How to Help Clients Make the Most of the Treasury’s Anti-Clawback Regulations

Posted by Robert L. Arone The 2017 Tax Cuts and Jobs Act doubled the federal gift and estate tax exclusion amount, which had previously been $5 million (adjusted each year for inflation) per individual. The exclusion amount for 2020, including the adjustment for inflation, is $11.58 million. However, the increase in the exclusion amount is temporary and, unless Congress extends it, will expire on December 31, 2025. This has caused concern that if taxpayers made gifts of the additional $5 million (adjusted for inflation) between January 1, 2018 and December 31, 2025, the benefit could be “clawed back” in the calculation of their estate taxes if they died on or after January 1, 2026—i.e., after the expiration of the increased exclusion amount. This concern arose because gift and estate taxes are calculated together, as a unified calculation. The determination of whether any tax is due is made by applying a

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Income Tax Strategies to Move Your Clients Forward

Posted by Robert L. Arone The 2019 estate tax exemption is $11.4 million per person, up from $11.2 million per person in 2018. According to the Tax Policy Center, only 4,000 estate tax returns were filed this year, with only 1,900 of those returns owing tax. Some industry experts estimate that less than one percent of all estates are taxable.  Put another way, over 99 percent of all estates are exempt from estate tax. With the likelihood of clients having a taxable estate being relatively low right now (this is subject to change, of course), it only makes sense that clients focus on income tax planning. As a trusted advisor, you hold a crucial role in ensuring that our clients receive the best comprehensive strategy. Basics of Income Tax What is the income tax? Income tax is a tax paid on an individual or entity’s income that meets certain requirements. Taxable income can

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What is the tax implication for a joint venture vs. a partnership?

By Eric P. Rothenberg, Esq. Partnerships and joint ventures share many similarities. However, there are significant differences business owners should be aware of when allying with another enterprise. Both are forms of legal structures used by business owners to combine resources, talents, or skills with another person or business. Business owners often mistakenly use the terms partnerships and joint ventures interchangeably. A partnership can be described as a voluntary association of two or more people who jointly own and carry on a business for profit, such as law firm partners who work together to provide legal services for gain. A joint venture, on the other hand, is typically a business undertaking by two or more people engaged in a single defined project. An expressed or implied agreement, a common purpose that the group intends to carry out, shared profits and losses, and each member’s equal voice in controlling the project

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Accounting Methods for Cryptocurrency Trades & Sales

By Eric P. Rothenberg, Esq. – (Published Article)   The world of cryptocurrency transactions was changed dramatically at the end of 2017 when the Internal Revenue Code [“IRC”] was modified to remove all types of assets eligible for Tax Free Exchanges under IRC Section 1031 [also known as “1031 Transactions] EXCEPT for real estate. Prior to 2018, you could exchange farm animals, rail cars and office equipment, etc. After 2017, only real estate will qualify. In my previous articles on cryptocurrency tax aspects, I discussed that the IRS has treated, since 2014, all cryptocurrency as “property” and not as either currency or security. The SEC, however, does treat it as a security, and FinCEN, the short name of the Financial Crimes Enforcement Network, a department within the US Treasury, treats it as currency. With three differing views of the same intangible object, confusion abounds. PRIOR LAW Prior to 2018, you

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I am setting up a small business on my own. Would I benefit from incorporating as an LLC?

In three words—yes and no. We have a new tax law this year that has what’s called a Qualified Trade or Business [QTB] deduction. It’s very complicated and before you set up an LLC or a S Corp, you would need to have a tax advisor run numbers. This deduction is not available to high income businesses [over $415,000 of taxable income for married filing jointly and $157,500 for all others.] This question cannot be answered unless you get help ASAP. While you would benefit greatly from incorporating your business as a limited liability company (LLC), as opposed to operating it as a sole proprietor or as part of a group of partners in a general partnership, there are some trade-offs to being a S Corp or an LLC or a proprietorship due to the new QTB deduct. An LLC is a relatively simple means of incorporating a business, with

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