax Division members held discussions with Hill staff, IRS, the National US Tax payer Advocate’s Office, Treasury and others concerning the dilemma of the late receipt of Schedules K-1 by US Tax payers and CPAs who prepare the Form 1040, 1041, 1065, 1120 and 1120S US Tax returns which include such K-1 information.
A position was approved for submission to Congress that would require the filing of Form 1065 on March 15, Form 1120S on March 31, and Forms 1040, 1041 and 1120 on April 15.  Extended due dates would be 6 months later for all these forms except Form 1041, which would be extended 5.5 months to September 30.   This would alleviate the problems mentioned above by establishing a logical set of due dates focused on promoting a chronologically-correct flow of information between passthrough entities and their owners.  It would promote the early filing of more business and personal returns and relieve some degree of workload compression surrounding the September 15 business return deadline.

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US Tax /~3/tke5mt9-Be0/duedatesproposal2010.aspx” title=”AICPA Recommends Change to Return Due Dates”>AICPA Recommends Change to Return Due Dates

Older Submissions on the US Tax Reform and Simplification

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US Tax /~3/fa6vblpl9Ag/priorsubmissions.aspx” title=”Older Submissions on the US Tax Reform and Simplification”>Older Submissions on the US Tax Reform and Simplification

AICPA US Tax Policy and US Tax Reform Materials

We have a strong interest in US Tax system changes or reforms, and we sincerely hope that the corollary goals of a fair, simple, and more transparent US Tax system can be served in any recommendations made for deficit reduction.
We take no position on the appropriate level of government revenues, spending or deficits, we recognize that deficits can be reduced by adjusting the amount of expenditures, by adjusting the amount of US Tax esbyexpatcpa.de/irs-problems-us-US Tax es.php”>US US Tax es imposed or by some combination of these actions.  The appropriate level of federal revenues and spending is a political question. Short-term deficits may be desirable during downturns in the business cycle, especially severe downturns such as the one the nation is currently experiencing.  However, the levels of budget deficits currently projected may be unsustainable in the long run. Permitted to continue and to grow, these deficits will limit economic growth, impair the government’s ability to finance its debt and provide essential services, and impose an ever-increasing burden on future generations.
Longstanding criticisms of our current US Tax code, taken together with these budget concerns, may provide the impetus for undertaking serious consideration of federal US Tax changes to help reduce the deficit over time. We urge that the principles of good US Tax policy be used as criteria for change. In the end, if the nation does not emerge with a system that is perceived as balanced, fair to all, administrable, economically efficient, transparent, and neutral in terms of its effect on economic activity, the effort will be a failed one.

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US Tax /~3/lZUSWgbM1yQ/US Tax Reform.aspx” title=”AICPA US Tax Policy and US Tax Reform Materials”>AICPA US Tax Policy and US Tax Reform Materials

Farm Debtors Must Pay Capital Gain US Tax in Full, the Supreme Court Holds

The U.S. Supreme Court ruled on May 14 that farmers who sold farm assets during a bankruptcy reorganization under Chapter 12 of the Bankruptcy Code were liable for the full amount of the capital gains US Tax that resulted from the sale (Hall, Sup. Ct. Dkt. No. 10-875 (U.S. 5/14/12), aff’g 617 F.3d 1161 (9th Cir. 2010)). In an opinion that affirmed a Ninth Circuit decision and resolved a split in the circuits, a divided Supreme Court (in an opinion by Justice Sonia Sotomayor joined by Chief Justice John Roberts and Justices Samuel Alito, Clarence Thomas, and Antonin Scalia) held that federal income US Tax liability resulting from the farmers’ post-petition farm sale is not “incurred by the bankruptcy estate” under Section 503(b) of the Bankruptcy Code and therefore not dischargeable in a Chapter 12 bankruptcy.Chapter 12 of the Bankruptcy Code, which governs farm bankruptcies, allows farmer debtors to enter into a reorganization plan. The plan must provide for full payment of “priority claims,” but certain government claims, including “any US Tax . . . incurred by the bankruptcy estate” are downgraded to general, unsecured claims that are dischargeable without full payment (Bankruptcy Code §§503(b), 507(a)(2)). The farmers in the case filed for Chapter 12 bankruptcy and then sold their farm. The IRS attempted to collect capital gains US Tax on the proceeds of the sale, but the farmers proposed to treat the US Tax as an unsecured claim that would be paid to the extent funds were available and the unpaid balance discharged. The case moved through Bankruptcy Court, federal district court, and then to the Ninth Circuit, which held that because a Chapter 12 bankruptcy estate is not a separate US Tax able entity under Secs. 1398 or 1399, the estate does not “incur” post-petition federal US Tax es. Because the US Tax was not “incurred by the estate” as required by Bankruptcy Code Section 503(b), the Ninth Circuit held that it was not eligible for discharge. The Supreme Court’s majority agreed that “the statute’s plain language, context, and structure” support this conclusion and upheld the Ninth Circuit’s decision. In a dissenting opinion, Justice Stephen Breyer, joined by Justices Anthony Kennedy, Ruth Bader Ginsburg, and Elena Kagan, argued that the farm bankruptcy provisions had been amended specifically to avoid the result reached in the case. Sen. Chuck Grassley, R.-Iowa, had sponsored the amendments to these provisions to enable farmers to qualify for Chapter 12 who might have to sell property held for a long time that had a low basis and thus would not be able to qualify if the US Tax esbyexpatcpa.de/irs-problems-us-US Tax es.php”>US US Tax es on the sale of the property were nondischargeable. The amendment was intended to place US Tax esbyexpatcpa.de/irs-problems-us-US Tax es.php”>US US Tax es incurred after the bankruptcy petition was filed in the same position as other unsecured creditors

