MIAMI -- Attorneys say no settlement is imminent in the U.S. attempt to force Swiss bank UBS AG to disclose names of thousands of suspected tax dodgers.
Attorneys for the bank and the U.S. Justice Department told a federal judge in Miami on Wednesday that talks have hit a stumbling block. Both sides say they'll continue discussions, but for now a full-scale hearing on the dispute remains set to begin Monday.
The Internal Revenue Service wants the judge to order UBS to turn over names of some 52,000 wealthy Americans believed to be hiding assets and evading taxes. UBS is refusing, contending that Swiss bank secrecy laws would make it a crime.
Switzerland's foreign minister is to discuss the case later this week with Secretary of State Hillary Clinton.
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Friday, August 28, 2009
Monday, August 17, 2009
The Metro Crash and Tax: Leaseback Infrequently Asked Questions
As discussed in an earlier post, Metro said that it could not comply with the NTSB recommendation that Metro replace its 1000-series Rohr cars because of a “tax advantage lease.” This post explains tax advantage leases in more detail–not the specifics of the WMATA’s Rohr leases, which we haven’t seen, but rather sale-leasebacks (sometimes called “sale-in/lease-outs,” or “SILOs”) in general. We’ll talk about two parties: TransitCo, which, like WMATA, is a tax-exempt transit authority, and Taxpayer, which is not tax exempt and has a regular flow of income. (This post discusses domestic sale-leasebacks; there are additional tweaks for cross-border sale-leasebacks.)
So: Leaseback Infrequently Asked Questions (or, Everything You Wanted To Know About Leasebacks but Were Afraid To Ask, Because You Thought You Would Probably Get Really Bored).
What’s the main idea?
The main idea is that TransitCo, which is tax exempt and thus cannot use tax benefits, essentially sells these tax benefits to Taxpayer, a taxable party who can use them to offset income.
What tax benefits?
TransitCo is mostly selling depreciation deductions.
That is not helpful. What are depreciation deductions?
Let’s back up for a minute. Imagine you spend $100 buying baking supplies, which you then turn into cupcakes that you sell for $110. It seems inaccurate to say that you have $110 of income when overall, you are only $10 better off than you would have been if you had not baked the cupcakes at all. So to determine taxable income, you get to subtract your trade or business expenses from your gross income. In this case, you would have only $10 of taxable income.
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So: Leaseback Infrequently Asked Questions (or, Everything You Wanted To Know About Leasebacks but Were Afraid To Ask, Because You Thought You Would Probably Get Really Bored).
What’s the main idea?
The main idea is that TransitCo, which is tax exempt and thus cannot use tax benefits, essentially sells these tax benefits to Taxpayer, a taxable party who can use them to offset income.
What tax benefits?
TransitCo is mostly selling depreciation deductions.
That is not helpful. What are depreciation deductions?
Let’s back up for a minute. Imagine you spend $100 buying baking supplies, which you then turn into cupcakes that you sell for $110. It seems inaccurate to say that you have $110 of income when overall, you are only $10 better off than you would have been if you had not baked the cupcakes at all. So to determine taxable income, you get to subtract your trade or business expenses from your gross income. In this case, you would have only $10 of taxable income.
Source
Monday, August 3, 2009
Law Proposed to Ease Home Office Tax Deduction
Proposed legislation would make it easier for small businesses to qualify for the home office tax deduction.
The bipartisan bill, introduced in both the House and Senate, would direct the Treasury Secretary to create an optional, easy-to-use standard deduction to encourage greater use of the home office tax incentive. In addition to instituting an optional home office tax deduction, the “Home Office Tax Deduction Simplification and Improvement Act of 2009” would require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest and depreciation in order to further reduce the burden on the taxpayer.
Under current law, a home office tax deduction can be claimed by qualified individuals who use a portion of their home as a principal place of business or as a space to meet with patients or clients. Recent research from the U.S. Small Business Administration indicates that roughly 53 percent of America’s small businesses are home-based, but few home businesses actually take advantage of the tax incentive because of the complex, rigid reporting requirements.
“With a morass of paperwork attributable to the home office deduction, the time-consuming process of navigating the tangled web of rules and regulations makes it unsurprising that so many small-business owners forego the home office deduction,” said Snowe, who is ranking member of the Senate Committee on Small Business and Entrepreneurship. “By simplifying this vital tax incentive, our bill will give small firms much-needed relief from burdensome tax rules, which, in turn, will allow them to focus their efforts on developing new, cutting-edge 21st century products and services and creating new jobs.”
The Snowe-Conrad-Gonzalez initiative has already attracted strong support from the National Federation of Independent Business, the IRS National Taxpayer Advocate Service, and the SBA’s Office of Advocacy.
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The bipartisan bill, introduced in both the House and Senate, would direct the Treasury Secretary to create an optional, easy-to-use standard deduction to encourage greater use of the home office tax incentive. In addition to instituting an optional home office tax deduction, the “Home Office Tax Deduction Simplification and Improvement Act of 2009” would require the IRS to streamline its reporting requirements to clearly identify the portion of the deduction devoted to real estate taxes, mortgage interest and depreciation in order to further reduce the burden on the taxpayer.
Under current law, a home office tax deduction can be claimed by qualified individuals who use a portion of their home as a principal place of business or as a space to meet with patients or clients. Recent research from the U.S. Small Business Administration indicates that roughly 53 percent of America’s small businesses are home-based, but few home businesses actually take advantage of the tax incentive because of the complex, rigid reporting requirements.
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The bill, introduced by Senators Olympia J. Snowe, R-Maine, and Kent Conrad, D-N.D., along with Rep. Charles A. Gonzalez, D-Texas, would also update the Tax Code to ease the burden of proof in claiming the deduction. Specifically, it would allow the home office deduction to be taken if taxpayers use part of their home to meet or deal with clients regardless of whether the clients are physically present. The bill would also allow for de minimis use of business space for personal activities so that taxpayers would not lose the ability to claim the deduction if they make a personal call or pay a bill online. “With a morass of paperwork attributable to the home office deduction, the time-consuming process of navigating the tangled web of rules and regulations makes it unsurprising that so many small-business owners forego the home office deduction,” said Snowe, who is ranking member of the Senate Committee on Small Business and Entrepreneurship. “By simplifying this vital tax incentive, our bill will give small firms much-needed relief from burdensome tax rules, which, in turn, will allow them to focus their efforts on developing new, cutting-edge 21st century products and services and creating new jobs.”
The Snowe-Conrad-Gonzalez initiative has already attracted strong support from the National Federation of Independent Business, the IRS National Taxpayer Advocate Service, and the SBA’s Office of Advocacy.
Source
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