Yearly Archives 2016

Choosing the appropriate legal form for a business is one of the first issues most entrepreneurs face. It is an important decision at the formation stage and also as a business grows. Sole proprietorships are generally the easiest. Corporations offer some different advantages, but often with additional complexity. This article addresses some of the pros and cons of different types of legal structures for businesses. Even if your enterprise has been in existence for a while, it may be time to review your options. There can be many complexities in determining the best legal structure and a qualified attorney may be
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A shareholders agreement drafted for a privately held company details the rights and obligations of the shareholders. It not only provides guiding principles for running the business today, it lays out the ground rules of what to do if one of the shareholders dies, becomes disabled — or one party wants to dissolve the business. In other words, it can resolve issues in the future that you may not even anticipate now. Caution: There are online shareholders agreement templates that can be filled in. But there is no one-size-fits-all shareholders agreement that is applicable to all businesses. Your company is
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Under the right circumstances, an intentionally defective irrevocable trust (IDIT) can be an effective estate tax planning tool. These trusts are set up to purposely fail certain technical tests in the tax law, yet they still have the approval of the IRS and allow individuals to pass more assets on to their heirs. Here are a couple of points to keep in mind: An IDIT is considered to exist as a separate taxable entity for federal estate tax purposes and general state law purposes. However, an IDIT is considered to be a grantor trust for federal income tax purposes. As
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It’s not unusual for commercial property taxes to rise as local governments seek more money for schools, law enforcement, fire protection and other needs. But when you get your tax bill, take a close look. It may have increased too much. Check out these items: Number transpositions – It’s possible for assessors to make errors in the physical descriptions of properties. They might list the property as being 21,000 square feet when it is actually 12,000. Transposition of numbers is one of the more common mistakes when recording data. Improvements – The bill may include assessments for improvements that were
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  Effective July 1, 2014 through June 31, 2022 businesses at least 50% engaged in manufacturing or research and development (R&D) in biotechnology, physical, engineering and life sciences may claim an exemption from the California state sales tax at the current rate of 4.1875% (local/district taxes still must be paid). Sales tax exempt qualified tangible personal property includes: 1. Any stage of the manufacturing, processing, refining, fabricating, or recycling process 2. Research and development 3. To maintain, repair, measure, or test any qualified tangible personal property described in (1) and (2); and 4. For use by a contractor purchasing that property for
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Say an IRA is inherited by multiple individual beneficiaries or by one or more individuals and one or more charities or other beneficiaries that aren’t “natural persons.” How do these scenarios affect the rules for required minimum distributions (RMDs) that apply after the IRA owner dies? And how can you optimize the tax results for individual beneficiaries? Here, we answer these questions and explain the importance of the fast-approaching deadline on September 30, 2016, that must be met to change beneficiaries for IRAs that were owned by individuals who died in 2015. Required Distribution Rules and Penalties for Noncompliance After
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How long do you have to keep records? The answer depends on a number of factors. But in the case of real estate (and other assets) the answer is until the property is ultimately sold and the statute of limitations has expired. One taxpayer learned that lesson in a painful way when he went to U.S. Tax Court over his gain on a real estate investment. Recordkeeping wasn’t the only issue in the case, but it was the one with the greatest impact. Facts of the Case The taxpayer purchased a small residential apartment building in 1991 for $82,500. The building had
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There are two basic ways to sell an incorporated business — sell the assets or sell the stock. For two good tax reasons, sellers usually prefer stock sales: Assuming you’ve owned the shares for more than a year, your profits will generally be taxed at a maximum federal rate of 20 percent.* This applies equally to C and S corporations. Double taxation is avoided when you sell C corporation stock, because the sale won’t trigger any taxable gain at the corporate level. However, there may be an even better alternative. If you can find another corporation to acquire your C or S
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The term “onboarding” hasn’t yet graduated from mere business jargon to an entry in the Webster’s Dictionary. Still, it’s a term that’s common in today’s business world. It refers to “the process of helping new hires adjust to social and performance aspects of their new jobs quickly and smoothly,” according to the Society for Human Resource Management (SHRM). The sooner new employees are truly on board, the faster they can be productive. It’s no longer considered sufficient to show new employees around, introduce them to a few coworkers, complete basic legal paperwork and then wish them good luck. SHRM research
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With both major political party conventions finally behind us, it’s time to focus on the upcoming national election. Among their many differences, the Republicans and Democrats have widely divergent tax platforms. While platforms are always relatively nonspecific and not necessarily synced with what the presidential candidates have in mind, it’s still good to know what tax positions the two parties and their presidential candidates have staked out. Here’s a quick summary. Democratic Party Tax Platform Republican Party Tax Platform The 2016 Democratic national platform was adopted on July 25. It includes generalized goals that you might expect from the Democrats,
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