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Recent Blog Posts

Business Law Contracts and Agreements Can Prevent Later Headaches

 Posted on March 18, 2016 in Small Business Taxes

Contracts and other types of business agreements, when drafted thoughtfully and properly, are wonderful tools. In addition to stating in writing what services or products will be provided and at what cost, well-drafted contracts and agreements also describe additional terms including time frame for delivery, how the contract can be extended or terminated, and provide an outline of how, and under what laws, disputes will be handled .

If handled correctly, contracts and agreements are negotiated fairly and ultimately serve to protect the interests of both parties. Unfortunately, problems with contracts can arise for any number of reasons, including the following:

  • The contract might be "off the shelf" and not tailored for the transaction or type of business;
  • One party drafted the contract and the other party wasn't given an opportunity to review it before signing;
  • The agreement might not cover all of the products or services agreed upon by the parties;

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Estate Planning / Wills & Trusts Fear

 Posted on March 11, 2016 in Taxation Law

Do you have an estate plan? If you do, then great! However, if you have considered creating an estate plan, but haven't, have you thought about why you are not moving forward?

Many times, people do not "get around" to having an estate plan drafted or drag their feet when it is time to execute the documents because of fear.

Fear? Really?

Yes, it is often that people do not want to face their own mortality to the effect that, when it comes to deciding "who gets what", they freeze. They panic. They are paralyzed .

To many, signing Estate Planning/ Wills & Trusts documents is like signing their own death sentence. As though, by executing the documents, they will ensure that disaster will strike the moment they walk outside of the law firm. Although this is highly unlikely, the fact is that we will all pass on at some point in time and it is an act of kindness to prepare for your family's security by planning for their future now.

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1031 Exchanges in Real Estate Law

 Posted on March 03, 2016 in Property Taxes

If you are considering a 1031 exchange of real estate, it is important to understand what a 1031 exchange is and isn't, and to be aware of potential issues that could result in favorable tax treatment being denied. Real estate law is complex by itself; add in the element of tax law that comes with section 1031 exchanges and an unrepresented client could easily find themselves out of compliance with the strict requirements of the tax code.

Section 1031 exchanges are named for section 1031 of the tax code which, boiled down to its simplest, allows for property sellers to rollover gains into a new property, postponing the tax bill. There is no limit to the number of times a seller can rollover gains as long as the requirements of the law are met . Those requirements are:

  1. Like-kind property. The property being sold and the property being purchased must be used for the same purpose; that is to say that they either both have to be investment properties used in a trade or business. Property held strictly for resale will not qualify for section 1031 tax treatment; neither will primary residences qualify either.

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Tax Law: What to Expect if Your Small Business is Audited

 Posted on February 26, 2016 in Small Business Taxes

As a small business owner, you are required to understand and adhere to the myriad of laws that affect your business, including both federal and state tax laws.

Even when you are confident that you are in compliance with all applicable regulations and requirements, finding out that your business is being audited is unnerving. Know that the fact your business was selected for an audit does not necessarily mean your filings have been flagged by the IRS, state or local tax authorities; you may have just won the tax audit random selection lottery (which is, unfortunately, not nearly as fun as winning the powerball.)

If you are selected for an audit, know that you have a number of rights during the audit process, including the right to professional and courteous treatment, the right to privacy and confidentiality, the right to know why certain information is requested, the right to appeal, and the right to representation.

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Estate Planning: Why Wills & Trusts are Key Documents for Everyone

 Posted on February 18, 2016 in Taxation Law

Let's face it; talking about estate planning using wills and trusts is morbid. Nothing about the discussion is fun or exciting, but it's a discussion everyone needs to have at some point.

Estate planning is planning for what happens to your assets when you pass away, and identifying who should be in charge of that process for you.

Failing to plan ahead, by having a living trust and pour-over will prepared, means that in effect, the state is writing your will for you. State "intestacy" laws spell out, clearly, how assets should pass when someone dies without a will. The problem is, the state's plan for your assets may not be your plan for your assets.

By taking control of your own planning now, you also get to identify who will be responsible for handling your estate and trust administration. This can help ensure that who you want to be in charge will do so, rather than leaving it up to a decision for the courts.

Additionally, properly structured and funded living trusts are designed to avoid probate court at death, meaning that assets pass much more smoothly and with significantly less hassle than they would if a probate proceeding was necessary.

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Landlords: Why You Shouldn't Draw Up Your Own Leases

 Posted on February 11, 2016 in Property Taxes

As a landlord, you probably love being able to run your own business. In fact, you might try to handle as much of your renting business as possible, such as performing maintenance on your rentals and handling your own advertising.

