Jeffrey B. Kahn, Esq. and Gary Sussman Discusses the Lifetime Estate Gift Annuity, the Building Blocks to Financial Security and the “Victory Tax” On ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses The Markets, Tips If You Owe Taxes and the IRS On ESPN Radio – July 15, 2016 Show

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Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses The Markets, Tips If You Owe Taxes and the IRS On ESPN Radio – July 15, 2016 Show

Topics Covered:

1. Special Guest: Chris Rupp, Franchise Owner; PrideStaff, PrideStaff Financial

2. Youth Optimism Powers U.S. Economy

3. Tips If You Owe Taxes

4. Call in Question:

a. I want to invest in an IRA but am not sure how to go about it. At what earnings point is it more beneficial to go the Traditional Retirement route and not the Roth Retirement route?

Jeff states: Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.
This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.
Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.
Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.
Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.
Jeff states:

For today’s show we have coming up:

Segment 2 material: Youth Optimism Powers U.S. Economy

Windus states:

Also coming up is:

Segment 3 material: Tips If You Owe Taxes

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: At this time, we would like to introduce you to our special guest:

Chris Rupp, Franchise Owner; PrideStaff, PrideStaff Financial

1. Can you tell us a little bit about PrideStaff?
2. What is PrideStaff Financial?
3. What was the drive behind starting up your own staffing and recruiting enterprise?
4. About how many companies around the Greater San Diego area does your company provide temporary work for?
5. Would you be able to tell us off the top of your head, what percentage of your temporary associates go on to become direct hire employees?
6. Where do you advertise for new talent to fill future positions?
7. Does PrideStaff provide benefits for the employees being sourced for temporary positions? How does that work within PrideStaff?
8. Do you have a list of associates who match up to a specific positions criteria, or do you have a first call first serve basis for available assignments?
9. Have you ever considered another path for yourself outside staffing services?
10. What would be your most valuable bit of advice for anyone interested in owning their own business?

Well it’s time for a break but stay tuned because we are going to tell you Youth Optimism Powers U.S. Economy.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And be aware of the special offer that Windus has for you: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Youth Optimism Powers U.S. Economy

http://on.wsj.com/29HcJ9i

• Millennials and baby boomers seem to have different feelings about the Economy
–>This is a decades long generational issue. Often people in their 20’s & 30’s are more optimistic than those at the end or towards the end of their working careers. Chris, have you noticed this in your work place or between you & your daughters?
• Specifically, confidence among the 35 & below crowd is back at pre-recession levels where as those about 55 is far lower and even decreasing in the last year. From your experience, what would be contributing to this decrease? Do you think it is work place happiness? Or watching the investments not have a good year? Concern over the Presidential election?
• Older Americans pulled back in spending in the first quarter of 2016 while younger ones increased, according to Chase credit & debt cards. Honestly, if I didn’t have a lot of money invested, I may not have felt the pain of the first quarter in 2016 as much. Right? How connected would I be to the economy?
• Younger people feel that having to bid for a house is a sign of a strong economy. Some older people get worried it is a sign of a housing bubble.
• Now this is great but the youth cannot carry the economy:
–>Many youths are burdened with high student loans that will ultimately prevent them from buying a home. Especially without a parent co-signer on that house.
–>Millennials will not see pay raises at a rate in which can keep the economy going like baby boomers could.
• Businesses are shifting who they target:
–>they used to target retirees or people who had time and money to spend. They are now focusing on tired parents that are working OR “stressed-out young professionals”…Todd Leff, chief executive and Hand & Stone, a Pennsylvania based massage chain.
–>businesses are even moving to advertise on Facebook
• Readings on consumer confidence for these two groups has ultimately ebbed and flowed but in June it was nearing a record. In August of 2015, was when it created that record originally?
• Youth are benefiting from things like a raise in minimum wage whereas older individuals are being hurt by rising medical bills while on a fixed income. Chris, what do you think of this? Do you think this is a broad nationwide analysis or do you think this applies to your feelings?
• Some events that impacted confidence across the board:
–>Debt-ceiling fight of 2011
–>Federal government shutdown in 2013
One event that didn’t:
–>Brexit? At least here in the U.S. it didn’t impact our Millennials! Whereas retired individuals saw a huge impact, albeit a short one, on their investments. Making them feel more uneasy then they already do.

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we are going to tell you some tips if you owe taxes.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

And be aware of the special Offer that I have for you: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Tips If You Owe Taxes.

