Berdon Blogs

SALT TALK: Are You a Visionary?

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Jun 19, 2017 11:40:00 AM

Girl Scout Cookies, Converse All-Stars (aka, Chuck Taylors), the World Book Encyclopedia, and Berdon LLP are all turning 100 years old in 2017.  While I can’t say if the first 100 years have gone quickly, I can certainly say my almost 22 years at Berdon have gone by in the blink of an eye. In fact they have gone by in some respects much quicker than the first 100 days of 2017.

Like the 101 year old 100 meter sprinter from India, Man Kaur, who won the Gold Medal at the World Masters Games in Auckland New Zealand this year, we at Berdon like to view this milestone as a new beginning and see no signs of slowing down. As always, we look ahead. 

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TAX TALK: Some Items to Consider When Selling Securities

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 19, 2017 9:30:00 AM

Many factors can affect the tax consequences and your net investment return on the sale of a security. You’re probably focused on factors such as how much you paid for the investment vs. how much you’re selling it for, whether you held the investment long-term (more than one year) and the tax rate that will apply.

There are additional details you should pay attention to that may impact the amount, timing, and tax costs of the gain or loss. If you don’t, the tax consequences of a sale may be different from what you expect.

Here are a few details to consider when selling a security:

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Topics: TAX TALK

T&E TALK: Protect Your Retirement Savings from Creditors

Posted by Scott T. Ditman, CPA/PFS on Jun 19, 2017 7:05:00 AM

A primary goal of estate planning is asset protection. If you have significant assets in employer-sponsored retirement plans or IRAs, it’s important to understand the extent to which those assets are protected against creditors’ claims and, if possible, to take steps to strengthen that protection.

Employer Plans

Most qualified plans — such as pension, profit-sharing and 401(k) plans — are protected against creditors’ claims, both in and out of bankruptcy, by the Employee Retirement Income Security Act (ERISA). This protection also extends to 403(b) and 457 plans.

IRA-based employer plans — such as Simplified Employee Pension (SEP) plans and Savings Incentive Match Plans for Employees (SIMPLE) IRAs — are also protected in bankruptcy. But there’s some uncertainty over whether they’re protected outside of bankruptcy.

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Topics: T&E TALK

TAX TALK: Coverdell ESAs: The Tax-advantaged Way to Fund Elementary and Secondary School Costs

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 12, 2017 11:32:23 AM

With school letting out you might be focused on summer plans for your children or grandchildren. But the end of the school year is also a good time to think about Coverdell Education Savings Accounts (ESAs) — especially if the children are in grade school or younger.

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.

Other Benefits

Here are some other key ESA benefits:

  • Although contributions aren’t deductible, plan assets can grow tax-deferred.
  • You remain in control of the account — even after the child is of legal age.
  • You can make rollovers to another qualifying family member.

A sibling or first cousin is a typical example of a qualifying family member, if he or she is eligible to be an ESA beneficiary (that is, under age 18 or has special needs).


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Topics: TAX TALK

SALT TALK:  I Read the (State Tax) News Today, Oh Boy

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Jun 12, 2017 9:20:00 AM

I read the state tax news every day. Fifty states, numerous localities and the thirst for revenue practically insures that Berdon will need me when I’m sixty four and beyond. Well, I just had to laugh when I read that the Beatles’ Sgt. Pepper’s Lonely Hearts Club Band album turned fifty years old last week.

I asked several colleagues if I may inquire discretely as to their views and experiences as to the current state of state taxation for nonresident athletes and entertainers. While some said, nothing changed, it’s all the same, and others commented that it’s getting better all the time.

Well, it is Friday morning at 9:00 and “Lucy in the Sky with Diamonds” is playing in the background. I’m reminded somehow of the Berdon tagline Listen, Solve, Do and am inspired to do just that. 

Even though virtually all jurisdictions have addressed the issue of withholding income taxes from nonresident entertainers and athletes performing or playing in the jurisdiction, some are still taking the attitude that it really doesn’t matter if I’m wrong or right and either simply going along with the jurisdictions general rules or ignoring requirements all together.

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T&E TALK: For Intrafamily Lending, Consider Establishing a Family Bank

Posted by Scott T. Ditman, CPA/PFS on Jun 12, 2017 7:05:00 AM

If you’re interested in lending money to your children or other family members, consider establishing a “family bank.” These entities enhance the benefits of intrafamily loans, while minimizing unintended consequences.

Upsides and Downsides

Lending can be an effective way to provide your family financial assistance without triggering unwanted gift taxes. So long as a loan is structured in a manner similar to an arm’s-length loan between unrelated parties, it won’t be treated as a taxable gift. This means, among other things:

  • Documenting the loan with a promissory note;
  • Charging interest at or above the applicable federal rate;
  • Establishing a fixed repayment schedule; and
  • Ensuring that the borrower has a reasonable prospect of repaying the loan.
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Topics: T&E TALK

TAX TALK: Donating a Vehicle Might Not Provide the Tax Deduction You Expect

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 5, 2017 12:25:14 PM

All charitable donations aren’t created equal — some provide larger deductions than others. And it isn’t necessarily just how much or even what you donate that matters. How the charity uses your donation might also affect your deduction.

Take vehicle donations, for example. If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it.

Determining Your Deduction

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Topics: TAX TALK

SALT TALK:  The Better Part of Valor is the Discretionary Adjustment

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Jun 5, 2017 10:19:00 AM

Just a few years after William Shakespeare’s death[1], the English Parliament passed the Petition of Right, a major step forward in the history of taxation in that it prevented the Crown from creating new taxes without Parliament’s approval. Had Bill lived just a few more years, he would have witnessed the King’s discretion severely limited. While this limit on discretion was certainly helpful as it related to new and arbitrary taxes, discretionary authority certainly has a place in modern day state taxation, especially when it relates to allocation and apportionment of income.

I’ve blogged many times about and as a Firm have issued more formal publications regarding the current thinking in state apportionment formulas. I’ve explained the traditional three factor method of property, payroll and receipts as compared to the trend towards a single receipts factor.  We have discussed the evolution away from a manufacturing to a service economy and as a result the total revamping of sourcing rules as they relate to the performance of services.  The technical details and variations are the subject of many an article and treatise.

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T&E TALK: Do You Know the Fate of Your Electronic Documents?

Posted by Oleg Ikhelson, CPA, J.D., Guest Blogger on Jun 5, 2017 9:17:00 AM

Once a financial document has outlived its useful life, it is sound policy to see that it is destroyed in a way that would prevent it from being retrieved and used by anyone else.  This is typically accomplished by contracting with a qualified document shredding service.  But today, so much of our personal documentation is stored electronically.  In this case, not only the network but the backup media needs to be purged to be consistent with a secure record destruction policy.   

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Topics: T&E TALK

TAX TALK: Business owners - When it comes to IRS audits, be prepared

Posted by Hal Zemel, CPA, J.D., LL.M. on May 30, 2017 11:50:00 AM

If you recently filed your 2016 income tax return (rather than filing for an extension) you may now be wondering whether it’s likely that your business could be audited by the IRS based on your filing. Here’s what every business owner should know about the process.

Red Flags

Many business audits occur randomly, but a variety of tax-return-related items may raise red flags with the IRS and lead to an audit. Here are a few examples:

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Topics: TAX TALK

About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

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