A threshold question in determining how a trust will be taxed in the US is whether the trust is foreign or domestic. The default rule is that a trust is foreign, unless the trust fails both the “Court Test” and the “Control Test.” The Court Test is met if a US court is able to exercise primary supervision over the administration of the trust. The “Control Test” is satisfied if one or more US persons have the authority to control all substantial decisions of the trust.
The US Tax Cuts and Jobs Act, passed on 17 December 2017, has dramatically changed the analysis and available strategies for structuring cross-border operations. Meaning, to realise tax optimisation, business owners must be aware of those changes. For example, in addition to a decreased corporate rate from 35% to 21%, and the full expensing of plant and equipment acquisitions, there is a now a reduced effective rate of 13.125% for domestic companies’ income from selling products or services to foreign customers directly or through related parties.
The Tax Cuts and Jobs Act passed by the US Congress on 17 December 2017, includes Section 199A, a provision that can afford pass-through businesses a 20% deduction of: Qualified business income (QBI) from a domestic qualified trade or business (QTOB) operated as a sole proprietorship, partnership, S corporation, trust or estate; Combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.
Recently, we have seen a growth in the sale or exchange of cryptocurrency, or the use of cryptocurrency to pay for goods or services. Unfortunately, guidance from the Internal Revenue Service (IRS) pertaining to related US income tax issues has not kept pace with the proliferation of cryptocurrency trading. This article highlights fundamental income US tax compliance issues for investors dealing or transacting in cryptocurrency.
IRS Clarifies 199A Section of Tax Law, Provides Safe Harbor and a 20% Deduction To Rental Real Estate Enterprises
If you own rental real estate, the fact that the IRS just issued Notice 2019-7, which clarifies Section 199A of the Tax Cuts and Jobs Act of 2017 could work to your benefit. The clarification will help in determining whether a rental real estate enterprise is a trade or business for the purposes of section 199A. From the outset, Section 199A sought to extend benefits of the Tax Cuts and Jobs Act to small businesses.
Read the latest article titled "How Do I Get Control Of My Family In Flux And Protect Its Finances?" by Partners Ladidas Lumpkins, Jay Goldberg, and Gabe Wolosky, published in the 53rd edition of Worth Magazine.
E. Martin Davidoff, National Managing Partner of the Tax Controversy Practice Quoted in Accounting Today
E. Martin Davidoff, National Managing Partner of the Tax Controversy Practice at Prager Metis, was quoted in a recent Accounting Today article titled: “Like ‘1986 on steroids.’” Click here to read the full.
With the K-1 season right around the corner, now is the perfect time to highlight a few key concepts that will directly affect fund managers from the Tax Cuts and Jobs Act (“TCJA") that was enacted on December 22, 2017. Limits on Deductibility of Business Losses TCJA imposes a new limit on the deductibility of business losses incurred by taxpayers other than corporations.
The new tax law passed last December certainly has its boosters and its detractors, but it also has written into it something that appears to be a proverbial win/win. While this new provision does offer tax breaks to those among us who receive capital gains, to get those breaks the advantaged must invest those profits in funds that benefit the disadvantaged. The shorthand for all of this comes down two words: Opportunity Zones.
The Tax Cuts and Jobs Act enacted on December 22, 2017, introduced Internal Revenue Code Section 199A. This new code section grants a deduction of up to 20% of qualified business income (“QBI”). It replaces Section 199 which was the Domestic Production Activities Deduction, beginning in 2018.