Jeff asks: So what is the first step in the IRS Collection process where you owe money to the IRS?
Amy replies: Mailed Tax Bills. If you owe taxes, you will first receive a bill in the U.S. mail from the IRS which tells you your balance owed through a certain date indicated on the bill. Don’t fall for those calls from people claiming to be the IRS threatening criminal action against you if you don’t pay the amount they are demanding. The IRS will never make an initial contact with you by telephone without first having sent you written notice that you owe the IRS or are under examination. Of course if you have the available funds, you should pay the balance no later than the date indicated in the bill to avoid any extra charges. If you can’t pay in full, keep in mind that interest and penalties continue to accrue on the balance so any payment made to IRS will result in lower accruals of interest and penalties for the future.
Windus asks: Is there a preferred method to pay your bill to IRS?
Amy replies: Use IRS Direct Pay. When paying a balance from an IRS tax bill consider using IRS Direct Pay. It’s the safe, easy and free way to pay from your checking or savings account. You can pay your tax in just five simple steps in one online session. Just click on the “Payment” tab on IRS.gov.
Windus asks: What about a taxpayer who does not have the funds now but is expecting substantial funds soon like from a settlement or inheritance or maybe even getting a loan?
Amy replies: Full Payment Agreements of up to 120 days. If you owe more tax than you can pay, you may qualify for more time -up to 120 days- to pay in full. You do not have to pay a user fee to set up a short-term full payment agreement. However, the IRS will charge interest and penalties until you pay in full.
Jeff states: But let’s say you are a taxpayer who cannot full pay now or even in the next 120 days, what do you do?
Amy replies: Apply for an installment agreement. For one thing if you’re financially unable to pay your tax debt immediately, you can make monthly payments through an installment agreement. Before applying for any payment agreement, you must file all required tax returns and if you are required to make estimated tax payments, you must be current in making those payments. The IRS calls this “being in current compliance”. By being in current compliance, the installment agreement can now cover all tax periods with outstanding balances.
Windus asks: Is there only one type of installment agreement with IRS?
Amy replies: Actually Windus many people don’t know that there are different types of installment agreements in place with IRS.
Amy states: “No Verification” Installment Agreements. For individuals who owe $50,000 or less in combined individual income tax, penalties and interest, OR businesses that owe $25,000 or less in payroll taxes, you can have an installment agreement set up with IRS without presenting any financial information.
Jeff states: Under these agreements the IRS will usually rely on oral representations made and not require any proof of income or bank statements. Nevertheless, when calling the IRS you still must be prepared so that the request can be evaluated during that session with the agent. Having an incomplete session and then calling back the IRS with the missing information will only direct you to another agent who can have a totally different take than the first agent.
Amy states: “Full Verification” Installment Agreements. For individuals and businesses that exceed the thresholds of the No Verification Installment Agreements, the IRS will require that full financial disclosure be made with your payment plan proposal. Be careful though because the IRS does limit certain expenses and depending on the type of installment agreement entered, you may not be able to get full credit for your actual living expenses.
Jeff states: So if you are in this situation, it is best to hire tax counsel to compile the proposal and financial disclosures. If you do it on your own first and fail, your representative will not be able to “undo” what was already disclosed by you to IRS and that could then limit the representative in getting the optimum result.
Windus asks: So for someone who already has an installment agreement, what do you advise?
Amy replies: Understand Your Installment Agreement & Avoid Default. Keep in mind that your future refunds will be applied to your tax debt until it is paid in full. Pay at least your minimum monthly payment when it’s due and if paying by check include your name, address, SSN, daytime phone number, tax year and return type on your payment. Make sure the check is mailed to the right address for delivery no later than the payment due date. File all required tax returns on time & pay all taxes in-full and on time as any new liability will default your installment agreement. Make all scheduled payments even if the IRS applies your refund to your account balance. If you don’t receive your statement from IRS, send your payment to the address listed in your installment agreement.
Jeff states: There may be a reinstatement fee if your agreement goes into default. Penalties and interest continue to accrue until your balance is paid in full. If you are in danger of defaulting on your payment agreement for any reason, it is a good idea to hire tax counsel who can seek reinstatement or even a modification where you can make lower monthly payments.
Jeff continues: The IRS will generally not take enforced collection actions:
1. When an installment agreement is being considered;
2. While an agreement is in effect;
3. For 30 days after a request is rejected, or
4. During the period the IRS evaluates an appeal of a rejected or terminated agreement.
Windus states: I hear all the time that taxpayers can settle their IRS debt with an Offer In Compromise. What is that all about?
Amy replies: Check out an offer in compromise. An offer in compromise or OIC may let you settle your tax debt for less than the full amount you owe. An OIC may also be helpful if full payment may cause you financial hardship. Not everyone qualifies after all, when you are looking for a discount on your IRS liability the government wants to make sure that collectability of the full liability plus interest and penalties is highly doubtful before granting a discount.
Jeff states: An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.
Amy states: The IRS will consider your unique set of facts and circumstances with a focus on your income and expenses to determine your ability to pay and your asset equity.
Amy continues: The IRS will generally approve an offer in compromise when the amount offered represents the most the IRS can expect to collect within a reasonable period of time.
Windus asks: How do you know if you are eligible for an OIC?
Amy replies: Before the IRS can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding and if you file for bankruptcy while your OIC is being evaluated, the IRS will stop evaluation and return the OIC.
Windus asks: What forms must you use to submit your offer?
Amy replies: The form to use in filing an OIC is Form 656. You must include payment of an application fee of $186.00 and a deposit towards the amount offered. Additional you must include financial disclosures. The main forms to use are Form 433-A (OIC) (for individuals) or 433-B (OIC) (for businesses) and these forms list all required documentation that must be included. Like installment agreement requests, the IRS limits certain living expenses so it make sense to engage tax counsel to pursue this process.
Windus asks: Are there any payment options available?
Amy replies: Your initial payment will vary based on your offer and the payment option you choose:

Lump Sum Cash: Submit an initial payment of 20% of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.

Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

Windus asks: What happens while an offer is being evaluated?

Amy replies:
1. Your non-refundable payments and fees will be applied to the tax liability;
2. A Notice of Federal Tax Lien may be filed;
3. Other collection activities are suspended;
4. The legal assessment and collection period is extended;
5. Make all required payments associated with your offer;
6. You are not required to make payments on an existing installment agreement; and
7. Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

Jeff states: If your offer is accepted you must meet all the Offer Terms listed in Section 8 of Form 656, including filing all required tax returns and making all payments for the next five years; Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt; and Federal tax liens are not released until your offer terms are satisfied.

Jeff continues: If your offer is rejected you may appeal a rejection within 30 days after the determination letter has been issued by IRS. If though your offer is returned, you do not have this right of appeal and must start the OIC process all over again.

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

Jeff states: And in the studio with Windus and me is our special guest Chris Rupp, Franchise Owner; PrideStaff, PrideStaff Financial.

OK Chris, as our special guest what questions have you pulled for us to answer?

Tracy from Carlsbad asks: I want to invest in an IRA but am not sure how to go about it. At what earnings point is it more beneficial to go the Traditional Retirement route and not the Roth Retirement route?

Windus answers.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses the Lifetime Estate Gift Annuity, the Building Blocks to Financial Security and the “Victory Tax” On ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses The Financial Markets, Deducting Hobby Losses and Your Taxes On ESPN Radio – July 8, 2016 Show

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Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses The Financial Markets, Deducting Hobby Losses and Your Taxes On ESPN Radio – July 8, 2016 Show

Topics Covered:

1. Special Guest: David “Stan” Stankaitis, CCIM; President at Trillium Capital Partners, Commercial Mortgage Broker
2. Said the “Stock Market to the Bond Market: La-La-La I Can’t Hear You”
3. Beware Your Hobby Business Could Land You In Tax Court
4. Questions from our listeners:
a. In order to invest more conservatively in the current volatile market and ride out the market slump until the next Bull Run, what type of investments should I be shopping for?
b. If I’m not set to retire for the next 40 years, should I really be concerned with how I’m investing right now if I’ll make it up further down the line?
c. Would investing on a Cost-Basis average eliminate some volatility if I choose to keep investing steadily through a recession?

***************************************

Windus states: Good afternoon! Yes sometimes we just have to take the money and run! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
Windus states: My co-host, Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team, is off today but we still have things covered.

Windus states:

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Windus states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Windus states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Windus states:

For today’s show we have coming up:

Segment 2 material: Said the “Stock Market to the Bond Market: La-La-La I Can’t Hear You”

Windus states:

Also coming up is:
Segment 3 material: Beware Your Hobby Business Could Land You In Tax Court
And of course towards the end of our show, we will be answering some of your questions.

