Christine Hradsky No Comments

K-1s & Passive Foreign Investment Companies

K-1s

PFICs are a serious tax matter and should be given a great deal of consideration when reporting elections.

By Bethany Bouw

The IRS allows certain entities to use a pass-through taxation via Form K-1. Essentially, this moves the income tax liability from those earning the income to those who benefit from it. Many individuals receive Form K-1, due to their investments in flow through entities like partnerships and S-Corporations. Those K-1 forms will include additional supplementary information behind the K-1 itself. This supplementary information is often where information on passive foreign investment companies (PFICs) is located. PFICs are a serious matter and require great consideration with reporting and elections.

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Christine Hradsky No Comments

Individual Retirement Accounts & Foreign Earned Income

Individual Retirement Accounts

Those saving for retirement while living abroad will need to be aware of the contribution limitations.

By Bethany Bouw

As US individuals look to save for retirement, it is important to note that those residing abroad may face some additional considerations. Many people seek to save for retirement via traditional and ROTH IRAs. Residing abroad doesn’t automatically preclude one from contributing to these types of accounts, but there may be limitations and other things to consider in making investment.

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Christine Hradsky No Comments

Consider an Alternate Metric to Value Your Small Business

Small business

The SDCF metric may be a more meaningful metric to value your small business.

Would you use a complicated discounted cash flow analysis to estimate the value of a mom-and-pop restaurant? How about using a price-to-earnings multiple derived from publicly traded restaurant chains? Neither method seems appropriate for a small family-operated eatery.

As this example illustrates, traditional valuation models don’t necessarily work for small businesses and professional practices. Instead, business appraisers and brokers typically recommend using an alternate metric for appraising small businesses known as “seller’s discretionary cash flow” (SDCF). Read more

Christine Hradsky No Comments

International Tax Alert- Registration-Required Obligation

Proposed Regulations Provide Guidance on the Definitions of Registration-Required Obligation and Registered Form

Summary

On September 19, 2017, the Department of the Treasury and the Internal Revenue Service (collectively, “Treasury”), published in the Federal Register proposed regulations (the “Proposed Regulations”) that provide guidance on the definitions of registration-required obligation and registered form, including guidance on the issuance of pass-through certificates and participation interests in registered form. The Proposed Regulations also withdraw a portion of previously proposed regulations regarding the definition of a registration-required obligation. The preamble to the Proposed Regulations (the “Preamble”) states that the Proposed Regulations are necessary to address changes in market practices as well as issues raised by the statutory repeal of the foreign-targeted bearer obligation exception to the registered form requirement.  Read more

Christine Hradsky No Comments

International Tax Alert – Country-by-Country Reports

Guidance Issued for Country-by-Country Reports for Early Reporting Periods

Summary

In Revenue Procedure 2017-23, the Internal Revenue Service (“IRS”) issued guidance for voluntarily filing Form 8975, Country-by-Country Report and accompanying Schedule A, Tax Jurisdiction and Constituent Entity Information (collectively, Form 8975), for early reporting periods. Read more

Christine Hradsky No Comments

Work Opportunity Tax Credit: What Business Owners Need to Know

Tax Credit

Work Opportunity Tax Credits are available to those who empolyee members of ‘targeted’ groups.

The Work Opportunity tax credit (WOTC) is a federal income tax credit that’s available to businesses that hire members of certain “targeted” groups. Here’s how your business may be able to benefit from this potentially lucrative tax break. Read more

Christine Hradsky No Comments

Coming Soon: Deadline to Reverse 2016 Roth Conversions

reverse 2016 roth conversions

The deadline to reverse 2016 roth conversions is October 16th, 2017.

Do you regret converting your traditional IRA into a Roth IRA? Fortunately, a taxpayer-friendly aspect of the Roth conversion rules is that you have until October 15 (adjusted for weekends) of the year following the year of a conversion to reverse it. In other words, the deadline for reversing any 2016 Roth conversions is October 16, 2017.

Why would you want to reverse your Roth IRA conversion? If the underlying assets held in your Roth IRA have performed poorly, causing the value of your account to plummet, you might want to reverse the account back to traditional IRA status. That way, you can avoid being taxed on account value that has disappeared since the conversion. Here’s how a reversal works. Read more

Christine Hradsky No Comments

Avoiding the 10% Penalty On Early IRA Withdrawals

IRA Withdrawals

There are nine exceptions for avoiding the penalty on early IRA withdrawals.

For one reason or another, you may need to take some money out of an IRA before reaching retirement. You can withdraw money from an IRA at any time and for any reason, but it’s important to keep in mind that most IRA withdrawals are at least partially taxable. In other words, you’ll owe regular income tax on the amount. In addition, the taxable portion of a withdrawal taken before age 59 1/2, which is called an “early withdrawal,” will be hit with a 10% penalty — unless you qualify for an exception. Read more