Category: tax shelter

CAPTIVE INSURANCE COMPANIES FOR CLOSELY HELD BUSINESS AND THEIR OWNERS

Posted by Richard Colombik, JD, CPA on

Captive insurance companies have been growing by leaps and bounds. A captive is an insurance company that insures the risks of its parent company. It is owned by a parent or at times by the shareholders of the parent company. The operating entity insures all or part of its risks with its captive company. The captive may reinsure some or all of such risks, or may retain such risks. The benefits of a captive may be many, but the primary goal is to retain the profit that would have been made by an outside third party insurance company or to provide coverage where coverage would not be available. There are many differing types of captives, based upon what the needs of the parent company or its owners are. The most commonly encountered types of captives according to Wikipedia are as follows:
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How You Can Move To Puerto Rico and Pay Almost Zero Tax

Posted by Richard Colombik, JD, CPA on

It seems almost everywhere you look these days, bankrupt governments are raising taxes.

But no matter where you are, there are always solutions to do something about it.

For example, if you’re an Australian taxpayer, you can move to Norfolk Island and pay minimal tax. If you’re British, you can structure your assets in Gibraltar or the Channel Islands.

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Tax Planning Must Happen NOW !!!

Posted by Richard Colombik, JD, CPA on

Congratulations to incoming President Trump. Yet many have questioned what happens to income tax planning?

First, 2016 tax rates are at 39.6% for individuals and 39% for Federal Corporate rates. State taxation has not changed and has a top rate of 13.3% in California. The additional Medicare taxes are still the law, but will hopefully be eliminated in coming years.

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Puerto Rico Bids To Become New Age Tax Haven

Posted by Richard Colombik, JD, CPA on

As the U.S. Treasury Department continues to tighten its noose around offshore accounts, a new tax haven has sprung up under its nose in the Caribbean. Welcome to Puerto Rico–island of tropical breezes, and (for new arrivals only) a 0% tax rate on certain dividends, interest and capital gains.

Puerto Rico is about the same size as Connecticut but with more palm trees, twice the unemployment rate, a third the median household income and a tiny fraction of the hedge funds–a deficiency the financially teetering territory aims to correct by turning itself into a refuge for tax-oppressed millionaires and billionaires.

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Billionaire to Put His Money in Puerto Rico

Posted by Richard Colombik, JD, CPA on

Despite Puerto Rico’s massive debt crisis, Paulson sees big profits ahead. He has plowed “quite a bit” ­an estimated $1.5 billion ­­ of his personal wealth into buying hotels, a resort and office buildings on the island. Paulson compares Puerto Rico today to Miami in the 1980s.

“It’s similar to that period in Miami’s history,” Paulson said Thursday at the Puerto Rico Investment Summit. “There was a lot of real estate on the beach, lots of abandoned buildings and vacant lots. That was definitely the best time to buy [in Miami].”

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STATE TAXATION ON MAIL ORDER

Posted by Richard Colombik, JD, CPA on

Quill Corp. vs. North Dakota

On May 26th, 1992, United States Supreme Court held that a mail order house, may have the minimum contacts necessary in accordance with the due process clause of the constitution with the taxing state relative to imposition of tax, yet lack the substantial nexus, as required by the Commerce Clause, with the state to have such tax imposed. Therefore, mere lack of physical presence in a taxing state does not in and of itself bar the taxing state from asserting a tax against such company.

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TAX TIPS

Posted by Richard Colombik, JD, CPA on

On August 5th, 1997, President Clinton signed the Tax Relief Act of 1997.  The majority of the changes apply for years beginning after December 31st, 1997.  Exceptions to this include the Capital Gains Tax relief and the new exclusion for sellers of their principal residence.

HIGHLIGHTS OF NEW TAX ACT

TAX CREDIT FOR EACH QUALIFYING DEPENDENT CHILD UNDER AGE 18.

Beginning in 1998 parents get a tax credit equal to $400.00, $500.00 after 1998, for each qualifying dependent child under age 18.  A phase out of the tax credit applies for joint taxpayers whose adjusted gross income exceeds $110,000.00.

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IRS Debt

What the IRS Giveth the IRS Taketh Away

Posted by Richard Colombik, JD, CPA on

In a prior column I wrote extensively on the usage of private annuities to sell one’s business, real estate or any large assets with the current incurrence of income tax.  IRC §72 and Rev. Rul. 69-24, 1969-1 C.B. 43.  Case law supported this view point and there had not been much if any current litigation on this issue.  Bell v. Comr., 60 T.C. 469 (1973), 212 Corp. v. Comr., 70 T.C. 788 (1978).

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Corporate Taxes

Debt vs. Equity?

Posted by Richard Colombik, JD, CPA on

How is your practice set up?

Is it a C corporation, or a flow through entity, S corporation, Limited Liability, or Partnership?  Or are you a sole proprietor?

If a C corporation, the reason this simple question is important, is that payments of dividends are not deductible by a corporation, but the payments of interest are deductible.  Therefore, the payment of interest reduces corporate taxable income, and corporate income tax, whereas the payment of a dividend, being non deductible does not decrease corporate taxable income and does not reduce corporate income tax.

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