Tax News

For years the highest corporate tax rate and individual tax rate were very close.  Taxpayers wanting to accumulate wealth would usually choose a passthrough type entity in order to pay the individual rate instead of paying a double tax – the corporate rate and additional tax on a dividend paid from the corporation.  However, with […]

The transition tax is not optional The transition tax is law under Internal Revenue Code Section 965.  It cannot be avoided and must be reported with the 2017 tax return.  If you have been properly filing Form 5471, but do not file the transition tax, the IRS will have all the information to assess against […]

Regardless of the outcome, guilt or reasoning behind the Paul Manafort trial, it illustrates a very important point.  Not properly reporting international taxes is not only a serious crime, but for the IRS it is also relatively easy to prove noncompliance.  Keep in mind, despite discussing Manafort’s lavish lifestyle, he isn’t on trial for being […]

After determining the taxable base, the next step is to determine the correct tax rate to apply. Income Tax Income tax is broken down into two categories, passive and active income (see here for further discussion on active v. passive).  Passive income, sometimes referred to as FDAP because it is defined as “fixed, determinable, annual […]

By now, many taxpayers are figuring out the need and the methodology to file and pay the transition tax.  However, there may be problems into the future as this law continues to appear to be unintended and ill-conceived for individual taxpayers. The basics of the transition tax is a one-time tax to be paid on […]

The U.S. taxing system is unique in many ways.  However, these differences are not always more aggressive or unfriendly to taxpayers.  One area we have seen with our clients where the U.S. is much better for taxpayers than Mexico is in the area of expense documentation.  Despite the direct comparison to Mexico in this discussion, […]

NRAs are not taxed on worldwide income and assets.   Therefore, there needs to be a system in place to determine what is taxable. Income Tax Step one for calculating U.S. taxable income is the most important.  NRAs will only pay tax on U.S. source income.  Similar to U.S. persons v. NRAs, there are only two […]

Recently, Harley Davidson announced it may be moving some manufacturing operations to Europe in order to avoid retaliatory tariffs.  This is a decision that any business would not take likely, however, a new tax law may have been a helpful factor. For years a major concern of the U.S. government and IRS was corporations holding […]

Yesterday, our Partner Josh Maxwell had the honor and pleasure of speaking to two different professional organizations in Tijuana regarding the transition tax.  This is a very important issue, and it is great our colleagues in Mexico are taking the initiative to learn about it, which will allow them to provide better service to their […]

The IRS has just announced new information regarding the transition tax, mainly revolving around deadlines and extensions for the 8-year installment plan.  Through three new FAQs on the IRS’s information website, the updates are as follows: For taxpayers who failed to pay the first installment by April 18, 2018 but made a valid election to […]