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Showing posts from May, 2003
Bankruptcy Discharges Corporate Officers
Corporate directors facing crushing judgments for leading their companies down the path to ruin can still find shelter in bankruptcy court, the 9th U.S. Circuit Court of Appeals ruled Wednesday. Though most liens are dischargeable under bankruptcy law, those incurred as a fiduciary trustee are not. But a unanimous panel held that a former Cal Micro Inc. executive isn't subject to that exception and wiped clean $1.3 million in debt.
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Jobs and Growth Tax Relief Reconciliation Act of 2003
Capital Gains Tax Cut

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (HR 2), approved by the House and Senate on May 23 and was signed by President Bush on May 28, 2003. The key provisions of the JGTRRA is a dividend and capital gains tax cut. The top rate is reduced from 20% to 15% through 2008. The 10% capital gain rate is reduced to 5% for taxpayers in the lower two tax brackets through 2007 and eliminated for 2008,. Congress will probably extend this tax cut and may ultimately make the tax cut permanent.

2003 -2004 Individual Tax Cuts

For 2003 and 2004, the JGTRRA accelerate some tax reductions previously scheduled for later tax years. The Act:

�œ increases the child tax credit from $600 to $1,000;
�œ accelerates the expansion of the 10 percent tax bracket, thereby lessening the tax rate for some taxpayers;
�œ eliminates the marriage tax penalty by increasing the maximum amount of income included in the 15% income t…
The New Tax Law Reduces some Business Taxes
The new tax law expected to be signed by President Bush allows small businesses to write off $100,000 in investments this year. This is an increase from the $25,000 write off limit. All businesses could depreciate half their assets this year, recouping their money faster. For example, a small business that spends $150,000 on new equipment this year can write off $100,000 immediately and recoup half of the remaining expense through depreciation this year. As a result, a business can immediately write off as an expense at least $125,000 of its equipment purchases.

Investors will see the tax rates they pay on dividend income and capital gains fall to a top rate of 15 percent through 2008. Low-income taxpayers will pay 5 percent now through 2007, and nothing in 2008. Investors currently pay taxes on dividends at the same rates as ordinary income, as high as 38.6 percent, and capital gains held for more than one year are taxed at 20 percent. In …
The New Tax Bill Proposal
Would cut taxes by $330 billion through 2013. Also provides $20 billion to state and local governments for Medicaid and other programs, to be paid over next two years.

-Corporate dividends, capital gains: Would lower the top rate to 15 percent on taxes paid by stockholders on corporate dividends and the taxes on capital gains. Current top rate is 38.6 percent for dividends, 20 percent for capital gains. Lower income people would pay a 5 percent rate on both. The new rates would run through 2007; in 2008, the lower rate would drop to zero. In 2009, today's current, higher rates would return.

-Personal income taxes: Would accelerate several tax reductions that had been scheduled to occur later this decade. Increase child credit to $1,000 per child, instead of current $600. Highest income tax brackets would be reduced to 35 percent, 33 percent, 28 percent, 25 percent. The lowest, 10 percent bracket would be expanded. For married people filing joint returns,…
IRS wants $15mil to Hire Collection Agencies!
The IRS plans to eventually place 2.6 million delinquent taxpayer accounts annually with private collection companies, according to Pamela J. Gardiner, acting Treasury inspector general for tax administration. It will need to make an initial $10 million to $15 million investment to launch the proposed initiative. If permitted by Congress, the IRS to hire private bill collectors to dun people on Uncle Sam's behalf. For their efforts, the outside agencies would get to keep up to 25 percent of the taxes they collected.
Next year, the U.S. Treasury a popular tax shelter for holders of U.S. Savings Bonds.
Starting in mid-2004, the Treasury will stop issuing Series HH bonds.

As a result, bondholders will no longer be able to roll over their Series E and Series EE bonds into Series HH bonds.

So they'll no longer be able to postpone the tax that'd otherwise be due on all the interest accumulated on their old Series E and EE bonds.
Real Tax Cuts Appear Doomed.

President Bush's $750 bil tax reduction is doomed. The House (controlled by Republicans) limited the cuts to $550 bil over 10 years. The Senate Bill of $350 bil over 10 years is mired in amendments and politically manuevering. Somehow the politicians in Washington seem to think it is THEIR money rather than OURS!
3rd Circuit Tightens Rules for Discharging Student Loans

In a ruling that promises to make it much more difficult for bankruptcy
debtors to win forgiveness of their student loans on "undue hardship"
grounds, the 3rd U.S. Circuit Court of Appeals has ruled that such debtors
must prove that they made good faith efforts to repay the loans over the
"entire" period from the first due date of the loans to the bankruptcy
filing date.

The court's unpublished per curiam opinion in Pelliccia v. U.S. Department
of Education is a significant narrowing of the court's 1995 decision that
established the undue hardship test, Pennsylvania Higher Education
Assistance Agency v. Faish.
This is a question I received today and is similar to many questions I receive:
I found your web site yesterday, and would like your opinion. I and my partners are interested in incorporating in Nevada for the purpose of privacy. We have been talking to Nevada Corporate Headquarters, and they assure us that a Nevada Corporation with Nominee service will ensure us complete privacy. Of the four partners, two would like to remain "silent". One concern is that, in the event of a lawsuit, would Nevada law prevail and protect the names of these partners? Our business would actually be in Washington and surrounding states.
This is my answer:
Thank you for the note. Frankly, nothing will do what you want - complete privacy. Let's make an example:
You setup Nevada Corp - Nevco. Inc. and want to do business in WA. You must file as a foreign corporation in WA. Even if there is a nominee owner, who will be the officers? Suppose the corporation is charged by a governmental agenc…
State Taxes - Because the States have radically increased their spending in the past decade, there has been a push to increase taxes imposed on business. State tax issues are now an important consideration since states are charging higher taxes and decoupling from the Federal Tax treatment of LLCs.
Watch out for the IRS "Sneak Attack." Revenue Officers (the IRS collection team) calls your tax attorney at lunch time and then immediately calls you saying "I could not speak with your attorney." Simply tell the IRS to call your tax attorney and do not say anything other than "You will have to speak with Mr. Cappuccio." Do not tell them anything because it could be used against you!
Welcome to My Weblog! This is dedicated to quick notes about the IRS, tax matters, and business law issues.