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

The Draft is Slavery. End it. Congress has been debating the merits of adding women into Selective Service to be drafted with men during times of national emergency.   Sen. Rand Paul has suggested that it would be better to end the draft.   The Libertarian Party agrees.   "The draft is simply slavery by another name. Drafting people to go abroad and kill or be killed is barbaric and a discredit to our military and country," says Nicholas Sarwark, chair of the Libertarian National Committee.   If a national emergency is so severe to merit mobilizing extra troops, Americans from all backgrounds, ages, and genders will pitch in to do what is needed.   The Libertarian Party urges elected leaders to end the draft and also to pursue foreign policy which is less dependent on military might.   The United States has many tools of foreign policy at our disposal that do not require force. Military force should always be a last resort and onl...

This past Thursday, Philadelphia city Council, under the prodding of its mayor James Kenney, imposed a 1.5 sent tax per ounce of "sugary" soft drinks. The idea is to prevent obesity. Of course, this will prove to be totally useless for several reasons. First, even though the beverage industry is fighting these taxes, the truth is no one could be happier than the beverage industry. It is much more expensive to make a soft drink with sugar or high fructose corn syrup than with NutraSweet or any other varieties of artificial sweeteners. Even though study after study has shown that people who drink "diet" drinks do not lose any weight and fact may have a tendency to gain weight, the beverage industry pushes diet soda to make more profit. Now, Philadelphia, like some other big cities, has decided to play right into the hands of the beverage industry. More people will choose to save the tax (on a 20 ounce soda it is $.30) and start to drink diet sodas. The beverage in...

European governments are attacking American businesses trying to get as much tax money as possible. The latest leader in this witchhunt is France. They are not only going after companies for large civil taxes but they are at going after the businesses and the employees of the business for criminal penalties and possibly jail. Leading the list are Google, McDonald's and Bookings.com. All these companies have some relationship to France by having services sold through subsidiaries, but the French do not care about legal structures of business. They just want their tax! This sounds a lot like many State governments. New Jersey is always trying to find "nexus" to pull in out-of-state businesses as being subject to New Jersey taxes. Also any business located in New Jersey is subject to grueling sales and use tax audits and lengthy appeals and court hearings. It is a real problem particularly when the company tries to handle it themselves or have an accountant represent them ...

Prince Estate  loses "Prncely" sum! Prince may have known music, but he forgot to plan for his family.  Like 70% of America,  he died without an Estate  Plan or Will. As a result, the IRS and States will get about 50% of his estate. All of his hard work goes to the Government rather than his family  and the charity of his choice.  So sad! I  wonder how many readers don't have a current Will and Estate Plan?

Thursday, European governments got together to attack people trying to own and control their businesses anonymously. The governments of France, Britain, Germany, Italy and Spain got together to create laws and try to enforce treaties to force banks and governments to reveal owners of businesses in other countries. For many years the high tax countries such as the US and Europe have been trying to find ways to attack developing countries from encouraging people to start businesses. Obviously if the business can be run in a lower tax jurisdiction it is prudent for the business owners to do that. Now, with the release of the "Panama papers" which were thousands of stolen documents from a Panamanian law firm listing the names and ownership of Panamanian registered companies, European governments are using this as an excuse to limit freedom of their citizens. This follows the actions by the Obama administration in the US requiring extensive financial reporting under threat of ja...

Corporations - the traditional business Corporations are the prime type of entity used in publicly traded companies, larger entities, and when the owners want a separate taxable entity from the individuals. A corporation is set up by filing a certificate of incorporation or articles of incorporation in the state of choice. In addition to getting a separate tax identification number, the corporation should have bylaws detailing the officers, the operation of the business and the amount of shares and any particular rights in different classes of shares. Liberation files a separate tax return and pays income tax on the income earned to both the state and federal governments. After pays taxes if it wants to distribute some of the profit to the owners, these distributions are called dividends and are taxed in the income of the shareholders. This can lead to the famous "double taxation" where the corporation is taxed and then the same income is taxed again at the shareholder leve...

The LLC is the most popular form of business in the US The limited liability company is taxed like a partnership in the US as the default rule. There can be other types of taxation elected, but that is generally not advisable. The limited liability company is established by filing a certificate of formation or articles of formation with the state. This is like the cover page of a book. It s just a bare outline of the business. It lets the public know that the entity is formed. The legal documents which control the limited liability company is the operating agreement and a buy and sell agreement. The operating agreement establishes all the terms of the LLC, the rights of the membership, the control of the LLC, and its tax attributes. The LLC is an extremely flexible type of entity. Similar to a partnership, it is as flexible as the attorney and the owners can be in drafting the documents. If the owners of an LLC simply adopt a form that they grab off the Internet or some service, th...