If you’re an American citizen and own a Swiss bank account, there’s a good chance you’ll be receiving a letter from the Swiss bank politely asking you to take your business elsewhere. A pending U.S. regulation, known as the Foreign Account Tax Compliance Act, or Fatca, requires foreign banks to identify Americans among their clients and to provide their financial information to the Internal Revenue Service. A devastating penalty equivalent to 30% of a bank’s U.S. income could be assessed if even one person is overlooked. Swiss banks are particularly on edge, as the U.S. has alleged that 11 Swiss banks have helped Americans avoid paying taxes. As a result they have begun ushering American clients out or limiting the range of products offered to them. The administrative cost of complying with the law, given the relatively small number and size of U.S. accounts, just isn’t worth it. While the impact can already be felt in Switzerland, banks world-wide are also concerned about the complexity of the new rules, and the difficulties and costs involved with Fatca, whose full enactment is viewed as inevitable.
Medical Practice adding a Co-shareholder? Caution!
If you are considering the addition of a co-shareholder to your medical or other professional practice, it may not be as simple as you think. While you may not mind sharing the profits with the new partner, allowing him to have input on business decisions affecting your practice may be quite another matter. As a result of a New Jersey statute long overdue for an amendment, you may be forced to hand over the controls to your new partner.
The law governing professional service corporations (N.J.S. 14A:17-6) specifies that where an entity has two shareholders, both “shall be” the directors. The terms of the statute appear to require that not only must the shareholder be a second director, but that he becomes a “minority partner” as well, which means that he will have half of the control regardless of his percentage of shareholdings. To illustrate, let’s assume you add John Smith as a 10% shareholder of your practice. He will be entitled to a 50% say in your practice’s business decisions, regardless of the fact that he only gets 10% of profits. [Read more…] about Medical Practice adding a Co-shareholder? Caution!
NJ Court Rules Discretionary Trust not Included in Alimony Calculation
The alimony statute, N.J.S.A. 2A:34-23, in determining an alimony award considers “the income available to either party through investment of any assets held by that party.” The question that arose in Tannen v. Tannen, a New Jersey Appellate Division case, is whether income from a discretionary trust falls under the category of “income available”. [Read more…] about NJ Court Rules Discretionary Trust not Included in Alimony Calculation
Thinking about Selling a Vacation Home? Get it Done Before 2013
2012 is entering its final quarter, and that means it’s time to start year-end tax planning. This year presents a bigger challenge than most, as the Bush-era tax cuts are set to expire unless Congress takes action soon. If the tax cuts expire it will result in higher tax rates for individuals, including capital gains and dividends, as well as higher estate tax rates. [Read more…] about Thinking about Selling a Vacation Home? Get it Done Before 2013
Medical Expense Deduction set to Decrease for those under 65
This year, unreimbursed medical expenses are deductible to the extent they exceed 7.5% of your adjusted gross income (AGI), but in 2013, for individuals under age 65, the “floor” will be raised to 10% of AGI. If you can accelerate your “discretionary” medical expenses you were planning on incurring anyway next year it would be to your advantage to do so. Examples include prescription glasses, and elective procedures not covered by insurance such as orthodontic work. Also, consider using a credit card to prepay medical expenses. As long as it is billed in 2012, a medical expense can be deducted in 2012 regardless of when the credit card company is paid.
Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties
Are you a U.S. citizen living overseas with a foreign bank account? If your accounts hold more than $10,000 in the aggregate anytime during the year, you are required to file an FBAR (Report of Foreign Bank Accounts) by June 30th of the following year. It doesn’t matter whether foreign accounts generate income or not; just owning them, or having signature authority, requires you to file. Failure to file can result in severe civil penalties and potential prosecution followed by a term in federal prison. [Read more…] about Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties