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Showing posts from March, 2005

Telecommuters Must pay NY State Income Tax

Telecommuters Must pay NY State Income Tax

A closely divided New York Court of Appeals upheld a controversial tax policy that has made New York state the bane of telecommuters, and something of an outcast among its neighbors. The state's high court held in a 4-3 opinion that a telecommuter who lives and works in Tennessee but is employed by a New York-based company must pay New York taxes on 100 percent of his income even though he spends at most 25 percent of his working time in the Empire State.

The solution is for the company to establish a subsidiary or sister company in another state to minimize New York's draconian tax practices.


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Can Trust Fund Penalties be Discharged in Bankruptcy?

Can Trust Fund Penalties be Discharged in Bankruptcy?

Some employment tax obligations are dischargeable in Bankruptcy. For instance, a proprietor employer's share of FICA tax more than 3 years old at time of bankruptcy petition would be dischargeable. 11 USC 523(a)(1), referencing 507(a)(8)(D).

1031 Exchanges in NJ

1031 Exchanges Exempt from NJ Non-Resident Withholding Tax

The tax law effective August 1, New Jersey P.L. 2004, C.55 (N.J.S. 54A:8-10), which demanded real estate tax withholding from nonresident New Jersey sellers, no longer applies to sellers in a §1031 exchange.

The new Seller’s Residency Certification/Exemption form (effective October 8, 2004) now includes exemption # 7, which applies to 1031 exchanges and other transactions not subject to Federal Income tax under I.R.C. Section 721

IRS Commissioner Brags About Profits from Increased Collections

IRS Commissioner Brags abour Profitablity of Increasing IRS Budget for Collections and Audits

Remarks of IRS Commissioner Mark W. Everson at National Press Club

IR-2005-30, March 15, 2005

"The Administration has called for a 4.3 percent increase in IRS
funding in the President's '06 budget, with a nearly 8 percent increase for
enforcement.

These investments will pay for themselves several times over. Last
year, the IRS produced direct enforcement revenues of more than $43 billion
from our collection, audit and document-matching efforts. This reflects
better than a 4 to 1 return for every dollar invested in the total agency
budget, including our service and outreach activities. And our direct enforc
ement revenues don't include the indirect impact of our work that occurs
when a neighbor hears about a friend's audit or reads about a criminal
conviction and then spurns the suggestion to inflate a deduction or
understate income. Increased enforcement funding makes good…

LLC vs. S Corporation

Question:

My accountant recommends an "S" Corporation rather than a LLC becasue LLC's are taxed as partnerships and that is more complex. What do you think?

Answer:

The LLC offers more flexibility than an S corp. Remember only qualified persons can hold S stockwhereas anyone or any entity can own a membership unit of an LLC. There is alimit on the number of shareholders an S corporation can have (75). While both an S and an LLC are generally small in number, the LLC can have an unlimited number of members.

An S can only have voting and nonvoting stock, which must otherwise have all other similar rights. An LLC can create whatever kind of membership interests it wishes, so long as the economics are properly reflected in each member's capital account.

Further, if you intend to put real property into a corporation, you will be subject to the problem of double taxation on the appreciation, whether it is a C or an S. The problem with having real estate in an S corporation aris…

Does a Single Member LLC offer Liability Protection?

There is no reason to believe that as to liability arising from
within the LLC, such as a slip and fall on the premises being held,
that a single-member LLC will offer any significantly less protection
from liability to the member than a sole shareholder corporation
would to its shareholder.

In most states, the law relating to sole shareholder corporations is
relatively well-defined and is found in the corporate veil piercing
and alter ego cases. While the "unity of ownership" element is
obviously met in the case of a sole shareholder corporation or single-
member LLC, there are other criteria which usually must be met
(entity undercapitalized for its liabilities or used to perpetrate a
fraud, etc.), such that historically sole shareholder corporations
have actually stood up pretty well to prevent the liability from
flowing to the shareholder.

So, while the use of a single-member LLC is not ideal from a liability standpoint (although it is better than a sole proprietorship) it …

My Mother Died without a Will

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Question:
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Category: Probate, Trusts, Wills & Estates
Location: NJ
Subject: My Mother Died without a Will

My Mom died in 2003 w/o a will. My siblings appointed me administrator, i am one of 9. The only property to be divided is the house. which comes with it's on set of problems,their is not a clear title. There are leins against the property, we were able to get $90,00 cleared with just a few thousand left.My husband and I would like to buy the property, we had it appraised and are able to pay cash to each of my siblings. 6 of us have signed QuitClaim Deeds.There are 3 hold outs (emotional hold outs)They feel my sister should have the house. she has no $ and can't get a mortage. I belive that my job is to settle it fairly 1/9 split is fair. It has been 20 months since my mom died and now the homeowners insurance is a problem, we have been dropped by the co. we were with for 30years. i found another co. for double the cost and short term,we must have a …

Congress Trying to Increase Small Business Taxes

Congress is trying to increase taxes on small businesses that are LLCs LLPs and S corporations. Presently, if a shareholder of an Scorporation or a Limited Parter of a Limited Liability Partnership or investor Member of a LLC has no participation in the management of the business, income received is not suject to the onerous Social Security/Medicare double tax. In order to raise taxes, some members of Crogress are trying to tax all of the distributions as if they were earning from work and therefore collect unwarranted Social Security and Medicare taxes.

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Seniority vs the ADA

Your company's seniority system ordinarily takes precedence over accommodating the needs of disabled employees, according to a Supreme Court ruling.

The case involved Robert Barnett, a baggage handler for US Airways in San Francisco who injured his back on the job. Barnett wanted a job in the mailroom but two other co-workers with more seniority also wanted the position. He sued in federal district court charging that the airline didn't make a "reasonable accommodation" for him under the Americans with Disabilities Act. (US Airways v. Barnett, No. 00-1250, April 29, 2002).

The decision may take some of the pressure off employers to make special arrangements for disabled staff members. But the court didn't give companies a green light to make promotions based solely on seniority and ignore the ADA entirely.

"In our view, the seniority system will prevail in the run of cases," Justice Stephen Breyer wrote for the court. However, a disabled employee might be…

Ondian Company Opening US Branch Company

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Question:
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Subject: Opening branch office of Indian company in NJ

We wish to know the legalities involved in opening the branch office of an Indian manufacturer-exporter of home textiles. This company is already exporting to wholesellers in USA.
Now wants to have own branch office in New Jersey.


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Reply:
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You will want to set up a separate Limited Liability Company or Corporation in New Jersey to run the NJ business. This has the advantage of being a US based entity with US source income. Any profits could either remain in the US or be paid as management fees to the parent Indian company.

Please check my web site http://www.taxesq.com/ for more information about setting up a New Jersey company.

I hope this helps!

Ron Cappuccio

IRS Publishes New 941

Here is the address for the revised 941 just published by the IRS

New 941

Common Fraudulent Tax Schemes

Here is a report by the IRS of the 12 most common fraudulent tax schemes. If you have fallen vitim to any of these, call me at 856 665-2121 right away. For other tax frauds see mny website at http://www.taxesq.com

Ron Cappuccio

The Dirty Dozen
The IRS urges people to avoid these common schemes:

Trust Misuse. Unscrupulous promoters for years have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits, and the IRS is actively examining these arrangements. More than two dozen injunctions have been obtained against promoters since 2001, and numerous promoters and their clients have been prosecuted. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.


Frivolous Arguments. Promoters have been known to make the following outlandish claims: that the Sixteenth Amendme…