<![CDATA[Houston Tax Advisors - Blog]]>Fri, 25 May 2018 02:15:48 -0700EditMySite<![CDATA[Do They or Don't They? ]]>Wed, 28 Sep 2016 15:11:10 GMThttp://www.assurancetaxadvisors.com/blog/do-they-or-dont-theyMatt Bissonnette grew up in a dinky flyspeck of a town off the Alaskan coast that you can't get to without a boat or a plane. He ultimately escaped to join SEAL Team Six, the Navy's most elite counterterrorism force. He took part in the 2009 mission to rescue Captain Mark Phillips from Somali pirates, a story which was told in the movie Captain Phillips. But that was just a warm-up for his biggest mission: "Project Neptune Spear," the 2011 raid that killed Osama Bin Laden.

In 2012, Bissonnette wrote a memoir called No Easy Day: The Firsthand Account of the Mission That Killed Osama Bin Laden. It earned him $6.7 million in royalties, which he planned to donate to the families of fallen SEALs. It also launched a lucrative second career as a public speaker. Unfortunately, Bissonnette broke the Pentagon rule requiring him to submit it for vetting before publishing. The day after the book landed on shelves, officials said it revealed classified information, a breach that could subject him to years in prison.

Last month, Bissonnette settled the dispute and agreed to pay back every dime of royalties, plus another $100,000 in speaking fees he earned before they approved the slides he uses in his presentations. Question: can he now deduct that payment from his taxes going forward?

Code Section 162(f) seems to shoot down any tax benefit. "No deduction shall be allowed . . . for any fine or similar penalty paid to a government for the violation of any law." But what about payments made to settle a dispute before a fine or penalty is imposed? Treasury regulations state that payments made to settle that sort of potential liability aren't deductible. But the regulations also state that compensatory damages do not qualify as fines or penalties.

So, that's the $6.7 million question. Does Bissonnette's payment serve to compensate the government for the damage his book caused? If so, then he gets his deduction. Or does it merely settle his potential liability for civil or criminal fines or penalties — in a way that benefits both the government and him by avoiding the time, expense, and potential public disclosures involved in a trial? In that case, no dice.

Bissonnette isn't the only celebrity who may miss out on a fat tax deduction for a big gesture. Actress Amber Heard recently finalized her divorce from Johnny Depp with a $7 million lump sum payment, then announced she's giving it all to charity. But she probably won't get the deduction you'd expect. That's because you can only deduct up to 50% of your adjusted gross income in any year (and carry any remaining balance forward five years). Ouch! Bet she didn't see that coming!

Now, there are two ways Depp and Heard might be treating that $7 million. It could be a transfer between spouses, incident to the divorce. In that case, it's nondeductible to Depp and tax-free to Heard. (Too bad her financial disclosures show she doesn't have nearly enough income to take advantage of the full deduction.) Or it might be alimony, deductible to him and taxable to her. In that case, she'll still owe tax on the 50% of her donation that she can't deduct this year.

Here's the lesson. Sometimes pricey things happen, and we console ourselves by saying "at least I get a tax deduction." But that's not always true, and it's rare that value of the tax deduction is enough to compensate for the loss that creates it. So call us before your next big transaction and make sure it serves you best! ]]>
<![CDATA[Go for the Gold]]>Thu, 25 Aug 2016 15:18:52 GMThttp://www.assurancetaxadvisors.com/blog/go-for-the-gold
​For awhile there, it looked like the just-concluded Rio Olympics would be a carnival of chaos. Golfers boycotting to avoid the Zika virus? Check. Swimmers making their way through raw sewage? Check. And those were just the disasters we anticipated before the opening ceremonies! Who could have predicted divers splashing into a pool of green water, or Ryan Lochte "over-exaggerating" making up a whopper about a drunken robbery?

In the end, it all worked out, and we got to witness the usual quadrennial spectacle of sport, livened with a dose of Latin color. Swimmer Katie Ledecky earned five gold medals and, in one race, beat a woman on a jet ski. Gymnast Simone Biles is headed for the cover of Sports Illustrated and has gone viral with her quote, "I'm not the next Usain Bolt or Michael Phelps. I'm the first Simone Biles." And none of Rio's projected shortfalls disrupted the spirit of competition.

