TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

I t has been estimated that  in the next five years or so, more than $5 trillion in value of small businesses will be changing hands. In the next 10 to 15 years, the estimate rises to $14 trillion. The main reason driving this is, of course, the aging of the Baby Boomer population in the United States.  Call us now to discuss planning for your business sale and succession! Ronald J Cappuccio 856 665-2121 As the Boomers hit their mid-sixties and beyond, they will begin retiring in droves. Many will want to transfer their businesses to family members while others will want to sell and use the funds to finance their retirement years. The owners of those businesses want to maximize their value (if they are going to sell) or find the most cost efficient method of transferring the entities to their heirs. Either way, the value of a business being transferred is an important element for the owners to consider. The recession tha...

Gay/Lesbian Married Couples may get same Estate Tax Treatment as Heterosexual Couples Edith Schlain Windsor v. U.S. (DC NY 6/6/2012)   A Federal District Court in New York ruled in favor of a surviving same-sex spouse's constitutional challenge to section 3 of the Defense of Marriage Act, which denies recognition of same-sex marriages for purposes of administering Federal law. The court found that this provision violates the equal protection clause of the Constitution. As a result, it allowed a marital deduction to the estate of the deceased same-sex spouse for the amount she left to the spouse who brought this suit. This case, which was not defended by the Obama Administration, held a NY lesbian couple that got married in Canada were entitled to the spousal estate tax deduction. Ultimately, until it is decided by the US Supreme Court, planning for same-sex married couples is still difficult. Stay tuned...

Form 8938 - Foreign Financial Asset Reporting The IRS has released new information about assets that must be reported on Form 8938 , Statement of Specified Foreign Financial Assets, This form is part of the Obama Administration' attack on taxpayers with undisclosed foreign assets. Individuals with an interest in a foreign financial assets during the tax year must attach a disclosure statement, Form 8938 to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as IRS may prescribe).  Specified foreign financial assets are:  (1) depository or custodial accounts at foreign financial institutions, and  (2) to the extent not held in an account at a financial institution,               (a) stocks or securities issued by foreign persons,              (b) any other financial inst...

Consulting Fees Paid to C Corporation Shareholders Were Disguised Dividends The 7th Cir. affirmed Tax Court  disallowance of a C corporation deduction of consulting fees paid to corporations entities owned by its shareholders. The Court agreed with the IRS that the fees were disguised dividends. The Tax Court rejected the claim that the fees were deductible salary expenses. The IRS argued if  the fees were salary expenses there would be no return to equity. This is know as the "independent-investor" test. Also hurting the taxpayer was the lack of evidence that payments were compensation for services. The Corporation did not withhold payroll taxes or report the payments as compensation on its Form 1120. The corporation also failed to keep time records matching the fees to the actual work performed by each shareholder. Please see: Mulcahy, Pauritsch, Salvador & Co., Ltd., CA-7

Criminals Mine Data from Social Media Sites to Prey on Grandparents Have you heard of this recent scam? Criminals scour publicly available data on Facebook, Twitter and other social media sites. Then, they locate a vulnerable relative -- generally a grandparent -- and call them pretending to be a grandchild traveling abroad. Here's a typical "grandparent scam" phone call using information gleaned from the Internet:   "Hi Grandma, it's Tom. I'm in Mexico on break from (the name of the university he attends). I got into a car accident and need some money to pay for the damage (or emergency medical treatment). Can you wire me $2,000 right away? Please don't tell my parents because they'll just get upset." In some cases, the scammers pretend the grandchild was arrested and is in jail. If money is wired, the grandparents may be contacted again, and told additional money is needed. Meanwhile, the victims' grandchildren are actually...