Windus states: It’s time now to introduce you to our special guest this week:

David “Stan” Stankaitis, CCIM; President at Trillium Capital Partners, Commercial Mortgage Broker

1. Tell us a little bit about what you do Stan.
2. What peaked your interest about your line of work, in the first place?
3. What did you do prior to entering the field of Commercial Mortgages?
4. How did working as a Derivatives Trader and Options Market Maker prepare you for your current position?
5. What made you decide to found your own lending company in 2006, and then later form Trillium Capital Partners?
6. How large is your company now?
7. With all of the different types of loan funding of commercial property, do you have a primary focus?
8. Why are you focused on these types of properties?
9. Besides the magnitude, can you tell our listeners what the major differences between private residential and commercial real estate mortgages?
10. What types of loan programs do service?

Windus states: Well it’s time for a break but stay tuned because we are going to tell you what the bond market is telling us.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And be aware of the special offer that I have for you: Windus states Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stock Market to Bond Market: ‘La-La-La I Can’t Hear You’
http://on.wsj.com/29sak2d

1. Lehman Brothers fell over in September 2008, equities slumped, then rallied back to their previous levels within a week
a. Brexit isn’t Lehman, but the stock market is behaving similarly
b. (DISCUSS: Similarities and historically what happened at the beginning of the great recession)
2. Since the Brexit vote, Treasury yields have tumbled, and they kept falling even as shares recovered
a. Last Friday, 10-year and 30-year yields set new lows, as did British and Japanese benchmarks
b. Bondholders think central banks will worry about the economic impact of Brexit, keeping rates lower for longer
c. (DISCUSS: Difference between now and when Lehman’s went down, bond yields rebounded with shares)
3. A divergence of bonds and equities isn’t healthy
a. (DISCUSS: Is recent activity showing that stocks are no longer about growth, but about a desperate search for safe alternatives to low-yielding bonds?)
4. We can hope
a. If Fed is scared by Brexit into keeping rates low even as the economy recovers, shareholders win
b. Short run: Brexit keeps central banks at bay until word gets around that the US economy isn’t much affected by UK troubles
c. (DISCUSS: Agree or disagree—we are in a post-Brexit safe zone and the decision for the UK to leave the EU will no longer affect us.)
5. The three big dangers for investors post-Brexit
a. Italy’s wobbly banking system
i. (DISCUSS: Explain situation with Italy pleading with Germany for bail out & possible political woes)
b. With interest rates still negative in Europe and Japan, investors may fret that central banks are running out of ammunition
i. (DISCUSS: Where interest rates are headed and whether or not you believe the Feds would considering dropping rates again so soon)
c. Governments may loosen their purse strings at the advice of the central banks to try and stimulate growth
i. (DISCUSS: Pros and Cons of increasing the US deficit versus a tighter budget. Should the world economy follow suit?)
6. Problem with investors playing it safe with equities that people will always need even in bad times(utilities, consumer staples, healthcare and telecommunications), is that they would all be hit it bond yields rise again
a. (DISCUSS: Higher bond yields caused by faster economic growth are offset by higher profits, meaning profits for the companies investors have shunned. How do you properly balance to be stable for either out-come, Bear Market or Bull Run)?

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Windus states: Stay tuned because if you run a side business or are looking to deduct losses from a hobby beware of the potential pitfalls that could land you in Tax Court.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff is off for today but we still have his associate attorney, Amy Spivey calling in from Walnut Creek.

Chit chat with Amy

Windus states: And before we start our next segment, Amy would you please tell our listeners of your offer?

Amy states PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call our office to make an appointment to meet with Jeffrey Kahn, right here in San Diego or at one of our other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Beware Your Hobby Business Could Land You In Tax Court

Windus states: Many people successfully develop a hobby into a going concern and actually receive income from it. That income must always be reported and taxes paid on that money regardless of your situation.

Amy states: Now if you leave that hobby as a hobby, under the tax law, you are not allowed to deduct any of the losses incurred by activity in that hobby. That is the reason most people turn their hobbies into a “trade or business” once they start making money.

Windus asks: Do taxpayers and the IRS have differing views as to what constitutes a “trade or business”?

Amy replies: Yes. A taxpayer will argue that the activity is a trade or business and therefore the loss is deductible in full. The IRS will argue that the activity is a hobby so expenses from the activity are generally limited to the income derived resulting in no deductible loss.

Amy continues: Let’s say you have a backyard greenhouse where you grow orchids and travel all over the world to collect new plants to add to your inventory and propagate. While you may think of this as your legitimate side business, the IRS is likely to disagree. If the IRS sees a history of losses from the activity, they may well challenge whether it is truly a “hobby” rather than a trade or business. If successful, such a challenge would preclude you from deducting a net loss from the activity, effectively rendering your orchid-growing-related tax-benefits useless.

Windus asks: When Are Hobby Losses Deductible?

Amy replies: By showing that your pursuit of your “hobby” is an activity engaged in for profit, you may be able to deduct those years where you incurred losses if you meet certain presumptions.

Amy continues: For activities not involving the breeding, training, showing, or racing of horses, the presumption is that your business is an activity engaged in for profit where you show annual net income from an activity for 3 or more of the taxable years in the period of 5 consecutive taxable years which ends with the most recent taxable year. So if for the first three years your activity has incurred losses, you must show net income in years four and five (even if only $1.00 in each year) in order to still be able to deduct the first three years of losses.

Amy continues: For activities involving the breeding, training, showing, or racing of horses, the presumption will work in the same fashion except you must show annual net income from an activity for 2 or more of the taxable years in the period of 7 consecutive taxable years which ends with the most recent taxable year.

Windus asks: Are there any factors out there that taxpayers should know to determine whether an activity is entered into for profit or a hobby?
Amy replies: The regulations under Section 183 (the so-called “hobby loss rules”), provide nine factors, which if answered in the affirmative, are indicative of a business.

Amy to recite each factor.
1. The manner in which the taxpayer carries on the activity. Do they complete accurate books? Were records used to improve performance?
2. The expertise of the taxpayer or his advisers. Did the taxpayer study the activities business practices? Did they consult with experts?
3. The time and effort expended by the taxpayer in carrying on the activity. Do they devote much of their personal time and effort?
4. The expectation that the assets used in the activity may appreciate in value. Is the plan to generate profits through asset appreciation?
5. The success of the taxpayer in carrying on similar or dissimilar activities. Have they converting them from unprofitable to profitable?
6. The taxpayer’s history of income or losses with respect to the activity. Has the taxpayer become profitable in a reasonable amount of time?
7. The amount of occasional profits. Even a single year of profits can be a strong indication that an activity is not a hobby.
8. The financial status of the taxpayer. Does the taxpayer have other income sources that are being offset by the losses of the activity?
9. Does the activity lack elements of personal pleasure or recreation? If the activity has large personal elements it is indicative of a hobby.

Windus asks: Is there any particular factor that stands out over the others?

Amy replies: No one factor is determinative but the more you have in your favor, the better off you are. And because factors 4 through 9 are largely out of your control, you’d better make sure you’ve got the first three buttoned up by running the activity in a businesslike manner. Your business records must be up-to-date and accurate, and your business plan must lay out a course for creating profit from your activity in the future. That written business plan can be a real asset if you end up in Tax Court versus the IRS.

Windus asks: Are there certain activities that attract IRS attention more than others, and by their very nature expose the taxpayer to risk of a hobby loss challenge?

Amy replies: There seem to be two “hobbies” that trigger audits most frequently and those are horses or yachts. Both are money pits, and so if people can figure out a way to make a business out of them, that will provide either tax deductions and/or income to cover the high expenses of each. The IRS knows this, and is very strict when applying the rules to these activities. When structuring these, pay very close attention to business start-up details.

Windus states: Despite the presumptions you discussed, the IRS does not always see your hobby as a viable business, and that is where tax difficulties arise. I suspect that there are a lot of Tax Court cases involving whether an activity was a hobby or business.

As time permits – Amy can discuss any of these cases leaving time for her to recite Jeff’s plug.

1. Fishing: In Busbee v. Commissioner, T.C. Memo 2000-182, this taxpayer decided to hold fishing tournaments. These tournaments required him to promote the activity through flyers, speaking engagements, and other marketing efforts. He had to recruit participants and sponsors. He intended his hobby of fishing tournaments to supplement his retirement income as he developed it into a business. Through the process, he became an expert in bass fishing. The Tax Court considered all of this, and allowed his business.
In Peacock v. Commissioner, T.C. Memo 2002-122, this taxpayer began tournament fishing in his retirement. Sailing everywhere on his personal yacht, he and his wife fished specifically for the pleasure of participating in the tournament, especially when these tournaments were in exotic locales. In this case, the Tax Court decided this was not a business but a hobby for the activity was not “motivated primarily by the pursuit of profit”. What probably hurt their case, even subtly, was the fact that they had just sold a business and were now millionaires.

2. Golfing: In William James Courville v. Commissioner, T.C. Memo 1996-134, an optical engineer, after 30 years of employment, was laid off. He decided to become a professional golfer, but took only 4 golf lessons while a “professional”. He did not qualify for the senior tour, and ended up with no income from this activity. However, he did submit a Schedule C, listing expenses totaling over $16,000. The Tax Court declared that he “failed to establish that his golfing activity was carried on with the actual and honest objective of making a profit”.

3. Track and field coaching: In Parks v. Commissioner, T.C. Memo 2012-105, the taxpayer began his professional career as a writer of freelance articles on the sport of track and field. Over a number of years, he owned a track and field magazine, coached at a number of different locations, studied with one of the foremost experts in the industry, then basically tried to establish himself and his trainees as credible within the field. By 2006, this man had a winning contestant who qualified for the Olympic trials, and by 2009, that contestant signed the taxpayer coach to a lucrative contract as his exclusive coach, and things only got better for the taxpayer. However, in a tax period of 9 years, the coach showed only a $43 profit, so the IRS claimed hobby not business. The Tax Court considered the case in great detail and decided primarily (although not all points) for the taxpayer, saying his income was growing and he had great potential for success. They did not see track and field as a typical hobby, and that did work to the taxpayer’s benefit.

4. Writing: There is an infamous case which always gives people a chuckle, and that is the man who decided to write about prostitution. Vitale v. Commissioner, T.C. Memo 1999-131. Ralph Louis Vitale, Jr., in 1999, claimed on his tax return that he was in the business of writing about prostitution. When this taxpayer began his “research” four years before his retirement, he was still a full-time employee. Over the course of time, he visited a large number of brothels doing his “research” and always paying for services in cash (no records kept). He did keep a journal detailing each of his visits and expenses, and eventually developed a manuscript from his notes. Vitale submitted his manuscript to a vanity publisher, paying $4,375 to publish it. All told, after he received $2,600 in royalties, the publisher went bankrupt. Subsequently, the book rights were returned to him, and he again began marketing his book throughout the industry. The IRS said this was just a hobby and disallowed Vitale’s deductions. So Vitale went to Tax Court. At first, the Tax Court felt that the taxpayer had a profit motive and overruled the IRS, even though the court also made comments about the “recreational” qualities of the contents of his book. The court did like his record-keeping and marketing and felt it showed his professionalism. But then the Tax Court disallowed all of his deductions, for the taxpayer could prove none of them (remember the cash payments?). Nevertheless, the court did not penalize this taxpayer in any way, saying that he had made a reasonable attempt to comply with the law.

Amy states: The U.S. Tax Court weighs “profit motive” most heavily in each of their decisions. Profit is a key decider when considering whether an activity is hobby or business. Is your hobby truly for profit or only for pleasure? That is foremost and basic premise that the Tax Court considers. Which is why ….

Amy states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Thanks Amy for calling into the show. Amy says Thanks for having me.

Windus states: Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Windus states: And Jeff and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Windus states: If you would like to post a question for us to answer, you can go to Jeff’s website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

Windus states: And in the studio with me today is our special guest, David “Stan” Stankaitis, CCIM; President at Trillium Capital Partners, Commercial Mortgage Broker. And Stan as our special guest, I will let you read what questions our listeners have for us to answer?

Carlos from San Diego asks: In order to invest more conservatively in the current volatile market and ride out the market slump until the next Bull Run, what type of investments should I be shopping for?

Windus answers.

Susan from Carlsbad asks: If I’m not set to retire for the next 40 years, should I really be concerned with how I’m investing right now if I’ll make it up further down the line?

Windus answers.

Sandra from Newport Beach asks: Would investing on a Cost-Basis average eliminate some volatility if I choose to keep investing steadily through a recession?

Windus answers.

Windus states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Have a great day everyone!

Smarter San Diego TV show | Business and Personal Tax & IRS Issues, advice and tips

How taxes and Business Entities Work

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How taxes and Business Entities Work

Topics:

· Is there any difference in an LLC or S-Corp when forming a business and looking at potential tax liability?

· How can this affect things if the business breaks up?

· How long do the tax records need to be kept?

business record keeping. How long do you need to keep your records for?

How Long Do Tax Records Need To Be Kept?

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How Long Do Tax Records Need To Be Kept?

The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

The period of limitations (which we call the Statute Of Limitations or “SOL”) is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the SOL that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

SOL’s that apply to income tax returns:

1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.