Olympic games are full of upsets, disappointments, and uncertainty. But there's one team that's always guaranteed to win, and that's the team at the IRS. They're not taxing winners on the value of their medals, at least not yet. But the U.S. Olympic Committee awards cash prizes to U.S. medalists: $25,000 for bringing home the gold, $15,000 for the silver, and $10,000 for the bronze. Uncle Sam's teams finished #1 in the medal race, combining for 46 golds, 37 silvers, and 38 bronzes. That means over $2 million in new income to tax!

How do those cash awards compare with our competitors across the globe? Well, we're nowhere near #1 in that race, for sure. If you live in Azerbaijan, bringing home the gold puts the Azerbaijani equivalent of 510,000 pretax dollars in your pocket. (We're not sure where you can actually spend $510,000 in Azerbaijan, but men's taekwando champ Radik Isaev probably can't wait for the challenge.) If you live in Russia, and you aren't disqualified for doping, bringing home the gold means an extra $135,000. Thailand's Sopita Tanasan, who dominated the women's 48kg weightlifting competition, will enjoy a $314,000 annuity to be paid out over the next 20 years.

Of course, the keepsie money isn't in the prizes, it's in the endorsements. Swimmer Michael Phelps cemented his Olympic legend by breaking a 2,168-year-old record for most individual medals. (Leoniodis of Rhodes, the previous record holder, had to win a footrace while carrying a 50 pound shield and wearing a complete suit of armor.) Phelps has won "just" $1.9 million from his actual swimming. But he's parlayed his fame into $94 million of taxable endorsements and a $55 million net worth. Maybe there's really something to that "cupping" nonsense?

Winning at the Olympics can open doors we can't even imagine yet. Consider this theory. In 1976, a young Bruce Jenner packed up his hopes and dreams and headed to Montreal. What if he gave it his all in the decathlon and finished . . . fourth? No medal, no Wheaties box, no Playgirl cover. Would we be keeping up with those krazy Kardashians today? (And for that matter, which of today's stars will be headlining a reality-TV trainwreck while we're watching the 2056 games?)

Here's the final result. Planning for one-time windfalls (like Olympic gold) can be just as important as planning for periodic income (like endorsements). The IRS wants a piece of it all. So call us before you earn your medals and we'll help you make the most of your gold! 
<![CDATA[The Darker Side of Reality TV ]]>Tue, 16 Aug 2016 00:59:38 GMThttp://www.assurancetaxadvisors.com/blog/the-darker-side-of-reality-tvAmericans can't seem to get enough of reality television. Most critics think that's because reality TV presents us as we all aspire to be. Something about the camera seems to bring out the best in people, whether they're bachelorettes, drag queens, or cake chefs. Reality TV is where we go to restore our faith in the simple human dignity in everyone, from hoarders to pawn stars to ice-road truckers. (Right?) Besides, what kind of masochist would voluntarily waste an hour of their precious life watching a gaggle of "real housewives" fighting like a sack full of drunken cats?

That's why it was so disappointing to hear that Abby Lee Miller, star of Lifetime's Dance Moms, has pled guilty to federal tax fraud and money laundering charges. It's a bit like finding out the mighty Wizard of Oz is just a little man behind a curtain. (Think of the children!)
If the Kardashians are the bright shining sun of the reality TV solar system, Abby Lee Miller is a minor outlying planet, or maybe a famous comet. Dance Moms has spent six seasons following Miller, her Pittsburgh studio, her dance team, and of course the dancers' moms. (We don't have to actually watch this stuff to write about it; the show even has its own Wikipedia page.)

Miller may be a whiz at choreographing routines like the one highlighted in "Topless Showgirls," featuring her preteen troupe performing a burlesque routine in flesh-toned bra tops and tights. (The show's producers mercifully pulled that episode from the season's DVD compilation.) But when it comes to business, she's got two left feet. In 2010, she filed for bankruptcy, claiming $325,000 in assets and $400,000 in debt. As part of that process, the court ordered her to do all her banking out of a single central account and file monthly operating reports disclosing her finances.

But Miller failed to disclose she would be profiting once her show debuted on July 14, 2011. In 2013, the judge supervising her affairs found himself channel-surfing one night and clicked onto Dance Moms. Naturally, he wondered why he wasn't seeing that income.
Miller could have cleaned up her act. Instead, she choreographed more scheming. She held on to checks to deposit them after her case was discharged, deposited money into hidden accounts, and asked customers to pay her mother instead of herself. And of course she didn't show that little pirouette to the IRS. How much are we talking? According to prosecutors, $755,492.85. That's a lot of sequined leotards!

