APRIL 2018
Khaas Baat : A Publication for Indian Americans in Florida




On Sept. 29, President Trump signed into law H.R. 3823, the "Disaster Tax Relief and Airport and Airway Extension Act of 2017." The act, which had been passed by Congress the day before, provides temporary tax relief to victims of Hurricanes Harvey, Irma and Maria. Businesses that qualify for relief may claim a new "employee retention tax credit" of up to $2,400 for qualified wages paid to eligible employees.

Relief for individuals includes, among other things, loosened restrictions for claiming personal casualty losses, tax-favored withdrawals from retirement plans, and the option of using current or prior year's income for purposes of claiming the earned income and child tax credits.

Eased Casualty Loss Rules

10 percent limitation removed: For taxpayers claiming a net disaster loss, the act eliminates the current law requirement that personal casualty losses must exceed 10 percent of AGI to qualify for a deduction.

Relief available to non-itemizers: The act also eliminates the current law requirement that taxpayers must itemize deductions to access this tax relief — it does so by increasing an individual taxpayer's standard deduction under Code Sec. 63(c) by the net disaster loss.

Increased floor: In addition, it increases the $100 per-casualty floor to $500 for qualified disaster-related personal casualty losses. That means, the first $500 of the casualty losses are not deductible for income tax purposes.

Employee Retention Tax Credit for Employers

The act provides a new "employee retention credit" for "eligible employers" affected by Hurricanes Harvey (Act Sec. 503(a)), Irma (Act Sec. 503(b)), and Maria (Act Sec. 503(c)). Eligible employers are generally defined as employers that conducted an active trade or business in a disaster zone as of a specified date (for Hurricane Harvey, Aug. 23, 2017; Irma, Sept. 4, 2017; and Maria, Sept. 16, 2017), and the active trade or business of which was on any day between the specified date and Jan. 1, 2018, rendered inoperable as a result of damage sustained by the hurricane.

In general, the credit is be treated as a credit listed in Code Sec. 38(b), and equals 40 percent of up to $6,000 of "qualified wages" with respect to each "eligible employee" of such employer for the tax year. Observation: Thus, the maximum credit per employee could be $2,400 ($6,000 × 40 percent).

Eased Access to Retirement Funds

The act eases a number of rules to allow victims to make "qualified hurricane distributions" (below) from their retirement plans of up to $100,000 (less any prior withdrawals treated as "qualified hurricane distributions"; Act Sec. 502(a)(2)(A)). "Qualified hurricane distribution": The act defines a "qualified hurricane distribution" as any distribution from an eligible retirement plan made on or after the date of disaster (IRMA, Harvey, Maria) to Jan 1, 2019. Penalty relief. Significantly, the Act exempts qualified hurricane distributions from the 10 percent early retirement plan withdrawal penalty.


Taxation of Virtual Currency

Virtual currency (like Bitcoin) is taxable by law just like transections in any other property. The IRS has issued guidance in IRS Notice 2014-21 for use by taxpayers and their return preparers that addresses transactions in virtual currency, also known as digital currency. Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest. Virtual currency, as generally defined, is a digital representation of value that functions in the same manner as a country’s traditional currency. There are currently more than 1,500 known virtual currencies.

If you have any transactions in virtual currency, consult your tax advisor to properly report in your tax return.

IRS to end offshore voluntary disclosure program (OVDP); Taxpayers with undisclosed foreign assets urged to come forward now.

The IRS announced it will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (OVDP) and close the program on Sept. 28, 2018. By alerting taxpayers now, the IRS intends that any U.S. taxpayers with undisclosed foreign financial assets and foreign income have time to use the OVDP before the program closes.

Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily. Those taxpayers paid a total of $11.1 billion in back taxes, interest and penalties. The planned end of the current OVDP also reflects advances in third-party reporting and increased awareness of U.S. taxpayers of their offshore tax and reporting obligations.

Sanjay Gupta, CPA, FCA, who has 27 years of experience in accounting and taxes, is based in Plantation. He can be reached at sanjayg@sanjayguptacpa.com or visit www.sanjayguptacpa.com


Asset Protection for Women: Beyond Insurance

By haren mehta

As women continue to work and earn money, become the main breadwinners, and run their own businesses, it's important to take measures to protect your lives, businesses, and simply the things you own. That's why asset protection planning has become so vital for women.

Asset protection planning is the process of arranging your financial affairs to prevent or at least minimize the risk of your assets being used to satisfy claims of future creditors or claimants. Asset protection is not intended to hide assets, defraud creditors, or evade the payment of taxes. In fact, if a court finds that your asset protection plans were made with the intent to defraud, it will disregard those plans and make the assets available to creditors.

Why is asset protection planning important for women?

Women, now more than ever, need to consider asset protection planning because:

Insurance as part of your asset protection plan

Often, the simplest way to protect assets is by shifting the risk to an insurance company. This should generally be your first line of defense. However, insurance may not provide all the protection you need, or it might not be available.

Other asset protection strategies generally involve transferring legal ownership of assets to other persons or entities, such as corporations, limited partnerships, and trusts. The logic behind shifting ownership of assets is fairly straightforward: your creditors can't reach assets you don't own.

C corporations

You might be a business owner, or thinking about starting a business. If so, choosing a business entity is an important decision. One option is a C corporation. The law views a C corporation as a separate legal entity. As such, business assets owned by a C corporation are considered separate from your personal assets, which will generally not be at risk for the liabilities of the business. However, protection from liability may be lost if the business does not act like a business, such as when the business acts in bad faith, fails to observe corporate formalities (e.g., organizational meetings), has its assets drained (e.g., unreasonably high salaries paid to shareholder-employees), is inadequately funded, or has its funds commingled with shareholders' funds.

Caution: A number of issues should be considered when selecting a form of business entity, including tax considerations. Consult an attorney and tax professional before shifting assets to a corporation or other business entity.

Limited liability company (LLC)

An LLC is a hybrid of a partnership and a C corporation. An LLC is generally taxed like a partnership with income and tax liabilities passing through to its members (and not double-taxed as with a C corporation), but it is viewed as a separate legal entity and can be used to own business assets, protecting your personal assets from business claims against the LLC. While the legal formalities are based on state law, the legal requirements to form and maintain an LLC are usually not as involved as those associated with a C corporation

Professional corporation (PC), limited liability partnership (LLP)

Many professionals, such as lawyers, doctors, dentists, and accountants, face liability for damages that result from the performance of their professional duties. While no business structure will protect you from personal liability for your own professional activities, states have enacted laws allowing professionals to join together to form professional corporations wherein all participating corporate members are of the same profession. An alternative form of business entity suitable for professionals is the LLP. Both an LLP and PC protect you from the professional mistakes of your partners. That is, if one of your partners is sued for negligence, and the PC or LLP is also named in the lawsuit, the partner sued may be liable personally for any judgment, but the PC or LLP should protect your personal assets from the reach of any judgment creditor of the entity.

To be continued...

Haren Mehta, managing partner of Capital Insurance & Asset Protection in Tampa, can be reached at (813) 679-5204 or email haren@mycapitalinsurance.com

homeeventsbiz directorysubscribecontact uscontent newseditor's notehealth
immigrationfinanceMINDBODY/NUTRITIONmoviesfashionbooks/getawaysIIFA 2014ART
astrologyyouthmotoringplaces of worshipclassifiedsarchivesBLOGFACEBOOK
Read the Editor's Blog. By Nitish Rele Classifieds Motoring Astrology Books Fashion Movies Finance Immigration Health Editorial News Content Find us on Facebook! Art