It might seem natural to handle your own leases when you're renting out your real estate, but this is one thing that you should count on a professional to help you with instead. These are a few reasons why.

Templates Might Not Work for Your State

A lot of landlords just like you assume that they can handle their own leases because there are so many templates online that they can download and use - often for free.

The idea might be appealing, and the leases that you find might have been prepared by lawyers, but this doesn't mean they one of them will be a good fit for you.

The main thing that you have to be concerned about is the fact that the lease could be written for a state that is different from yours. Since every state has different laws in regards to landlord and tenant laws, this can be a big deal.

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Business Law: Why Choice of Entity is a Crucial First Decision

 Posted on January 29, 2016 in Small Business Taxes

When starting a new business, it is critical to understand the differences between different types of business structures and to evaluate the pros and cons of each option as they relate to your new venture. Business laws govern both the formation and operation of all types of business, and contain very specific requirements that can be traps for the unwary.

What might be an appropriate choice of entity for one type of business may not meet the needs of another. Unfortunately, making an incorrect choice of business entity not only creates administrative burdens to "unwind" the first choice, but it also usually results in unnecessary expenses at a time when the new business needs every dollar working for it.

There are also differences in the type of supporting documents a business must have behind the scenes, and in the legal formalities that must be observed on an ongoing basis. For example, a single-member LLC usually does not need to observe the same types of formalities as a corporate entity, which must hold and document regular meetings of shareholders and directors. Where a single-member LLC may not need an operating agreement or a member control agreement, those types of documents are very important for a multi-member LLC.

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Highway Bill Creates Tax Collection Changes, New Penalties

 Posted on December 29, 2015 in Taxation Law

Taxpayer complaints led the IRS to abandon the practice in 2006 but now it is set to return: using private collectors to pursue overdue federal tax payments. Subcontracting with private collection firms was approved by President Obama when he signed the recent federal highway bill—also known as Fixing America's Surface Transportation (FAST) Act, HR 22—on December 4, 2015. According to multiple media sources, including the Hill, the president signed the legislation with only hours remaining before federal funding for highways was set to expire. FAST should provide funding for the nation's highways and other infrastructure for the next five years without increasing gasoline taxes. The law also has substantial implications for taxpayers who owe a significant amount of money to the IRS. In addition to authorizing the use of private collection agencies for some tax collections, FAST also includes a new penalty for taxpayers who have "serious" tax debt that is delinquent.

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Governor Brown Vetoes California A.B. 99

 Posted on December 03, 2015 in Taxation Law

Are you concerned that a recent decision by California Governor Jerry Brown may impact your taxliabilities? A.B. 99 was a bill written to bring California into compliance with federal rules regardingcancellation of debt income (CODI) related to mortgage debt forgiveness. Though the bill was approvedby state legislators, Governor Brown cited the need for California's continued tax revenue as the reasonhe is not granting this tax relief. Many tax payers anticipated the governor's signing of the bill. Manymay not have accounted for the mortgage debt relief to be counted as income. This may createincreased tax responsibilities. If you believed that A.B. 99 was going to be signed into law and you havenot made appropriate tax payments to the California Franchise Tax Board, you may need a California taxattorney.

Currently, California tax law does not conform to federal exclusions for income from the discharge ofqualified principal residence indebtedness occurring after 2013. California taxpayers with cancellation ofdebt income who anticipated the implementation of A.B. 99 may not have made their payments beforethe due date of the return. This may lead to penalties for the 2014 tax year.To get answers about California's A.B. 99 and how its veto might impact your tax responsibilities,contact California Tax Attorney John D. Teter.

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Bitcoin and Other Digital Currency Are Regarded as Property for Tax Purposes

 Posted on October 22, 2015 in Taxation Law

Digital currency may be a misnomer because, according the United States Government, it is property rather than currency. Regardless of what it is called, digital currency does have value and the owner of the currency must report digital currency transactions on his/her income tax returns or face penalties.

During an American Bar Association webcast that was held on March 25, 2015, government sources said they will aggressively pursue taxpayers who use virtual currency for illegal activities including money laundering, tax evasion and a host of other crimes. The webcast affirmed what the IRS stated in a press release published in March of last year: "IRS Virtual Currency Guidance : Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply."

Bitcoin, the most popular digital currency, has approximately $3.9 billion in circulation worldwide. Each holder of Bitcoin currency obligated to pay US income tax must report the fair market value to the IRS. According to the IRS press release, other requirements include

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