Last October, a federal grand jury indicted Miller on 20 counts of fraud. For an encore, prosecutors added a money-laundering charge after discovering she and her employees had smuggled $120,000 in cash from Australia in Ziploc bags hidden in their suitcases. A week later, she pled guilty to one count of bankruptcy fraud and one count of not reporting an international currency transaction. Now she's looking at 24 to 30 months in a place where sequined leotards are in very short supply.

Ironically, Miller's cheating didn't save her anything — once the judge found her television gold mine, she wound up using it to pay her creditors in full! And that's the lesson of our story. Cutting corners and breaking the rules may seem to offer short-term relief. But survivors know that long-term planning is the key to financial success. So call us for help with your planning and enjoy some real world savings!

<![CDATA[Harry Potter and the Deathly Tax Bill ]]>Thu, 07 Jul 2016 17:06:49 GMThttp://www.assurancetaxadvisors.com/blog/harry-potter-and-the-deathly-tax-bill
Harry Potter's sidekick Ron Weasley has challenged opponents from a mountain troll to the Horcruxes to the Death Eaters. Now the actor who plays him, 27-year-old Rupert Grint, is taking on a foe as powerful as Voldemort himself. Last month, he challenged a squad of dementors taking on the deceptively ordinary appearance of bureaucrats at Her Majesty's Revenue and Customs, Great Britain's equivalent of our IRS.

Grint has conjured up a fortune since being plucked from his local theatre group to play Harry Potter's friend. He's rumored to have collected about £24 million for his work in the series. (That's about $32.4 million, give or take, depending on how panicky currency traders are feeling about last month's Brexit vote.)

In Harry Potter's world, the Ministry of Magic imposes a Hexing Tax of up to 3,000 galleons on the privilege of wizarding. (Junior Wizard Savings Accounts at Gringott's Bank are thankfully free from this tax!) But in our Muggle world, Her Majesty's Revenue and Custom wants considerably more, taxing non-wizardry income at rates up to 40%.

Grint's accountant, Dan Clay, doesn't have a magic wand. But he does appear to have taken a class or two in Defence Against the Dark Arts. On April 6, 2010, the top tax rate on incomes over £150,000 leapt from 40% to 50%. Because the higher rate took effect in the middle of the year, the law required high-income taxpayers to split the 20-month period leading up to the transition into two separate tax periods, of eight months and 12 months. Clay chose a split that let his client report his income from the sixth and seventh films into the period before rates went up so that he could pay the lowest possible bill. But tax inspectors found documents during an unrelated audit suggesting Grint had intended to choose a different split, and imposed the higher tax.

Grint has paid the new tax in full and his barrister is quick to point that out. "There is no tax avoidance involved here." But after paying the tax, Grint filed suit to request a refund in the neighborhood of £1 million. (Pricey neighborhood!) Thus he found himself at a Tax Tribunal sitting at the high court in London, where he told Judge Barbara Mosely that his knowledge of taxes was "quite limited" and he had trusted the details to his father and his accountant. If we had Hermione Grainger's Time Turner, we'd tell you whether he wins. But we don't, so we'll just have to wait for the judge's decision.

Sometimes tax planning involves big-picture concepts and strategies like tax-efficient entity structures for business owners. (If we were to advise the barman at the Leaky Cauldron Inn that opens into Diagon Alley, we might suggest the British equivalent of an S corporation.) Sometimes it involves arcane technical details like accounting periods. And sometimes you have to resort to potions and spells. (We've got those, too. We just can't give them to you because you're a Muggle. Sorry.)

Has the Sorting Hat placed you in a top tax bracket? Here's the good news: You don't have to take on the Ministry of Magic to pay less. You just need a plan. So pick up the phone and call us — or have your owl bring us a letter — and let's see what we can do for you! 
<![CDATA[Barry Good!﻿ ]]>Wed, 15 Jun 2016 04:06:51 GMThttp://www.assurancetaxadvisors.com/blog/barry-good
Humorist Dave Barry entertained millions of readers with his nationally syndicated column from 1983 to 2004. Along the way, he earned a Pulitzer Prize for commentary, inspired a television series (Dave's World), and even, after mocking the cities of Grand Forks, South Dakota and East Grand Forks, Minnesota, earned the honor of having a sewage pumping station named after him. Dave's slowed down in recent years, but he always had a lot to say about taxes. So here are some of our favorite Dave Barry quotes for your quick enjoyment:




"[American tax laws] are constantly changing as our elected representatives seek new ways to ensure that whatever tax advice we receive is incorrect."

"The question is: What can we, as citizens, do to reform our tax system? As you know, under our three-branch system of government, the tax laws are created by: Satan. But he works through the Congress, so that's where we must focus our efforts."

"If our government is going to be able to provide for the common good, everybody has to contribute his or her fair share in the form of taxes. And when I say "everybody," I mean, "not everybody." Because the truth is that a lot of people don't pay taxes. Poor people, for example. Also many rich people. Also a fair number of middle-income people."

"Q. At 9 a.m. today, I made large cash contributions to both major political parties. As of 1:30 this afternoon, the federal government had still not enacted special tax-break legislation just for me. What kind of country is this?
A. Unfortunately, because of the high demand, the federal government can no longer provide "same-day service," but if you do not see action by noon tomorrow, you should contact your personal congressperson; or, if you are staying in the Lincoln Bedroom, simply stomp on the floor."

This week it seems especially appropriate to remind you that there's nothing funny about overpaying your taxes, and there are no Pulitzer Prizes waiting for people who do it. The solution, of course, is a plan to pay less. So call us when you're ready for a plan of your own, and have a laugh at the expense of everyone else who doesn't have one! 
<![CDATA[Have a Coke and a Tax ]]>Wed, 15 Jun 2016 03:56:48 GMThttp://www.assurancetaxadvisors.com/blog/have-a-coke-and-a-tax
When most of us hear the word "tax," we immediately think "IRS." It's natural to associate those three-letter words with each other (even if "IRS" is an acronym and not a word). But our friends at the IRS are hardly the only tax collectors with their hands out for your money. State and local governments need love money too, and they don't have as many options for raising it as Uncle Sam. So every now and then, someone makes headlines with a plan to tax something new.

Philadelphia's incoming mayor Jim Kenney is the latest local official to propose quenching his city's fiscal thirst with a new tax. His inaugural budget would impose a three cents per ounce tax on soda, juices, iced tea, and other sugary drinks. The mayor claims the measure would raise $400 million over the next five years. The issue has even bubbled up into the presidential race — Hillary Clinton supports the tax, while her challenger Bernie Sanders condemns it as disproportionately harmful to the city's poor.

This isn't the first time governments have tried carbonating their revenue by taxing soda — since 2008, 40 similar taxes have been rejected around the country, including twice previously in Philadelphia. Only one place, famously progressive Berkeley, California, has succeeded. New York Mayor Michael Bloomberg actually banned drinks larger than 16 ounces before a state court doused the rule. (Grateful Gothamites fondly remember it as "Bloomberg's $#*@ing Big Gulp ban.")

Now Philadelphia's Kenney is hoping the third time will hit the sweet spot. But this time, he's coming at it from a different direction. He's not positioning it as a public health measure or using it to fight obesity or diabetes. He's just looking to reinvest some of the soda companies' profits into the communities where the biggest customers live. The $400 million would go towards funding universal pre-kindergarten, creating community schools, and renovating parks, community centers, and libraries.

School funding advocates and public health officials are all for it. New York's Bloomberg has joined the fray in support. But naturally, Kenney's proposal has drawn opponents. You'll be shocked to learn that the American Beverage Association has spent $2.6 million to oppose it. (They poured $9 million down the drain fighting the Berkeley referendum.) Local Teamsters oppose it, too, arguing that flat soda sales will cost jobs. And plenty of city residents feel squeezed enough already — for example, there's already a $2 per pack tax on cigarettes that helps fund local schools.

Political infighting is fierce, and council members are looking at a whole menu of alternatives. One council member proposed a 15 cent tax on beverage containers, designed to hit the people who drink mineral water and fancy kombucha teas just as hard as the people who guzzle Mountain Dew. She also introduced a "healthy beverages tax credit" to encourage stores to stock drinks worth drinking. Others are considering taxing (gasp!) diet sodas. But time is running out — council has to pop the top on a final budget by the end of June.

