Tag Archives: income shifting

Will Robots Save You Taxes and Your Business?

international tax planning, ecommerce tax planning, cloud computer tax planning, offshore tax planning,

international tax planning for eCommerce.

The U.K. Financial Times reports that in the UK, alone, robots will be replacing 15 million British workers.  In the U.S., we estimate 100 million workers.

The Newspaper’s article points out that lower paid workers are most at risks.  Well, we have seen this a the supermarket where the computer checkout is more attractive than the human ones.  

Exploiting the tax savings require you to think outside of the brick and mortar world.

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tax planning, avoid taxes, small tax business,

Great Tax Savings using the New IRS Regulations on Debt versus Equity

tax planning, avoid taxes, small tax business,

President John Kennedy (Democrat) is the most respected president of last century. The President and Supreme Court Justice Hand agreed that patriotism does not mean paying more than your legal share.
Supreme Court Justice Holmes said tax planning means you get as close to that legal line as possible.

If you were a tax nerd, like me, you would have read many many articles on the new IRS section 385 regulations (debt versus equity transactions).  Nobody like change and that applies to most tax planners.   But for every action, there is an equal reaction.

While corporate tax planning will be more complex with these regulations, small business tax planning is improved.

 This blog looks at shifting income and wealth by valuing a promissory note.  For estate tax planning, you want the note to have a low value.

For small business income tax planning, you want the note to have a high value or a low value. In the example below,  the note had a low value.  
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Tax Planning with the 2017 IRS Audit Guide for Family Partnerships and LLCs

saving taxes, how to save taxes, tax planning,

Saving taxes by requesting a private letter ruling from the IRS National Office.

 Great Tax Teams make extensive use of related and family-owned partnerships, LLCs and corporation to save taxes.   Knowing what the IRS is hunting for will help you to avoid the tax traps that many tax advisers miss.  

I found an internal IRS report to its auditors on auditing family partnerships including family LLCs.  The report is below in blue print. 

If you are interested in exploring an IRS guarantee of your tax planning, then visit our website to learn about an IRS private letter ruling.  Here is a link to our site.

Table of Contents

  • Introduction

    Issue A: Income Shifting Using Family Partnerships (Author note: a great tax planning method for international tax and estate taxes)
    Capital Is Not a Material Income-Producing Factor
    Capital Is a Material Income Producing Factor
    Issue B: Family Partnerships And Transfer Taxes (Author’s note: i.e. gift tax, estate tax, and generation-skipping tax).
    Examination Techniques
    Supporting Law
    Resources

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Saving Taxes with the New IRS Partnership Audit Guide

saving taxes, how to save taxes, tax planning,

Saving taxes with an IRS approved tax plan is called a private letter ruling.

I came across the IRS audit guide for partnerships.  IRS agents are not tax experts. So, the IRS has a guide to tell them what to do. Knowing how to save taxes means you will need to know the tax planning strategies discussed in this audit guide.

Just how do you save taxes if you have a partnership?  I recommend that read this guide and you will become a partnership tax expert.  

International tax planning strategies include the use of foreign partnerships.  They are ideal for income shifting.  As you will see in this guide, the section for international taxation of a foreign partnership is left “blank.”  If an IRS agent audits your foreign partnership, the agent is on his own.

A word of caution, a foreign limited liability company is not treated as a domestic LLC. A foreign LLC is classified as a foreign corporation unless the owner’s make an election with the IRS.   If you need help with this, then contact me. 

Both the Delaware LLC  Nevada LLC are popular international tax planning entities. They are so effective that the Mexico has complained to the U.S.Government.

Great tax planners guide their clients.  They do more than just prepare a tax return.  If your CPA is not guiding you, then find a new CPA.  My firm does not prepare tax returns.  However, we guide many clients.

If you need help with your tax planning, then email me, Brian Dooley, CPA, MBT [email protected]

Partnership Tax Planning with the  IRS Audit Techniques Guide

This Audit Techniques Guide (ATG) is presented in several chapters. The publication/revision date of each chapter is posted in the Table of Contents below. These chapters can be accessed and then printed by following the links in the Table of Contents below.

Chapter 1 and 2 – Initial Year Return Issues  (Published 12-2002) (author note – this section has many tax elections that will save you taxes).

Chapter 3 – Contributions of Property with Built-in Gain or Loss ─ IRC section 704(c) (Revised 12/2007) (Author note – here you will learn sophisticated tax planning methods for both onshore and offshore tax planning).

Chapter 4 – Distributions (Revised 12/2007) (Author note: this chapter contains the fundamentals of tax basis (tax cost) shifting).

Chapter 5 – Loss Limitations (Revised 12/2007) (Author note: loss limitations include the “at risk” tax law from 1976).

Chapter 6 – Partnership Allocations (Revised 12/2007) (Author note: for the foreign partnership this chapter is vital).

Chapter 7 – Dispositions of Partnership Interest (Revised 03-2008) (Author note: timing of income and losses is a sophisticated tax plan.  Your CPA should read this)

Chapter 8 –  Real Estate Issues in Partnerships (Published 12-2002)

Chapter 9 – Tax Shelters (Revised 12/2007) (Author note: read this chapter to learn what not to do).

Chapter 10 – International ─ (Reserved)  (Too complicated for the IRS.  If you want to brainstorm your ideas or concerns, then please give me a call for a free one-hour consultation.) 

Chapter 11 –  Family Partnerships (Author note: on this link your learn income shifting methods, how to avoid estate taxes and asset protection.)

 

Amazing Tax Savings with the Passive Foreign Investment Company (PFIC)

This video is from my course for the California Society of CPAs; This video is on saving taxes during a period of stock market volatility.

Here is the problem… harvesting capital losses and capital gains can reduce your investment returns.   Besides the commission’s, spread between the bid and ask price, there is a loss of working capital when you pay taxes… even the long term capital gain tax.

Legitimate?  Of course, they are.  The IRS is the one that put them on the form.  Complex?  Of course, they are.   They are for the wealthy that have the super smart tax planners.

This video has just one of the many (and I do mean many) tax advantages of the foreign investment fund.    The video is short, but it is sweet.

You will learn how to re-direct the income of a foreign investment fund owned by a domestic corporation or a foreign corporation to the individual shareholder.   With the flexible IRS rules, you can re-direct the income to any of the shareholders.  This is known as income shifting.  Of course, the gain will be taxed at the lower long-term capital gain rate.

If you need help with your tax planning, then email me, Brian Dooley, CPA, MBT [email protected]

We recommend that you work with the IRS and get their okay of your tax plan with a private letter ruling (get more information on this link).