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US Tax /~3/DY4JWL_51ko/20120514.aspx” title=”Farm Debtors Must Pay Capital Gain US Tax in Full, the Supreme Court Holds”>Farm Debtors Must Pay Capital Gain US Tax in Full, the Supreme Court Holds

Top 11 Reminders for 2011 FBARs

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Top 11 Reminders for 2011 FBARs

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List of top 11 reminders for 2011 FBARs, from AICPA webcast on May 7, 2012 regarding What You Need to Know for 2011 FBARs:  Required reporting of foreign bank and financial accounts due by June 30, 2012.  Form TD F 90-22.1 – Report of Foreign Bank and Financial Accounts. …

May 6, 2012

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US Tax /~3/8tObE-j7dQs/Top11Reminders2011FBARs.aspx” title=”Top 11 Reminders for 2011 FBARs”>Top 11 Reminders for 2011 FBARs

Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property

The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts (NPCs) for U.S. federal income US Tax purposes (T.D. 9589). The temporary regulations establish an exception to the definition of U.S. property for obligations of U.S. persons arising from upfront payments made with respect to certain cleared contracts that are properly classified as NPCs. The temporary regulations provide that obligations of U.S. persons arising from such upfront payments by a controlled foreign corporation (CFC) that is a dealer in securities or commodities (within the meaning of Sec. 475) do not constitute U.S. property for purposes of Sec. 956(a).To qualify for this exception:
The upfront payment must be required under a contract that is cleared by a derivatives clearing organization or a clearing agency that is registered as a derivatives clearing organization under the Commodity Exchange Act or as a clearing agency under the Securities Exchange Act of 1934, respectively;

The CFC must make the upfront payment to or through a U.S. person that is a clearing member of the derivatives clearing organization or clearing agency, or directly to the derivatives clearing organization or clearing agency if the CFC is a clearing member of the derivatives clearing organization or clearing agency;

The upfront payment must be made, directly or indirectly, to the counterparty to the contract;

The counterparty to the contract must be required to make a payment in the nature of initial variation margin that is equal (before taking into account any change in the value of the contract between the time the contract is entered into and the time at which the payment is made) to the amount of the upfront payment made by the CFC; and

The payment in the nature of initial variation margin must be paid, directly or indirectly, to the CFC.

The IRS does not believe that an obligation of a U.S. person created by an upfront payment resulting from a cleared contract that satisfies the requirements listed in this regulation is the type of transaction intended to be covered by Sec. 956, whether or not the payment is treated as a loan under the NPC rules under Sec. 446. While the Sec. 956 exception in the temporary regulations currently is limited to cleared contracts, the IRS stated in the preamble to the regulations that it is continuing to study, and requesting comments on, whether and under what circumstances it would be appropriate to extend the exception to contracts that are not cleared by a U.S.-registered clearinghouse, but that would otherwise meet the criteria set forth in these temporary regulations.These regulations apply to payments made on or after May 11, 2012. However, US Tax payers may apply the rules of these regulations retroactively to payments made prior to May 11, 2012.

