Berdon Blogs

SALT TALK: Golf and a Little Bit of Residency Planning, Anyone?

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Nov 6, 2017 9:17:00 AM

At Berdon, we do our best to educate our clients about the tax ramifications of their decisions.  They know that in most states there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. First, the domicile test. It’s the “touchy-feely” test of what your intentions are and where you intend your home to be. Then there is the arguably more objective statutory resident test. If you have a “permanent place of abode” (a term of art to be discussed some other time) and are “present” (also a term of art to be further explored) in the jurisdiction for more than 183 days, you are a resident.

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Topics: SALT TALK

T&E TALK: A Dynasty Trust keeps on Giving Long into the Future

Posted by Scott T. Ditman, CPA/PFS on Nov 6, 2017 7:05:00 AM

With a properly executed estate plan, your wealth can be enjoyed by your children and even their children. But did you know that by using a dynasty trust you can extend the estate tax benefits for several generations, and perhaps indefinitely? A dynasty trust can protect your wealth from gift, estate, and generation-skipping transfer (GST) taxes and help you leave a lasting legacy.

Dynasty Trust in Action

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SALT TALK: Traps in Transactions - Tax Free for Fed Doesn’t Mean Tax Free for State and Local

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Oct 30, 2017 11:41:00 AM

Another common misconception is the belief that because a transaction is tax free (really, tax deferred) for federal tax purposes the states will tag along and not subject the transaction to tax.  While this certainly isn't true when we are addressing the possibility of transfer taxes or even sales tax for that matter (stay tuned), it may not even be true for state income tax purposes.

Put yourself in the shoes of the state taxing authorities.  While a properly structured like-kind (1031) exchange can defer income taxes for years, it's technically only a deferral.  The newly acquired property will inherit the lower basis of the old property.  In theory, the federal government will eventually collect the tax on the ultimate sale in a straight transaction.  State tax collectors may not be so lucky.  What if the property being sold is in New York City and the replacement property is in Florida?  As the law now stands, both New York State and New York City are out of luck and not entitled to any tax resulting from the appreciation on the New York property. 

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Topics: SALT TALK

TAX TALK: Self-Employed Retirement Plans

Posted by Hal Zemel, CPA, J.D., LL.M. on Oct 30, 2017 9:17:00 AM

If you are self-employed you may be able to set up a retirement plan that allows you to contribute much more than you can contribute to an Individual Retirement Account (“IRA”) or even an employer-sponsored 401(k). There is still time to set up such a plan for 2017, and it generally is easy to do. So whether you are a “full-time” independent contractor or you are employed but earn some self-employment income on the side, consider setting up one of the following types of retirement plans this 2017.

Profit-sharing Plan

This is a defined contribution plan that allows discretionary employer contributions and flexibility in plan design. You can make deductible 2017 contributions as late as the due date of your 2017 tax return, including extensions — provided your plan exists on Dec. 31, 2017.

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Topics: TAX TALK

T&E TALK: Who Should Own Your Life Insurance Policy?

Posted by Scott T. Ditman, CPA/PFS on Oct 30, 2017 7:00:00 AM

If you own life insurance policies at your death, the proceeds will be included in your taxable estate. Ownership is usually determined by several factors, including who has the right to name the beneficiaries of the proceeds. The way around this problem is to not own the policies when you die. However, don’t automatically rule out your ownership either.

It’s important to keep in mind the current uncertain future of the estate tax. If the estate tax is repealed (or if someone doesn’t have a large enough estate that estate taxes are a concern), then the inclusion of your policy in your estate is a nonissue. However, there may be nontax reasons for not owning the policy yourself.

Plus and Minuses of Different Owners

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Topics: T&E TALK

TAX TALK: Two ACA Taxes that May Impact Your Executive Compensation

Posted by Hal Zemel, CPA, J.D., LL.M. on Oct 23, 2017 12:19:09 PM

If you’re an executive or other key employee, you might be rewarded with restricted stock, stock options, or nonqualified deferred compensation (NQDC). Tax planning for these forms of executive compensation is generally more complicated than for salaries, bonuses, and traditional employee benefits. And planning gets even more complicated if you could potentially be subject to two taxes under the Affordable Care Act (ACA):

1) the additional 0.9% Medicare tax, and

2) the net investment income tax (NIIT)

These taxes apply when certain income exceeds the applicable threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other taxpayers.

Additional Medicare Tax

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Topics: TAX TALK

SALT TALK: Traps in Transactions - Don’t Stumble Over a Good Deal

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Oct 23, 2017 12:07:29 PM

At Berdon, we promote a culture within the Firm and with clients to be up-to-date regarding what our clients are planning for themselves and their businesses. This ensures that we assist in maximizing the efficiency of a given transaction, and safeguards against some common mistakes that can be prevented if addressed upfront, can be prevented.

These common foot faults span the gamut of all types of taxes. What might be a mistake in one state could be the optimum result in another.

Let’s consider real property transfer taxes.

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Topics: SALT TALK

T&E TALK: A Crummey Trust Can Preserve the Annual Gift Tax Exclusion

Posted by Scott T. Ditman, CPA/PFS on Oct 23, 2017 7:00:00 AM

Traditionally, taxpayers have looked for ways to make the most of the $14,000 annual gift tax exclusion, and using a Crummey trust is one way to do that. But with the federal gift and estate tax exemption currently at an inflation-adjusted $5.49 million and the possibility of an estate tax repeal, it may seem that the annual exclusion is less relevant than ever before. Or is it?

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Topics: T&E TALK

SALT TALK: Counting Days - The Sun May Actually Rise in the West

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Oct 16, 2017 10:15:21 AM

While most of us think of a day as the interval of light between two successive nights, taxing jurisdictions that look to the statutory residency test certainly had something much shorter in mind.  While the New York statutes don’t bother to define what constitutes a day for purposes of the count, the regulations clearly state that “presence within New York State for any part of a calendar day constitutes a day spent within New York. . .”

Despite the broad reach of the regulations, two very limited exceptions are carved out. 

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Topics: SALT TALK

TAX TALK: Accelerate Your Retirement Savings with a Cash Balance Plan

Posted by Hal Zemel, CPA, J.D., LL.M. on Oct 16, 2017 9:18:00 AM

If you are a business owner, you may not be able to set aside as much as you’d like in tax-advantaged retirement plans. Typically, you’re older and more highly compensated than your employees, but restrictions on contributions to 401(k) and profit-sharing plans can hamper retirement-planning efforts. One solution may be a cash balance plan.

Defined Benefit Plan with a Twist

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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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