For employment tax returns, you should keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

The following questions should be applied to each record as you decide whether to keep a document or throw it away.

Are the records connected to property?

Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.

What should you do with your records for nontax purposes?

When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.

How Taxes And Business Entities Work

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How Taxes And Business Entities Work

Is there any difference in an LLC or S-Corp when forming an entity and looking at potential tax liability?

When clients inquire on what type of entity should be formed for the operation of a business venture, we refer to that type of discuss ion as “Choice Of Entity”.

Both LLC’s and S-Corp’s have some similarities.

They both offer the following advantages over not incorporating:
• Limited liability: Directors, officers, shareholders/members, and employees enjoy limited liability protection.
• Pass-through taxation: Owners report their share of profit and loss on their individual tax returns.
• Double taxation elimination: Income is not taxed twice (unlike corporate income which is taxed at the corporation level and again then at the individual level as dividend income when distributions are made).
• Investment opportunities: The company can attract investors through the sale of shares of stock or membership interests.
• Perpetual existence: The business continues to exist even if the owner leaves or dies.

The big difference though is how these entities are taxed which people are not aware knowing that for both types of entities, the income or loss flows through to the individual income tax returns of the owners. An S-Corp will follow the corporation tax code. An LLC can follow either the partnership tax code or the corporation tax code or even be taxed as an entity disregarded as separate from its owner.

To answer which tax code is most beneficial, we consider several factors including the type of business being conducted. Real estate ventures are usually better off being subject to the partnership tax code while other types of businesses are usually better off being subject to the corporation tax code.

How the owners are to be compensated or paid back their investment also impact what entity to use. It is common that owners who fund a business over owners who provide sweat equity will demand a priority when any distributions are made. It is also advisable that for owners who render services to the business pick up ordinary income as compensation for the service provided. The choice of entity becomes key to minimize the adverse tax consequences that could otherwise arise if proper planning is not made.

We also consider the ultimate exit strategy of the business in determining what entity to use. Depending on how the business is first going to be capitalized or financed, the exit strategy for the business will have different tax consequences if the entity follows the corporation tax code or the partnership code.

Since the initial choice of entity in most cases cannot subsequently be changed without incurring additional tax liability, you should seek tax counsel BEFORE forming the entity and not waiting until afterwards when it is too late.

IRS Generates $8 Billion from Voluntary Disclosure. Expect More FATCA Reporting in 2016

IRS Generates $8 Billion from Voluntary Disclosure. Expect More FATCA Reporting in 2016 and Beyond

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IRS Generates $8 Billion from Voluntary Disclosure. Expect More FATCA Reporting in 2016 and Beyond

The Internal Revenue Service faces many challenges when it comes to enforcing compliance with U.S. tax laws for individuals with offshore assets and income sources. To strengthen these efforts, the IRS has implemented offshore voluntary disclosure programs (known as OVDP’s) as a way to encourage U.S. taxpayers to come forward to meet their tax obligations related to earning income abroad or having undisclosed offshore assets. The OVDP’s support comprehensive efforts to address tax evasion issues through targeted enforcement, prosecution and implementation of the Foreign Account Tax Compliance Act (“FATCA”). Results of voluntary disclosure programs and FATCA implementation have been encouraging to the extent that the IRS has vowed to expand FATCA and strengthen enforcement strategies. The programs have proven effective in helping taxpayers become current with their tax liabilities, raising IRS collections and discouraging offshore tax evasion for taxpayers with assets and income abroad.
Understanding FATCA

FATCA was introduced in March 2010 as part of a strategy to crack down on U.S. taxpayers who use foreign financial institutions (FFI’s) to conceal their assets to avoid paying U.S. taxes. This piece of legislation effectively gives the Department of Justice (“DOJ”) and the IRS blanket authority to investigate suspect accounts held by individuals and businesses in offshore institutions. FATCA forces FFI’s to comply with stringent reporting requirements for any accounts that may be held by U.S. taxpayers in countries that have signed inter-governmental agreements(IGA’s) or, to disclose specific account holder information to the DOJ and the IRS. Serious sanctions and penalties may be imposed for non-compliance.

The intent of FATCA was to go after high net worth individuals who were taking advantage of offshore tax havens to shield assets from U.S. tax obligations. However, FATCA provisions include disclosing information on all accounts held in the name of U.S. citizens. This had unintended consequences, including closure of accounts when businesses and individuals failed to meet stringent documentation requirements and denial of new account applications that affected even those who had limited income and assets. Countries that have signed IGA’s include Spain, France, Germany, United Kingdom, Singapore, Switzerland and Japan.

The IRS has indicated that FATCA Offshore compliance and FATCA provisions will top 2016 priorities. These efforts will include facilitating exchange of FATCA information worldwide to root out unreported and under-reported income and untaxed assets. Aside from reporting requirements, FATCA also obligates FFI’s to withhold taxes and to report account activities that may indicate fraud and tax evasion.
Compliance with FATCA Provisions

U.S. citizens who have assets held in FFI’s should use Form 8938 to report those assets as part of their annual tax returns. The reporting thresholds vary depending on certain factors.

• If you live in the U.S. and you are single, you may have to comply with FATCA requirements when your offshore financial assets are valued at $50,000 at year-end or $75,000 anytime during the year.
• If you are U.S.-based, married but filing separately, the same thresholds as outlined above applies.
• If you are married and living in the U.S., the value of your specified foreign assets must be reported starting at a year-end valuation of $100, 000 or if the value met or exceeded the $150,000 level during the tax year.
• If you live abroad, married and filing jointly, the threshold is $400,000 at year-end or $600,000 at any time during the year.
• If you live abroad and you are single, the foreign asset filing threshold is $200,000 at year-end or $300,000 during the year.

Filing Form 8938 does not take the place of other reporting requirements such as the FBAR, the Report of Foreign Bank and Financial Accounts, and FinCen Form 114. Failure to file Form 8938 and the FBAR may lead to hefty penalties, starting with $10,000 for failure to file. When the IRS sends a notification and you fail to file your Form 8938, another $50,000 is added to your accrued penalties. You could also be liable for an additional 40% penalty based on underpayment of taxes due to non-disclosure of offshore assets. Also, being compliant with these filing requirements now does not cure past non-compliance.
Impact of FATCA Reporting Requirements

Under FATCA provisions, banks, investment houses, brokers, specified insurance companies and some non-financial entities are required to report account information to the IRS and DOJ if the account holders are U.S. citizens. This means that when you set up new accounts with offshore entities, you will be asked to provide information about your citizenship. FATCA reporting requirements apply even when only one spouse is a U.S. citizen or only one spouse lives abroad.