We realize that a three-cent tax on an ounce of soda won't get in the way of your financial goals. But if you're one of the millions who look somewhere besides coffee for your daily caffeine fix, it would be a constant reminder of the government's power to tax. We never forget how destructive that power can be, and that's why we work so hard to give you a plan to pay the least amount possible — and avoid the unpleasant surprise of a "shook-up" can!
<![CDATA[A Tale of Two CEOs ]]>Tue, 17 May 2016 14:33:12 GMThttp://www.assurancetaxadvisors.com/blog/a-tale-of-two-ceos
Every year, business reporters look forward to listing the country's highest-paid CEOs. Corporate chiefs have always done well for themselves — in 1980, the average S&P 500 head earned 42 times more than the average worker. But lately those compensation numbers have swollen fat enough to boggle Stephen Hawking's mind — in 2000, the CEO-to-worker ratio reached a high of 500:1.
Last year's CEO pay champ was Discovery Communications skipper David Zaslav. His total haul started with $3.0 million in salary and $6.1 million in bonus, before piling on $94.6 million in stock and $50.5 million in options, He also scored $1.9 million in "other" comp, like $296,930 for personal use of the company jet and a $16,800 car allowance (because it's hard to afford reliable transportation on a $3 million salary). Not bad for a guy whose company brought us Shark Week and Here Comes Honey Boo Boo!

You would think every CEO wants to make the top of that list. But some of the smartest ones are hiding out at the other end, happy to count themselves among the lowest salaried. Why on earth would they choose to work all year for peanuts? If you guessed "taxes," you're absolutely right!

Let's take a closer look at Zaslav's $9 million in salary and bonus. Sure, stacking that kind of paper sounds great. (Okay, it probably is.) But "$9 million" is really more like an opening offer. First the IRS grabs 39.6% in federal income tax. There's FICA tax of 7.65% on the first $118,500, plus 2.9% on anything above that, plus 0.8% more on anything above $250,000. Then the Empire State piles on another 8.82% more. (OK, here's where we insert the obligatory joke about how Zaslav would rather face one of those sharks his network loves to film.)

Now let's look at another CEO: Larry Page, who heads up search engine Google. His salary last year? A dollar. One measly buck. A year's worth of work for less than the cost of your morning coffee. But (and this is a pretty big but) he saw the value of his stock shoot up about $8 billion — including a mind-blowing $4 billion in just one afternoon. (Friday, July 17, 2015 was a spectacularly good day to be Larry Page.)

And how much tax did Page pay on those billions? Nothing. In fact, he won't be taxed at all until he chooses to sell. Even then, he'll qualify for special lower rates, capped at just 23.8%. But wait, there's more! If Page wins promotion to that great corner office in the sky without having sold his stock, he'll enjoy a "stepped up basis" and avoid tax on the gains entirely. Well, he won't enjoy it, but Mrs. Page and the surviving Pagelets probably will.

Page's strategy may not make the IRS happy. But Google shareholders love it. Seeing CEOs tie their fortunes to long-term stock prices reassures investors that executives have their best interests in mind. And studies show that CEOs with low salaries are less likely to engage in the sort of shenanigans that lead to surprise earnings restatements, expensive lawsuits, and embarrassing stretches behind bars. (Just because you call it a "country club" prison doesn't actually make it a "country club.")

Here's the bottom line, and it applies whether you make a buck a year or a million. When it comes to paying less tax, it's just as important how you make your money as how much you make. So call us for a plan to help structure your income so you can keep as much as possible!
<![CDATA[POTUS Meets IRS]]>Tue, 26 Apr 2016 21:18:02 GMThttp://www.assurancetaxadvisors.com/blog/potus-meets-irs​For most of us, filing a tax return is a fairly private affair, just between us and our friends at the IRS. But for President Obama and his family, it's a high-profile event. Last week the White House posted the Obamas' return online, and it reveals a lot about how the tax laws apply at the highest levels.

The President's base pay is $400,000 per year, the same as when he took office seven years ago. When he talks about American workers not getting pay increases, he really does feel their pain! (He's not the only one in Washington with that complaint; Congressional salaries have also been frozen since then.)

Of course, the job comes with some pretty nice tax-free perks. There's a nice white house on 18 acres of prime Pennsylvania Avenue real estate, with a fenced yard, vegetable garden, and tennis court. Zillow says it would rent for about $2 million/month. There are a couple of nice private jets for trips to see foreign leaders around the world. There's a nice helicopter just to get from the nice white house to the nice jets. And there's a $50,000 entertainment allowance for hosting the friends he makes on those trips around the world.

The President also earned $348 in taxable interest, $9 in taxable dividends, and $3,000 in capital losses. Finally, he earned $56,069 in net business income from book royalties. That's way down from 2009, when Dreams From My Father and The Audacity of Hope raked in $5.2 million. Those revenues have dropped every year since he took office, and his current income is barely enough to put him in "the 1%." On the bright side, the self-employment income let him stash an extra $11,064 into a self-employed retirement account.

On Schedule A, the Obamas included $18,390 in state and local income taxes, $30,167 in property taxes, $36,587 in mortgage interest, and a generous $64,066 in charitable contributions. However, there's a phaseout on itemized deductions starting at incomes over $309,900, which limits their actual deduction to just $145,545. That isn't the only phaseout that hits the Obamas . . . their income level means no child tax credit for daughters Sasha and Malia, and the Personal Exemption Phaseout costs them $16,000 in personal exemptions they could otherwise claim.

The First Family finishes with $290,640 in taxable income and $71,440 in tax. But wait . . . there's more! The Alternative Minimum Tax wipes out those state and local tax deductions and costs the Obamas an extra $7,743. The President owes $1,502 in self-employment tax on his book earnings. He also owes $1,766 in additional Medicare tax imposed, starting in 2013, by his own Affordable Care Act. ("Thanks, Obama!")

The Obamas signed their return on April 7. Under "Occupation," Barack listed his as "US President" and Michelle listed hers as "US First Lady." So where is her income in all of this? Nowhere to be found! Realistically, the Obamas won't ever have trouble making ends meet. But fans of the First Lady's work argue that failing to pay her sends a terrible message about paycheck equality. Even former President Ronald Reagan, who probably would have opposed today's paycheck fairness legislation, once quipped that with his wife Nancy, the government "gets an employee free."

Here's what may be the most surprising fact about the Obama's taxes: they paid too much. Granted, the President is in a unique position of having to demonstrate strict compliance with the law. But his 1040s over the years reveal plenty of perfectly legal missed opportunities to pay less. Fortunately, you don't have to publish your return every year, so you can take advantage of every legal strategy. Call of for a plan and we'll show you how!

<![CDATA[Born to Run]]>Mon, 18 Apr 2016 20:52:09 GMThttp://www.assurancetaxadvisors.com/blog/born-to-run
Lots of states get a bad rap. California is too flaky. New Yorkers are too unfriendly. North Dakota is too cold. (Wait a minute . . . you mean we've got two Dakotas?) But there's one state that may get the worst rap of all, and that's New Jersey. Too many Americans hear the name and think of clogged freeways, bumbling second-rate mobsters, knuckleheads at the shore, or the one miserable night they spent at the Newark Airport Radisson.

Now New Jersey may be headed for a fiscal crisis — and it's all one man's fault. Is it blustering Governor Chris Christie, whose approval ratings are hovering somewhere between "Zika virus" and "psoriasis"? Is it freshman Senator Cory Booker, stirring up controversy in Washington? Is it native son and local favorite Bruce Springsteen, threatening to write songs about neighboring Delaware?

No, no, and no. New Jersey's budget is threatened by one modest-looking man that most Garden Staters have never heard of. His name is David Tepper. He manages a hedge fund called Appaloosa Partners. And his great offense is moving himself, his business, and his tax dollars to one of those sunny tax havens we all love to point fingers at.

The Garden State is famed for its high taxes. The top personal rate is 8.97% and kicks in on incomes over $500,000. According to the New Jersey Office of Legislative Services, returns with incomes over $1 million account for about a third of all individual collections. And those individual collections, in turn, account for 40% of the state's revenue. Follow the math and that means the government in Trenton depends on its one-percenters — especially the Wall Streeters — for nearly one dollar out of every eight it spends.

But David Tepper is no ordinary Wall Street fat cat. Remember when Hillary Clinton grumbled that the top 25 hedge fund managers make more than all of America's kindergarten teachers combined? Tepper is one of those guys. In fact, he's been the fattest cat of them all, three times in the last five years.

Just how much are we talking? Try $4 billion in 2009, $2.2 billion in 2012, and $3.5 billion in 2013. All told, he's raked in a jaw-dropping $15 billion over the last decade. And at nearly 9%, the state income tax on that haul crosses the billion dollar line. That's enough to pay for a municipal airport, a suburban highway spur, or a modest little hydroelectric dam.

Now New Jersey sees all those glorious glittering tax dollars about to vanish. Tepper, who turns 59 in September, is doing what plenty of other Jersey guys his age do when they get tired of winter — he's flying south for good. And which sunny island tax haven did he pick? Miami Beach, of course! (You mean you didn't realize Florida is a bona fide tax haven?) Sure, the weather's nice. But the tax climate is even nicer — 0 degrees of tax on personal income and 0% chance of estate tax!

