By: Amanda Wilson
Every year, as the countdown to the new year approaches, Congress races to extend expiring tax provisions. Last night, the Senate finally caught up with the House and approved a bill extending certain beneficial tax provisions. The President is expected to sign the bill into law this week.
By: Amanda Wilson
A few weeks ago, I posted about the increasing popularity of U.S. corporations moving their headquarters abroad, as illustrated most recently by the proposed Burger King/Tim Hortons merger. This type of transaction is referred to as a corporate inversion, which is a transaction in which a U.S. based multinational corporation restructures so that its U.S. parent is now owned by a foreign parent corporation (a Canadian corporation in the Burger King/Tim Hortons proposed acquisition). A corporate inversion has gained increasing popularity because of the high U.S. corporate tax rate and the desire to minimize U.S. taxes. For obvious reasons, the Obama administration does not like corporate inversions and wants to stop them.
By: Amanda Wilson
There has been a lot of publicity lately regarding Burger King’s proposed acquisition of Tim Hortons, as Burger King is expected to move its corporate headquarters to Canada following the acquisition. These type of corporate inversions, where U.S. companies move their headquarters outside of the U.S., have been gaining momentum. We have also seen large companies, such as Apple, benefiting from using foreign holding companies to protect income for their foreign operations from U.S. taxation. Many politicans criticize these moves as unpatriotic. However, they also offer corporate taxpayers the opportunity to benefit from lower corporate tax rates.
By Jason Palmisano
Carmelo Anthony is a professional basketball player who recently signed a lucrative new NBA free agent contract with the New York Knicks. Michael McCann recently wrote an article in Sports Illustrated providing a breakdown of the potential income tax consequences if he had signed with the Chicago Bulls, Miami Heat, or Houston Rockets for the maximum amount with each team. Note, the “Jock Tax” in the chart is is a standard 4% agent commission. (hat tip: Paul Caron)
By: Amanda Wilson
When deciding how to form their new business, small business owners are often encouraged to organize as an S corporation because of self-employment tax savings. This recommendation is because the IRS does not recognize that a partner in a partnership can also be an employee. As a result, the IRS takes the position that all of the partner’s income from the partnership should be subject to self-employment taxes, instead of just the amount that reflects a reasonable salary. In contrast, an owner of an S corporation can clearly be treated as both an owner and an employee, resulting in self-employment tax savings.
