Berdon Blogs

SALT TALK: Nexus Gone Crazy - Feds Need to Tell States to Put Down the Cookie (Ducky) [1]

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Dec 4, 2017 1:39:38 PM

Being a state and local tax practitioner has always been a stressful job. Stress eating is certainly understandable, especially around the holidays. But lately, it appears, some states have been trying to force cookies down our throats. Not the baked kind, but the electronic variety. 

As avid readers of my blog know, the states have been very creative in attributing the more than de minimus physical presence required by the U.S. Supreme Court in Quill [2] to internet retailers, so as to create sales tax nexus and require the retailers to collect sales tax.  Some of these approaches, especially those attributing the presence of a representative or agent to an otherwise out of state retailer, certainly seem to make sense, and if the Supreme Court were ever to decide to review agency-type nexus in the context of internet sales, my bet is the state taxing authorities would prevail.

Read More


SALT TALK: Year End Planning Tips – Taxing Reasons Not To Visit Your Relatives for the Holidays

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 27, 2017 11:40:00 AM

The drive is too far and the traffic is horrendous.  Did you see those outrageous airfares?  I have a major deadline at work.  Didn’t we come to you last year; this year I have to go to the in-laws?  While all members of the Berdon SALT team are anxiously looking forward to traveling both to spend the upcoming holidays with our respective families, we know that some of our clients may not be as enthusiastic.  Our holiday gift to our readers is two-fold: firstly an excuse (at least a new one) not to attend that family function, and secondly, potential tax savings for using our excuse.

The excuse:  I can’t spend another day in (fill in the appropriate tax jurisdiction) because I will be taxed as a resident and owe an additional (please fill in the appropriate dollar amount) in personal income tax. Even worse, the House and Senate are currently weighing changes to state and local tax law so I’m not even sure where I stand!

Read More


SALT TALK: Republicans Insist SALT is Detrimental to our Health

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 20, 2017 10:21:43 AM

Even though a 2017 study of Russian cosmonauts concluded that everything we thought we knew about salt might be completely wrong, the House and Senate are poised to pass tax legislation taking away our daily dose of SALT.  While salt (NACL or Sodium Chloride) is completely different from SALT (state and local taxes), I love them both and don’t want anyone other than my internist to limit my intake.  Neither the cosmonauts nor my internist have denounced science as of yet, so both opinions are still highly valued.

Now that the House of Representatives has passed their version of “tax reform” the extinction of the state and local tax deduction seems closer to reality.  As passed, the House Bill completely eliminates any deduction for state and local income taxes, but still allows property tax deductions up to $10,000.  The Senate version, still working its way to a vote, goes even further by eliminating the $10,000 window for property tax deductions.

Read More


SALT TALK: Where You Rest Your Weary Bones May Have No Impact on Tax Residency

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Nov 13, 2017 9:16:00 AM

As avid readers of my blog already know (see last week’s installment), most states have a two-pronged approach to pulling you in as a resident and consequently taxing you on worldwide income. The first way is domicile, the test that generally looks to your intentions. The second and the focus of this post is statutory residence.

If you have a permanent place of abode and are in the jurisdiction for more than 183 days, with limited exceptions, you will be held in the same regard as a domiciliary of the jurisdiction. You will be taxed as a resident. What many taxpayers fail to appreciate is that you don’t ever need to sleep, visit, drive by, look at or be within 500 miles of the so called living quarters that may constitute a permanent place of abode.

Read More


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

Posted by Wayne K. 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.

Read More


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

Posted by Wayne K. 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. 

Read More


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

Posted by Wayne K. 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.

Read More


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

Posted by Wayne K. 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. 

Read More


SALT TALK: Life Coaching, GPS or Tax Planning

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 9, 2017 11:36:44 AM

What do these three items have in common?  Depending on whom you ask, they can all help you find your way.  Not knowing much about life coaching, and as a male being devoid of the gene to ask directions (even from an inanimate object), I tend to be most helpful providing direction in the form of tax planning.

In an earlier blog, I discussed the trend towards single factor apportionment formulas.  Today, we will address its first cousin, market-based or customer-based sourcing.  In the old-world manufacturing economy, it was easy to “find your way.” You sent thingamajigs[1] to your customer in Ohio and (very) generally speaking, receipts would be sourced to the thingamajigs’ destination, Ohio. So a New York- based manufacturer would get the benefit of apportioning a percentage of his or her tax base outside of New York and either to Ohio (if there was nexus in Ohio, a topic for at least another 100 posts) or possibly to nowhere. 

Read More


SALT TALK: Guitars and the Ever-Increasing Burden of Proof

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Oct 2, 2017 11:44:52 AM

I can guarantee any taxpayer that has gone through an audit, whether as an individual or a business entity, “was feelin ‘bout half past dead” at some point through the process. As goes the audit process, the traveler in The Band’s song, The Weight, kept being asked for more and more as he went further along in his journey through Nazareth (Pennsylvania, home to C.F. Martin & Company, maker of the world renowned Martin guitar.)

When facing an audit, in almost all circumstances the taxpayer bears the burden of proof [1]. This means the taxpayer bears the weight of proving by clear and convincing evidence, the validity of items represented on the tax return as filed. Whether a deduction or a day spent outside of the jurisdiction, the taxpayer must be “clear” and “convince” the taxing authorities.

Read More


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.

Subscribe to Berdon Blogs

Recent Posts