To clarify, the OVDP’s implemented in 2009, 2011 and 2012 were intended to encourage taxpayers with offshore assets to comply with their tax obligations and become current on tax liabilities accruing to ownership of assets in FFI’s and any income earned abroad. The 2009 OVDP resulted in 18,000 disclosures and a $3.4 billion collection that covered back taxes, penalties and interest payments. In 2011, the OVDP generated 15,000 disclosures and revenue collections of $1.6 billion for 75 percent of the accounts that were finalized in that year. In 2012, a third program generated 12,000 disclosures, bringing total collections for all OVDP opportunities to $8 billion as of October 2015 according to Douglas W. O’Donnell, commissioner for the Large Business and International Division, which is part of the IRS.

A separate report prepared by the Treasury Inspector General for Tax Administration pointed out that the IRS stood to generate about $21.6 million more in penalties alone with more efficient enforcement action on taxpayers who were disqualified or who withdrew from the OVDPs. Taxpayers who participate in voluntary disclosure programs qualify for reduced penalties. When FATCA reports reveal the existence of unacknowledged accounts before the taxpayer applies for OVDP participation, the IRS may deny access to reduced penalties and other benefits of voluntary disclosure.

The Future of FATCA

Since FATCA was implemented in 2010, it has proven effective as an offshore asset tracking strategy and in raising tax compliance for taxpayers with offshore accounts. IRS collection figures demonstrate the value of voluntary reporting as a key component of compliance efforts. As such, the IRS is expected to put more muscle into FATCA and offshore compliance strategies in 2016 and beyond. These efforts may include automatic information exchange for FATCA-related issues, greater cooperation with FFIs, foreign governments and the IRS to pinpoint potential target accounts and improved tax withholding compliance by offshore financial institutions.

References:
https://www.irs.gov/pub/irs-utl/d11809–2016-01-00.pdf
https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-u-s-taxpayers
https://www.irs.gov/uac/newsroom/irs-offshore-voluntary-disclosure-efforts-produce-6-5-billion-45-000-taxpayers-participate
http://www.accountingtoday.com/news/tax-practice/irs-overlooks-noncompliance-in-offshore-voluntary-disclosure-program-78456-1.html

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses the Lifetime Estate Gift Annuity, the Building Blocks to Financial Security and the “Victory Tax” On ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Employee Benefits and Taxes On Podcast

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Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Employee Benefits and Taxes On ESPN Radio – June 24, 2016 Show

Topics Covered:

1. Special Guest: Cade VanHeel, Pay it Forward Processing Regional Sales Office Manager

2. Employers Cut Down on Wellness Benefits

3. How Taxes And Business Entities Work

4. Questions from our listeners:

a. If I’m invested in my companies 401(k), what are the benefits of me opening up an outside IRA?
b. Can I invest a Healthcare Spending Account? How does that work?

*************************************************************

Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
Jeff is off on assignment today but I am not alone as I will be introducing my special guest in the studio with me and Jeff’s associate Amy Spivey will be calling in later in the show.  You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.  When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble! And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

For today’s show we have coming up:

Segment 2 material: Employers Cut Down on Wellness Benefits

Also coming up is:

Segment 3 material: How Taxes And Business Entities Work

And of course towards the end of our show, we will be answering some of your questions.

Windus states: Please welcome today’s special guest…
Pay it Forward’s Regional Sales Office Manager,
Cade VanHeel

1. Tell us a little bit about what you do as the Regional Sales Manager for Pay it Forward Processing.
2. What was it about Pay it Forward that attracted you to the position in the first place?
3. The company philosophy centerpiece of “Every Swipe Benefits Charity” is an innovative program that fundraises to give back to the community. Can you explain how that works and what organizations benefit from the charity?
4. How long has the program “Every Swipe Benefits Charity” been around?
5. How much has the “give back” program donated to charity?
6. Is their one organization or foundation that leads in
7. Do you have a niche clientele? Or a sector that gravitates toward you more than others for services?
8. When proposing your product to a merchant, what costs are associated with program?
9. How quickly would your company be able to equip a merchant with the devices and/or technology to conduct business?
10. A benefit of Pay it Forward Processing is no increase in processing costs, but what triggers a decrease in costs to merchants?
11. How do you keep your sales team engaged? Do you have monthly quotas, or how does that work?

Well it’s time for a break but stay tuned because we are going to tell you why employers are cutting down on wellness benefits.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And be aware of the special offer that Windus has for you: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Employers Cut Down on Wellness Benefits
http://on.wsj.com/1YzJFAy

1. New survey of benefits from the Society for Human Resource Management finds employers are cutting back on certain wellness benefits
(Discuss correlation between healthcare costs going up while benefits are decreasing)
2. Designed to cut employers’ health costs, study saw fewer benefits for:
a. on-site flu shots
i. Decrease from 61% to 54%
b. 24-hour nurse hot lines
c. Health coaching
i. Decrease from nearly 50% to 37%
d. Discounts on premiums for weight loss
3. Alternately, One Rand Corp study of a Fortune 100 company found when measuring ROI, wellness programs lost 50 cents for every dollar spent
a. (Discuss: Should companies be held to providing health and wellness programs, if they’re not benefiting a majority?)
4. Not only focused on health and wellness, survey finds pay is changing too
a. More companies are handing out bonuses to top performers instead of large annual raises
b. Wider range of workers are eligible for things like spot-bonus awards and retention bonuses
c. Spot bonuses offered by 43% of employers compared to 38% in 2012
d. (DISCUSS: Which would you prefer and why, bonuses or company-wide raises?)
5. Survey also shares that organizations offering telecommuting has tripled to 60%, up from 20% in 1996.
a. (DISCUSS: Does the benefit of telecommuting warrant cuts in company sponsor wellness programs, since employees aren’t going into work in the first place?)
6. Healthcare and retirement savings benefits have remained fairly steady, although types of coverage have changed
a. Health savings accounts are being provided by some 50% of employers surveyed, up from 43% last year.
b. (DISCUSS: 20 years ago, companies didn’t offer health-savings accounts. Is this a suitable substitution for cutting health and wellness spending?)
c. (DISCUSS: Are health and wellness provisions being weaned out like pensions? Health care savings accounts being substituted like company sponsored retirement savings that only help those who help themselves?)
7. The variety of benefits has been widening to appeal to the multigenerational workforce.
a. Survey says companies now cover so 330 benefits compared to 60 two decades ago
b. Emerging benefits include:
i. Genetic testing for cancer = offered by 12% of employers
ii. Subsides for using an employee owned tech device = offered by 12% of firms
iii. Automatic enrollment in a 401(k) or other retirement plan = offered by 21% of companies
(DISCUSS: Is this changing for the better or just evolution with time in general? Does it benefit an employee more to have little bits of benefits in a lot of places or more generalized benefits, leaving one liable for the rest?)