New Jersey isn't the only state to worry about its 0.0001%-ers flying the coop. Last year, the Connecticut Department of Revenue Service announced that they were "keeping an eye" on their top 100 taxpayers, including more hedge funders like Steve Cohen, who paid roughly $150 million in state income tax all by himself in 2014.

How would you feel if you thought the tax man was stalking you like a jealous ex? It would probably creep you out. That's where we come in. We give you a plan to keep as much as you legally can, no matter where you earn it. So call unless, unless you want your picture on the tax collector's wall!
<![CDATA[Where Are All the Americans?]]>Tue, 12 Apr 2016 18:07:27 GMThttp://www.assurancetaxadvisors.com/blog/where-are-all-the-americans
​Last Sunday, the International Consortium for Investigative Journalism stunned the world with their release of findings from 11.5 million files leaked from the Panamanian law firm Mossack Fonseca. The "Panama Papers" blow the lid off the firm's creation of over 214,000 companies, mostly in the British Virgin Islands and similar "sunny places for shady people" where financial miscreants go to hide their loot.

Most of the press has focused on 140 political figures and family members caught with their pants down. Iceland's Prime Minister Sigmundur Gunnlaugsson has already resigned. British Prime Minister David Cameron has released his tax returns to rebut claims he improperly benefited from his father's offshore investments. And Russian President Vladimir Putin, whose close cronies have been named, has denounced the leak as a U.S.-led plot to weaken Russia. But there's one question on everyone's lips — specifically, where are all the Americans?

It's not like there aren't any Americans lurking in the files. Billionaire developer Igor Olenicoff, who paid $52 million to settle tax-evasion charges back in 2007, is there. He says he's been framed. (Right.) John "Red" Crim, another convicted tax cheat who sold sham trusts to hundreds of marks around the country, is there too. But those are the sorts of people you'd expect to find hiding offshore. Where are the senators, the televangelists, and the Wall Street fat cats you really want to see exposed?

Here's one possible explanation that House of Cards fans might appreciate. Clifford Gaddy, a former Russian finance ministry advisor, suggests that Putin himself may be behind the leaks. The Russian strongman is popular enough in his own country to withstand exposure, and most critics already assume he and his billionaire henchmen are looting "the Motherland" blind. Gaddy's hunch is that Putin may be holding back information on Americans to blackmail them. (Is Gaddy really serious? Or is he just trolling the Kremlin?)

But the real reasons are disappointingly less suspicious. The surprising truth is that we Americans don't get any tax benefits simply by moving our income offshore. That's because U.S. law taxes us on everything that moves we earn no matter where in the world it moves we earn it. Titling businesses and investments offshore doesn't save tax unless we just "forget" to report them.

We also don't have to go offshore to cloak our ownership. We can incorporate anonymously in business-friendly places like Nevada (where Mossack Fonseca kept an office) or Delaware, and stay nearly as far under the radar as if we had sent our money on a Caribbean vacation.

Even when we do go offshore, there's nothing inherently improper or unlawful about it. For example, Hollywood billionaire David Geffen used a Cayman Islands company to hold title to a $300 million yacht he bought from a Russian billionaire's ex-wife. Juicy? Sure! Illegal? Sorry, move along . . . nothing to see here.

Here's all you really need to know. The Panama papers remind us that the global elite really do have ways to hide their money from threats, including taxes. But here in the U.S., you have plenty of legitimate deductions, credits, loopholes, and strategies you can use to accomplish those same goals — without hiding or cheating. All you really need is a plan. So call us for strategies that won't risk exposure to muckraking reporters and front-page headlines! 
<![CDATA[Start Warming Up Your Texting Thumbs]]>Fri, 08 Apr 2016 14:54:01 GMThttp://www.assurancetaxadvisors.com/blog/start-warming-up-your-texting-thumbsIf you're not already one of the millions of Americans with a smartphone glued to your hands, this story may make you reconsider . . .

​Vermont Senator Bernie Sanders has fired up the progressive left with his long-shot White House run. Sanders describes himself as a "democratic socialist," and asks Americans, "What's wrong with being more like Scandinavia?" Naturally, his platform includes Scandinavian-style higher taxes on America's wealthy.

Texas Senator Ted Cruz may be Sanders' complete and polar opposite, an unabashed conservative who appears biologically allergic to anything related to government. Naturally, his platform slashes taxes for nearly everyone. If that's not enough, he wants to abolish the IRS entirely, and replace them with taxes we can file on a postcard.