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US Tax /~3/zm-scn4Ml9w/20120511.aspx” title=”Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property”>Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property

May 11, 2012 US Tax E-Alert: Deadlines for Key Opportunities are Next Week

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May 11, 2012 US Tax E-Alert: Deadlines for Key Opportunities are Next Week

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This newsletter contains information regarding: Tangible Property Regulations, Full Deduction for Administrative Costs of Estates & Trusts, and Final Regulations Regarding Trust Ordering Rules.
…

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US Tax /~3/zonHb4IX45c/2012-05-11US Tax E-Alert.aspx” title=”May 11, 2012 US Tax E-Alert: Deadlines for Key Opportunities are Next Week”>May 11, 2012 US Tax E-Alert: Deadlines for Key Opportunities are Next Week

Archive of April 23, 2012 AICPA Tangible Property Infocast

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Archive of April 23, 2012 AICPA Tangible Property Infocast

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The materials and replay of this event are now available for free without CPE for US Tax Section members.  The AICPA held an audio and slide infocast on Monday, April 23, 2012 from 2:00 to 3:30 p.m. Eastern on Do You Know What to Deduct and What to Capitalize?  Understanding the New Temporary Regulations for Tangible Property.  A rebroadcast was held on May 8, 2012 from 2:00 to 3:30 p.m. Eastern. 
Panelists include:  Jane Rohrs and Natalie TuckerSpecial Guests include:  Merrill Feldstein and Kathleen Reed, Internal Revenue ServiceModerator:  Michelle Koroghlanian
…

April 22, 2012

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US Tax /~3/D1Op4CS_xQw/04232012InfocastTangPropUS Tax SecArchive.aspx” title=”Archive of April 23, 2012 AICPA Tangible Property Infocast”>Archive of April 23, 2012 AICPA Tangible Property Infocast

AICPA Testified 05.09.2012 regarding Deduction and Capitalization of Tangible Property Expenditures

The AICPA testified before the IRS and Treasury at the May 9, 2012 public hearing on proposed and temporary regulations under IRC sections 162(a), 168, and 263(a) regarding the deduction and capitalization of expenditures related to tangible property, (REG-168745-03 and TD 9564), and Revenue Procedures 2012-19 and 2012-20.  The testimony was provided by Carol Conjura, chair of the AICPA’s US Tax Methods & Periods Technical Resource Panel, and focused on several of the comments that were included in the AICPA’s comment letter of April 17, 2012.The temporary regulations proposed by the Internal Revenue Service governing the deduction and capitalization of tangible property expenditures are too complex and many US Tax payers, especially small businesses, will not have the resources to comply.   Specifically, Conjura said, “the regulations fail to provide sufficiently objective principles, they do not provide as many bright line tests as are needed and they introduce entirely new sources of complexity.”  Further “the regulations in their current form, will likely fall short of achieving the government’s main goal as stated in the preamble of providing more certainty and less controversy.”The regulations “will place demands on many US Tax payers that exceed their limited compliance resources,” she said.  “US Tax payers and their advisers will have to devote significant resources to understanding these complex rules and then applying them to common or routine transactions every year, such as the purchase of materials and supplies, and recurring property maintenance activities.  The need for simplification is particularly pressing for small businesses, which make up the majority of business US Tax payers.”  “The ‘facts and circumstances’ approach on which the temporary regulations rely has led to long-standing controversy and uncertainty” in this area, Conjura said.  “The AICPA recommends that the government develop and include in the next set of regulations significantly more bright line tests, objective standards and safe harbors.”Conjura also said the AICPA believes the de minimis rule in the regulations, which requires an annual financial statement that meets the definition of an Applicable Financial Statement, discriminates against smaller US Tax payers.  The definition of “Applicable Financial Statement” requires preparation of the statement in accordance with U.S. Generally Accepted Accounting Principles and use of the statement in filings with the U.S. Securities and Exchange Commission or with any federal government agency other than the IRS.  Instead, the AICPA recommends the use of an alternative test that would allow smaller US Tax payers to meet the eligibility requirement for the de minimis rule.  For example, an aggregate dollar ceiling could be set on the US Tax payer’s US Tax deduction; the ceiling could be measured by a defined attribute reported on the US Tax return, such as a percentage of US Tax gross receipts.The AICPA commended the IRS and Treasury for permitting automatic accounting method changes to comply with the regulations, and for the waiver of the scope limitations for two years to allow US Tax payers additional time needed to comply with the regulations.  The AICPA also noted several of the areas where the transition guidance should be revised or clarified, including:
amended to permit extrapolation procedures to compute the section 481(a) adjustments;
additional transitional relief to provide US Tax payers with additional time to comply with the written de minimis policy requirement; and,
clarify the situations in which single or multiple Form 3115 filings are required for related accounting method changes.
For further details on each of the areas included in the AICPA’s oral testimony, as well as other areas where the AICPA has provided recommendations to the government on this guidance, please refer back to the April 17th comment letter. 

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US Tax /~3/oaosRgz01Wo/AICPA05092012TangibleTestimony.aspx” title=”AICPA Testified 05.09.2012 regarding Deduction and Capitalization of Tangible Property Expenditures”>AICPA Testified 05.09.2012 regarding Deduction and Capitalization of Tangible Property Expenditures