Writings by James F. McDonough

Real Estate: tax hikes due to FIRPTA changes & how to avoid them FIRPTA is the Foreign Interest In Real Property Tax Act and became law to force foreign sellers of U.S. real property to pay tax on gain from sales. Without FIRPTA changes, sellers would pocket the proceeds and remove themselves from the U.S. […]

NJ Bans Additional Loans for Companies in Default Status Recently, Gov. Chris Christie announced that he signed a new bill into law that would prohibit the state of New Jersey from subsidizing low-income property developers who defaulted on state loans. According to a report by the Washington Times, the bill was initially proposed after a […]

Much ado about the Redstone family In what has been deemed by the tabloids as a family soap opera, the U.S. Tax Court ruled in a recent landmark case of the Redstone family that the transfer of stocks does not qualify as a taxable gift because the transfer was made for full and adequate consideration […]

New estate planning channel for older demographic? A recent decision by the U.S. Tax Court affirmed the estate planning opportunity for older individuals that was perceived by some as being safely available in the Fifth Circuit where the Tax Court’s McCord decision, that was adverse to the taxpayer, was reversed. According to a Law 360 […]

Increase of offshore account penalties The IRS recently warned that the agency has collected $8 billion in taxes and fines collected from offshore bank account penalties which were a result of not conforming to the Foreign Account Tax Compliance Act. According to a report by Forbes contributor and tax lawyer Robert Wood, the IRS has begun to […]

Filing tax returns on time I was asked if there is any drawback to not filing tax returns on time or to paying taxes late or not at all. Aside from the obvious, there are other ramifications that may not manifest for some time. We encounter in our practice business owners who have fallen behind […]

Section 1031 Exchanges Section 1031 or like-kind exchanges have become commonplace and most accountants have one or more individual income tax returns where an exchange is reported. There are however an increasing number of taxpayers who believe they can prepare their personal or business entity returns. While this is not the norm, it prove fatal […]

Introducing the Cadillac tax On July 31, the IRS and the Treasury issued Notice 2015-52 that explained all the potential issues and approaches of the proposed Cadillac tax regulations, according to the National Law Review. The Cadillac tax requires compliance from employers and thus, Notice 2015-52 calls for business owners to begin planning for the […]

The IRS’ Audit Technique Guide The Internal Revenue Service prepares Audit Technique Guide (ATG) to address over 50 industries or topics for their examiners. The Non-Qualified Deferred Compensation Audit Technique Guide was designed to address common issues relevant to non-qualified plans. The ATG divides such plans into four groups: Salary Reduction Arrangements, Bonus Deferral Arrangements, Top-Hat […]

A recent bill proposed by New Jersey Sen. Joseph Pennacchio, R-Morris, would provide a 1 percent tax credit for high net worth individuals earning over $500,000 annually. The goal of the bill is to stimulate the state’s economy and attract small businesses and multinational corporations and prevent state-to-state migration of the top earners in New Jersey. […]

Substantial Compliance The state probate code was amended in 2004 to permit documents that were intended to have testamentary effect but were not executed in accordance with the statutory requirements. The new probate code’s doctrine of substantial compliance holds that if a document was not executed in compliance with the statute, the proponent may establish […]

Mr. Anson & the HMRC Much ado has been made about the use of hybrid entities that are viewed as flow-through (transparent) or disregarded in one jurisdiction but are separate taxpayers or non-transparent in the other jurisdiction. A United Kingdom (U.K.) resident (Anson) ran his United States (U.S.) consulting business through a Delaware limited liability […]