Feb 23, 2021

Key Tax Trap for Foreign Individuals Who Move to the United States

US Taxes

Many individuals who move to the U.S. for work, study or investment, often understand that they will need to be careful to comply with the applicable immigration rules, such as obtaining a visa.  And while such persons often have a general idea that they will need to file U.S. tax returns, far less time is spent on tax planning. This blog post outlines a commonly overlooked filing status that may be of substantial use to foreign investors, workers and students. U.S. Tax Filing Status by Residency Under U.S. tax rules, individuals are divided into three general categories, each of which… Read more


Feb 1, 2021

Recent U.S. Case Highlights Tax Risks for Foreign Equipment Leasing Arrangements

US Tax Court

Recently the U.S. Tax Court issued another opinion in the long-running saga of a UK vessel that was chartered for use in U.S. waters.  The case has been in audit or before the Tax Court since 2014 and highlights several issues that directly impact foreign equipment leasing firms. On January 8, 2020, the U.S. Tax Court issued the first opinion in the case, addressing whether the income from leasing the vessel was subject to U.S. taxation.  Because the owner of the vessel was a U.K. resident, special rules in the U.S.-U.K. tax treaty came into play.  (Note that these rules… Read more


Jun 4, 2020

Tax Consequences of Deferring or Restructuring Payments

Loans

During the current economic downturn arising from the COVID 19 pandemic, many businesses are struggling with payments to lenders, landlords and contractors.  This SGR Tax Blog posting addresses the tax consequences to each party when a payment is deferred or renegotiated. While the tax consequences of such are frequently not foremost in the minds of debtors, they often drive decisions on the creditor side.  Accordingly, even for debtors an overview of these rules can help explain positions taken by creditors. The tax rules on debt instruments (“DI’s”) are more complicated and we address them first.  Leases and other arrangements are… Read more


Mar 30, 2020

Business Tax Relief Under the CARES Act

Business Tax Relief

The following table outlines at a high level the major business tax changes in the CARES Act.  Please contact Joe Mandarino, if you have any follow up questions. § Title Description 2301  Employment tax credit   Eligible employers allowed a refundable credit against their social security tax liability equal to 50% of the qualified wages of each employee. Credit capped at $5,000 per employee. Applies to wages paid after 3/12/2020 and prior to 2021. Eligible employer: business is fully or partially suspended due to COVID-19, or gross receipts decline by at least 50% 2302  Employment tax payment     deferral  … Read more


Nov 11, 2019

Finance Leases, Operating Leases and Hybrids: GAAP and Tax Considerations

Blog_GAAP and tax

Over the past few years, there have been several recent changes in GAAP and tax rules that impact the treatment of leases.  With some of these changes going into effect in 2020, it is an opportune time to review the cumulative effect of these changes. Caveat – The following discussion is intended to survey only tax and accounting aspects of leases, not the rules that would apply to determine ownership and title under state law, remedies, UCC issues, and the like.  Those rules use tests that are often different from the tax and accounting standards and add additional complexity. Finance… Read more


Sep 30, 2019

IRS Finalizes Safe Harbor for Rental Real Estate Activities

On September 24, 2019, the Treasury Department finalized a safe harbor for rental real estate activities which should provide some tax benefits for lessors and investors. We addressed the draft safe harbor in a previous tax blog posting which can be found here. In this posting, we provide a summary of the final version of the safe harbor and recommendations for maximizing the benefits available under it. Background IRC Section 199A is a tax incentive for pass-through entities and sole proprietorships.  It effectively reduces the federal tax rate on income arising from certain activities by as much as 20%.  Thus, if… Read more


Feb 7, 2019

Selling a Corporation – Asset vs. Stock Sale?

Asset Sale vs. Stock Sale

The 2017 Tax Act creates new opportunities for asset sales, particularly for sellers of businesses that are carried on in corporate form. Whenever a business owned by a corporation is sold, the parties have to negotiate whether the transaction will be structured as an asset sale or a stock sale. For tax purposes, asset sale treatment is generally more attractive to a buyer and may induce a buyer to pay a premium over what it would pay for a stock purchase. Conversely, an asset sale will usually trigger higher tax expense to the seller.  Prior to the recent tax law… Read more


Jan 22, 2019

Final Pass-Through Deduction Rules Grant Welcome Relief for Rental Real Estate Activities

Rental Real Estate - Sign in Yard

On Friday, January 18, 2019, the Treasury Department issued final rules under IRC Section 199A. As part of this regulation package, Treasury also provided much-needed relief and clarity for rental real estate activities.  This development creates some hope that similar rules may be in store for Opportunity Zone Funds. Background IRS Section 199A is a tax incentive for pass-through entities and sole proprietorships.  It effectively reduces the federal tax rate on income arising from certain activities by as much as 20%.  Thus, if income from an activity qualifies, a taxpayer who would otherwise pay taxes at the current top federal… Read more


Jan 9, 2019

LLCs, Partnerships and the Tax Time Machine

LLCs and partnerships and taxes

Many LLCs and partnerships amended their governing documents in 2018 because of the various new tax rules that came into effect last year. For example, many pass-throughs converted so-called “guaranteed payment” arrangements. Under new IRC Section 199A, certain types of income qualify for a lower income tax rate – depending on the facts, the federal tax on such income can be reduced by as much as 20%. However, this tax benefit does not apply to income received under guaranteed payment clauses.  By eliminating these arrangements, recipients may be able to qualify for the new tax benefit. What about partnerships or… Read more