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stay tuned because after the break we are going to tell you How Taxes And Business Entities Work.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is Jeff’s associate attorney, Amy Spivey.

Chit chat with Amy

Windus states: So Amy please tell our listeners of your offer.

Amy states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call our office to make an appointment to meet with Jeffrey Kahn, right here in San Diego or at one of our other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

How Taxes And Business Entities Work

Windus asks: Is there any difference in an LLC or S-Corp when forming an entity and looking at potential tax liability?

Amy replies: When clients inquire on what type of entity should be formed for the operation of a business venture, we refer to that type of discuss ion as “Choice Of Entity”.

Windus asks: What are the similarities between LLC’s and S-Corp’s?

Amy replies: They both offer the following advantages over not incorporating:
• Limited liability: Directors, officers, shareholders/members, and employees enjoy limited liability protection.
• Pass-through taxation: Owners report their share of profit and loss on their individual tax returns.
• Double taxation elimination: Income is not taxed twice (unlike corporate income which is taxed at the corporation level and again then at the individual level as dividend income when distributions are made).
• Investment opportunities: The company can attract investors through the sale of shares of stock or membership interests.
• Perpetual existence: The business continues to exist even if the owner leaves or dies.

Windus asks: So what are the big differences?

Amy replies: The big difference though is how these entities are taxed which people are not aware knowing that for both types of entities, the income or loss flows through to the individual income tax returns of the owners. An S-Corp will follow the corporation tax code. An LLC can follow either the partnership tax code or the corporation tax code or even be taxed as an entity disregarded as separate from its owner.

Amy continues: To answer which tax code is most beneficial, we consider several factors including the type of business being conducted. Real estate ventures are usually better off being subject to the partnership tax code while other types of businesses are usually better off being subject to the corporation tax code

Windus asks: How can this affect things if the entity breaks up?

Amy replies: Whether the entity breaks up or sells off an interest is something to consider at the beginning when first choosing an entity. The exit strategy for the business will have different tax consequences if the entity follows the corporation tax code or the partnership code. A big factor to consider is how the business is first going to be capitalized or financed.

Windus states: So a lot of people always ask me how long do tax records need to be kept. Amy what do you have to say about that.

Amy replies: The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.

Windus asks: What is that period of limitations?

Amy replies: The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

Windus asks: So what are the Period of Limitations that apply to income tax returns?

Amy replies:

1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.

Windus asks: So what are the Period of Limitations that apply to employment tax returns?

Amy replies: Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Windus asks: Are the any special consideration for records connected to property?

Amy replies: Yes, generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.

Amy continues: If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.

Windus asks: What should you do with your records for nontax purposes?

Amy replies: When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.

Windus states: So Amy please tell our listeners of your offer.

Amy states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call our office to make an appointment to meet with Jeffrey Kahn right here in San Diego or at one of our other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Jeff and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Windus states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

Windus states: OK Cade as our special guest, what questions have you pulled for us to answer?

Joshua of Newport Beach asks: If I’m invested in my companies 401(k), what are the benefits of me opening up an outside IRA?

Windus answers.

Debbie of San Diego asks: Can I invest a Healthcare Spending Account? How does that work?

Windus answers.

Windus states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses the Lifetime Estate Gift Annuity, the Building Blocks to Financial Security and the “Victory Tax” On ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses The Markets, Taxes and the IRS On ESPN Radio – June 17, 2016 Podcast

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Jeffrey B. Kahn, Esq. and Gary Sussman Discusses The Markets, Taxes and the IRS On ESPN Radio – June 17, 2016 Show

Topics Covered:

1. Special Guest Steven Hyde, Loan Officer at Movement Mortgage

2. The Most Pessimistic Bull Market in History

3. Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.

4. Questions from our listeners:

a. I have a 401(k), my spouse has a 401(k) and we make deductible contributions. Can I contribute to an IRA?

b. Can I still contribute to an IRA after I retire? How does that work with RMDs?

**************************************************************

Jeff states: Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Gary states:

And this is Licensed Financial Planner, Gary Sussman, at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Gary states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: The Most Pessimistic Bull Market in History

Gary states:

Also coming up is:

Segment 3 material: Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Gary.

Jeff states: So let’s introduce you to today’s guest:

Please welcome Steven Hyde, Senior Mortgage Loan Officer at Movement (858) 775-1005

Questions:
1. You have quite the passion for photography, not only working freelance for a while as a photographer, but also in web design and marketing. What prompted your career change and peaked your interest in becoming a Loan Officer?
2. What top factors determine if someone gets a loan?
3. Can you walk us through the process you take to select a mortgage loan for a client?
4. What’s more important when looking at a mortgage: rates, fees or points?
5. What do you expect to see happen to mortgage loan rates over the next couple of years?
6. Under what circumstances would you recommend to a client a refinance?
7. What are some of the things should people be aware that will increase their chances for being approved for a loan?

Well it’s time for a break but stay tuned because we are going to tell you about the Most Pessimistic Bull Market in History.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And be aware of the special offer that Gary has for you: Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.guideyourstory.com.

The Most Pessimistic Bull Market in History

http://on.wsj.com/1ZKiTo3

1. Instead of chasing growth and profits, investors this year have bought into safety
a. Go-go stocks aren’t growing, investments geared toward utilities and consumer staples
b. (DISCUSS: examples of safety stocks or funds in relation to go-to stocks like Google, Amazon, Facebook, Netflix, etc.)
2. The bubble that pushed markets up in 2007 is elsewhere
a. Excess in credit created shaky profits; this time the government bond market
b. (DISCUSS: market sectors that took the hardest hit in the Great Recession)
3. Change of pace
a. Investors transitioning to stock from underperforming bonds are not risk takers; aiming for more conservative, bond-like equities
b. (DISCUSSION: Does it look like investors are still uneasy from the last recession? More cautious the next go-around while remembering what happened last time?)
4. Opting for the least exciting companies has worked brilliantly
a. (DISCUSS: super conservative market sectors that perform similarly to bond expectations yet have a greater dividend and annual return)
b. Utilities sector: Up 16%
c. Consumer Staples: Up 5.7%
d. Telecom Sector: Up 14%
e. All three sectors offer healthier dividends than the market
5. The two most obvious signs that the economy is improving
a. Small company figures
b. Chip maker yield
c. (DISCUSS: Russell 2000 Index for small capitalization stocks and the PHLX Semiconductor Index of the US sector; what should investors be looking at?)
d. Leading indicators for the economy tend to follow the direction of small-cap equity and chip makers
e. (DISCUSSION: With the market what it is, what ratio should investors be focusing on between domestic and international equities? Is there a way to safe guard yourself from another US melt-down by keeping a “toe” in global trade?)
6. Picking a side
a. Buying Bond proxies = believing insanely low global yields are right, economy is weaker than projected and bad times are ahead of us
b. Buying cheaper economically sensitive stock = believing we are going to continue the recovery of the past seven years/maintain growth in a pessimistic bull market
c. (DISCUSSION: Where do you see the market heading? How do you feel the election will affect the market come November or Inauguration Day? What if you’ve got a ways until retirement, how should you be planning you IRA investments?)

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.guideyourstory.com.

Stay tuned because after the break we are going to tell you about the Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

And be aware of the special Offer that I have for you: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Streamlined Filing Compliance Procedures

Jeff states: A reader of last week’s show commented on why we did not discuss the Streamlined Procedures as the solution to U.S. taxpayers who have undisclosed foreign accounts. Well we have talked about this in the past so maybe a refresher and update is due.

Gary asks: But before we get into this, Amy, what are the Filing Requirements If You Have Undisclosed Bank Accounts?

Amy replies: By law, many U.S. taxpayers with foreign accounts exceeding certain thresholds must file Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR.” It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.

Amy continues: Additionally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.

Gary asks: Is it true that the U.S. Requires Reporting Of Worldwide Income On U.S. Income Tax Returns?

Amy replies: The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Jeff states: The first Voluntary Disclosure Program for Undisclosed Foreign Bank Accounts came out in 2009. While the law imposes a penalty rate as high as 50% of the value of your foreign accounts, this program had a maximum rate of 20%. In later years this top penalty rate was increased to 25% and then 27.5%. The IRS still received a lot of complaints that the penalty rates under this program were to high.

Amy states: So on June 18, 2014, the IRS announced major changes in the 2012 offshore account compliance programs, providing new options to help taxpayers residing in the United States and overseas. The changes are anticipated to provide thousands of people a new avenue to come back into compliance with their tax obligations.

Jeff states: The streamlined filing compliance procedures are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations (1) a streamlined procedure for filing amended or delinquent returns and (2) terms for resolving their tax and penalty obligations.

Gary asks: How are the streamlined procedures different than the regular OVDP?

Amy replies: Taxpayers will be required to certify that the failure to report all income, pay all tax, and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22.1), was due to non-willful conduct. Under the regular OVDP it is not necessary to show your conduct was non-willful.

Gary asks: Under what circumstances would a taxpayer not be allowed to enter into this program?

Amy replies: If the IRS has initiated a civil examination of a taxpayer’s returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the streamlined procedures. Similarly, a taxpayer under criminal investigation by IRS Criminal Investigation is also ineligible to use the streamlined procedures.

Amy continues: However, taxpayers eligible to use the streamlined procedures who have previously filed delinquent or amended returns in an attempt to address U.S. tax and information reporting obligations with respect to foreign financial assets (so-called “quiet disclosures” made outside of the OVDP or its predecessor programs) may still use the streamlined procedures.

Jeff states: Now the Streamlined Procedures are classified between U.S. Taxpayers Residing Outside the United States and U.S. Taxpayers Residing in the United States.

Gary: As I understand a key factor in qualifying for a full waiver of the penalty is that the taxpayer cannot be a U.S. resident.

Amy replies: That’s right. Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days. Under IRC section 911 and its regulations, which apply for purposes of these procedures, neither temporary presence of the individual in the United States nor maintenance of a dwelling in the United States by an individual necessarily mean that the individual’s abode is in the United States.

Amy continues: Individuals who are not U.S. citizens or lawful permanent residents, or estates of individuals who were not U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the last three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not meet the substantial presence test of IRC section 7701(b)(3).

Gary asks: What if a taxpayer closed an liquidated their undisclosed foreign bank accounts, are they in the clear?

Amy replies: No. Recent closure and liquidation of foreign accounts will not remove your exposure for non-disclosure as the IRS will be securing bank information for the last eight years. Additionally, as a result of the account closure and distribution of funds being reported in normal banking channels, this will elevate your chances of being selected for investigation by the IRS. For those taxpayers who have submitted delinquent FBAR’s and amended tax returns without applying for amnesty (referred to as a “quiet disclosure”), the IRS has blocked the processing of these returns and flagged these taxpayers for further investigation. You should also expect that the IRS will use such conduct to show willfulness by the taxpayer to justify the maximum punishment.

Amy continues: Additionally, starting with the 2011 Tax Return Filing Season: U.S. taxpayers who have an interest in foreign assets with an aggregate value exceeding $50,000 must include new Form 8938 (Statement of Specified Foreign Financial Assets) with their Federal income tax return. This reporting will serve as an additional tool for the IRS to determine prior noncompliance of taxpayers who have undisclosed foreign accounts or unreported foreign income. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file an FBAR (Report of Foreign Bank and Financial Accounts). Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification. A 40% penalty on any understatement of tax attributable to non-disclosed assets can also be imposed.

Gary asks: What if someone is current in the 2012 Offshore Voluntary Disclosure Initiative (“OVDI”) and facing a penalty of 27.5%, can they get relief under the streamlined procedures and be subject to a 5% penalty?

Amy replies: For taxpayers who essentially applied to the 2012 Offshore Voluntary Disclosure Initiative (“OVDI”) on or before June 30, 2014, they can have their case converted to be under the new procedures which could substantially reduce their penalties to 5% and in some cases even eliminate them. Our office has been successful in getting such cases converted.

Gary asks: So what should one do if they have undisclosed foreign accounts?

Amy states: So we encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts. By then, it will be too late to avoid the new higher penalties under the OVDP of 50% percent – nearly double the regular maximum rate of 27.5% and 10 times more than the 5% rate offered in the expanded streamlined procedures.

Jeff states: And keep in mind that once the IRS contacts you, you cannot get into this program. You will now be subject to the maximum penalties (civil and criminal) under the tax law. Which is why …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And Gary and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Steven since you are our guest, what questions have you pulled for us to answer?

James from Newport Beach asks: I have a 401(k), my spouse has a 401(k) and we make deductible contributions. Can I contribute to an IRA?

Gary answers.

James from Newport Beach also asks: Can I still contribute to an IRA after I retire? How does that work with RMDs?

Gary answers.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Gary states: Have a great day everyone! And Happy Father’s Day!