So what do you think would happen if you locked Sanders and Cruz in a room and forced them to come up with a tax system they both could support? Well, it probably wouldn't be pretty. (Seriously, can you imagine?) But those two unlikeliest of bedfellows just might come up with something to make April 15 look like any other day.

Our current system couldn't be much uglier. In January, your mailbox fills up with W-2s, 1095s, 1098s, and 1099s. Starting in February, you'll get your K-1s and your corrected 1099s. (It's enough to make you suspect the tax code is a conspiracy put together by paper and printer manufacturers.) Then it's time to compile all that information and crunch those numbers on brain-numbingly obtuse federal forms. In 2010, a White House panel estimated Americans spend 7.6 billion hours and 140 billion dollars keeping the IRS off their backs. (Hey now, we know what you're thinking, and don't blame us.)

But what if we could avoid all that hassle? What if the IRS could do you taxes for you — then send you the forms, all ready to approve? In millions of cases, they already have all the information they would need to do that. (Computers, too, if they could just protect them from hackers.)

That's already reality in eight countries, including Sanders' favorites Norway and Finland. In nearby Estonia, most taxpayers file online in less than five minutes.

But the gold medalist in speed-filing gold may be everyone's favorite sub-arctic socialist paradise, Sweden. In Sweden, most taxpayers just wait for the government to send their return, already filled out. But some of them actually get it by text message. And if everything looks good, they text "yes" and they're done. (That's one Swedish policy that even Ted Cruz might be able to get behind!)

​Unfortunately, there are too many groups with vested interests in the current system to make that a reality here. But there is a silver lining, if you look hard enough. (Harder!) And that's the fact that complexity creates opportunity. Every deduction, credit, loophole, and strategy that Washington throws into the code gives us a chance to help you pay less. And all you need is a plan. So whip out your smartphone — or even, god forbid, your landline — and call us!]]>
<![CDATA[We Don't Really Like You]]>Tue, 08 Mar 2016 00:51:48 GMThttp://www.assurancetaxadvisors.com/blog/we-dont-really-like-you
The actress Sally Field has appeared in dozens of television and movie roles since first appearing as "Gidget." But she's perhaps best known for a 45-second acceptance speech at the 57th Academy Awards, when she accepted the Oscar for Best Actress and told the audience "you like me . . . you really like me!"

Late last month, that same group of the world's most narcissistic people gathered to congratulate themselves once again. They heard comedian Chris Rock skewer the Hollywood establishment for their "sorority racism." They saw the winners take the stage to spread the word on pet political causes. And a select group of presenters and nominees walked out with something extra: a big IRS bill.

Back in the 1970s, the Academy decided to thank actors for participating in the ceremony with a "swag bag" of modest gifts. But over time, that bag has grown as lavish and extravagant as a Beverly Hills mansion. This year's participants could choose from gifts totaling up to an almost-obscene $230,000. Here's just part of the haul:
  • A VIP all-access trip to Israel ($55,000)
  • Three nights at the famed Golden Door spa in San Marco, California ($4,800)
  • Three nights at the Grand Hotel Tremezzo just down from George Clooney;s summer home on Italy's Lake Como ($5,000)
  • A plastic surgery package from 740 Park Associates ($5,530)
  • Three sessions with celebrity fitness trainer Jay Cardiello ($1,400)

The bag even included a couple of items that are just too trashy for us to mention here. The haul is so rich that it doesn't fit into an actual "bag." Instead, recipients show up at a hotel suite to pick out what they'll really use, so they don't wind up paying tax on a lifetime supply of Lizora Pu-Erh Nourishing Cream and Tea Cleansing Bar ($31,200) that they just wind up giving to the maid.

As for the tax bill, back in the old days, when the value of the gifts didn't exceed the annual income of 99% of the country, they were tax-free! But by 2006, the IRS had had enough. Time to collect some taxes, they decided. But how can they collect taxes on gifts? Well, take a look at how they answer that question in their IRS Gift Bag Q&A press release:

"Q: If these are gifts, why do they have to be treated as income?
A: These gift bags are not gifts for federal income tax purposes because the organizations and merchants who participate in giving the gifts bags do not do so solely out of affection, respect, or similar impulses for the recipients of the gift bags."

Sorry, Sally Field . . . when it comes to the swag bag, the IRS says the sponsors who "donate" the goodies don't really like you. (But the hotel in Italy sounds lovely!)

Here's the lesson for the week. It's not always obvious what's income and what's not, what's deductible and what's not. If you really want to keep as much as the law allows, you need a plan to wade through the confusion. So call us for a red-carpet plan of your own!