Report from Counsel, Author at Ross Law Firm Ltd.

How to Avoid a Basis Management Disaster

08/17/202006/03/2014 by Report from Counsel

Many of us in the legal, financial and accounting worlds discover our new clients’ well-intentioned, yet disastrous, plans after the fact. The widow has already transferred her house into her children’s names or an inherited IRA is drained to pay for a Porsche. Observing the lost planning opportunity and the financial fallout is universally gut wrenching.

To help get the message out and to illustrate the transformation you provide to clients, you are welcome to use the below facts and scenarios in your own educational materials, presentations and conversations. Consider this a “red flag” list of income tax pitfalls and opportunities so you can be your clients’ (and their beneficiaries’) basis management hero.

Estimated Taxes for Business Owners

08/17/202005/27/2014 by Report from Counsel

Estimated tax is the method used to pay tax on income that isn’t subject to withholding, most notably earnings from self-employment. Many owners of small businesses-whether operated as S corporations, partnerships, limited liability companies electing partnership taxation, or sole proprietorships-pay their estimated tax using the same IRS Form 1040-ES that individuals use.

Ensure Your Financial Privacy

08/17/202005/20/2014 by Report from Counsel

There is a federal law that affords consumers significant say over the privacy of their financial information while still allowing financial institutions to share information for normal business purposes. This Act covers banks, savings and loan institutions, credit unions, insurance companies, securities firms, and even some retailers and automobile dealers that extend or make arrangements for consumer credit.
There may be more forms of personal information gathered by the institutions than you realize. They may have credit reports and records of how much you buy and borrow, where you shop, and how well or poorly you pay your bills on time.

Estate Planning—Powers of Appointment

04/10/201404/06/2014 by Report from Counsel

A power of appointment is the power given to someone to allow that person to designate who will receive property or an interest in property. The creator of the power is called the donor, the individual having the power is the powerholder, and the possible recipients of the property are permissible appointees.
Powers of appointment used for estate planning have many variable forms. The powerholder may hold the power in a fiduciary capacity (such as the trustee for a trust) or nonfiduciary capacity. The power may be presently exercisable by the powerholder or may be exercisable only in the future, such as by the powerholder’s will. The powerholder may or may not be the creator of the power. There may be multiple powerholders who must act jointly or a single powerholder. The persons in whose favor the power may be exercised may be unlimited, including the powerholder (sometimes called a general power of appointment), or may be limited. The beneficial interests that may be created in the appointees in whose favor the power may be exercised may be unlimited or limited. Various legal consequences in regard to powers of appointment will be affected by the restrictions imposed on the powerholder.

Before You Start a Business . . .

10/25/201704/03/2014 by Report from Counsel

Both heart and mind must be working well if the owners of a new small business are to experience success. While it is only human nature—not to mention fun—to indulge one’s imagination about what a new business started from scratch could be like, would-be entrepreneurs need to engage in some cold, hard thinking and planning before taking the plunge. At the risk of pouring cold water on some of the anticipation and excitement, what follows is a guide for how to plan for, and think through, the many decisions that must be made well before you have that “Grand Opening” sign made.

Why?

This may seem obvious, but you should know just what your reasons are for wanting to start a new business. If the motivations are weak, odds are the business will be a bust, whereas well-founded reasons can help a business persevere through good times and bad. Some common reasons for starting a new business include escaping the whole nine-to-five routine (though it may be replaced by an eight-to-eight routine), answering to no one else, upgrading your standard of living, and being convinced that you can provide a needed product or service.

Recreational-Use Immunity for Golf Injury

08/17/202003/17/2014 by Report from Counsel

The purpose of recreational-use tort immunity statutes, which are common across the country, is to encourage private and public landowners to make their property available for public recreational use. To advance this public interest, these laws usually immunize the owners or occupants of real property from negligence liability toward people entering the land for recreation, often on the condition that the property is made available for use free of charge.

Typically the statutory immunity stops short of protecting defendants from liability for greater degrees of wrongdoing, such as acts or omissions that can be characterized as willful, malicious, or grossly negligent. Originally the perceived need for immunity arose because of the impracticability of keeping large tracts of mostly undeveloped land safe for public use, but the concept has evolved so that it need not necessarily involve vast expanses of wilderness.

Tax-Free Gains from Home Sales

08/17/202003/13/2014 by Report from Counsel

One of the most significant tax advantages to owning a home comes at the back end of ownership, when you decide to sell it for a profit. A homeowner can exclude up to $250,000 of such profit from the federal capital gains tax. For married couples filing a joint tax return, the exclusion jumps to … Read more

Public Use Required for Eminent Domain

08/17/202003/10/2014 by Report from Counsel

“Eminent domain” is the power of the federal, state, or local governments (and, in some limited circumstances, private parties, such as utilities and railroads) to take, or to authorize the taking of, private property for a public use without the owner’s consent and upon payment of just compensation.
That right to compensation is rooted in the federal and state Constitutions.

Deducting The Business Use Of Your Home

08/17/202001/28/2014 by Report from Counsel

The federal income tax deduction for the business use of a home has a good dollars and cents upside for those who qualify. Some detailed questions have to be answered correctly to get to that point, however. Not surprisingly, the IRS publication on the subject makes use of a complex flowchart filled with “yes or no” questions to guide taxpayers to a determination of their eligibility for the deduction.

Qualifying for the Deduction

To pass the threshold for use of the home business deduction, a taxpayer must satisfy the following two basic sets of requirements: The first set concerns the nature of the business activities, while the second set relates more to the place itself.

E Mail Is Binding

08/17/202001/28/2014 by Report from Counsel

In law as in society at large, signing contracts on paper in ink (and maybe in triplicate) now seems so 20th century. If your reflex is still to regard e mail communications as only informal give and take, think again. A recent case demonstrates that if the necessary terms for an agreement are present in e mails, a binding agreement will result. If you don’t want that outcome, you are well advised to make it clear in the e mail itself that no party will be bound until a final agreement is signed by all parties.

Eric signed an agreement to buy a truck stop. The agreement included a financing contingency and required Eric to make a large refundable deposit that would be held in escrow. When Eric could not secure the necessary financing, he terminated the purchase and sale agreement and asked for his deposit back. The owner declined, saying that Eric had broken the agreement in bad faith.