Monthly Archives: November 2022

Crypto investors who desire to hanging on to their coins through the ups and downs of the market’s dramatic gyrations. The wash sale may help crypto investors with tax loss benefits.

The wash sale rule prohibits selling securities at a loss and reacquiring them within 30 days. A wash sale occurs when you sell or trade securities at a loss and then buy them or substantially identical securities within 30 days before or after the sale. Some investors attempt to use wash sales to realize a loss and maximize their tax deductions. The wash sale rule does not currently apply to crypto.

The wash sale rule is a regulation set by the Internal Revenue Service that prevents a taxpayer from deducting losses relating to a wash sale. By having this regulation in place, taxpayers are not able to claim artificial losses by trading in and out of a stock to offset capital gains or income. If a taxpayer chooses to repurchase the same or similar security within 30 days, they can add the loss to the cost basis of the security they repurchased. When the new stock is later sold, any capital gains taxes would still be lower.

The wash sale rule currently only applies to assets classified as stocks or securities and other financial instruments that are traded on organized exchanges. 

Cryptocurrency is Classified as Property by the IRS and
is Currently Not Subject to the Wash Sale Rule. 

An investor in a virtual currency can sell their position to lock in a capital loss and immediately repurchase the currency without losing exposure to the cryptocurrency.

Now with Cryptocurrency values declining, it would be advantageous for investors to recognize their current losses and then purchase the same investments if they are still desired investments.

There are exceptions. While the wash-sale rule does not apply to the sales, trade, or purchase of digital currencies such as Bitcoin and Litecoin, cryptocurrency investors should know that it does apply to crypto assets such as synthetic versions of stocks and securities. The IRS and SEC may also consider initial coin offerings (ICOs) to be securities, so the wash-sale rule would apply if such a ruling applies.

Have an IRS Tax Problem?

for a FREE Tax HELP Contact us at:
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Read more at: Tax Times blog

According to Law360, The U.S. measure for global intangible low-taxed income will likely remain out of sync with an international minimum tax agreement now that legislative windows have closed without key GILTI changes. 

Enacted under the 2017 Tax Cuts and Jobs Act, GILTI was meant to target income earned from intangible assets, such as patents or other intellectual property, held in jurisdictions with low tax rates. Foreign income that falls under the provision is immediately pulled into the U.S. for taxation and receives a deduction of 50%, 

Nearly 140 jurisdictions last October agreed in principle on Pillar Two, which would allow countries to apply top-up taxes to make up the difference if members of a corporate group land at effective tax rates below a 15% threshold.

By the time these 140 other countries signed on to the overhaul, the global regime differed from GILTI in two main ways: 

• Pillar Two involved a 15% minimum ETR, and 
• its top-up taxes operated on a country-by-country basis. 

GILTI, in contrast, still had its 10.5% rate and allowed for jurisdictional blending, which allows companies to use excess foreign tax credits from high-tax jurisdictions to cover the GILTI tax in other countries.

Congressional Democrats proposed changes to GILTI on these two key issues under the Build Back Better Act, which passed the House of Representatives in late 2021 but faced roadblocks in the Senate. Under the Inflation Reduction Act, GILTI remained unchanged.

Have an IRS Tax Problem?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243) 

Read more at: Tax Times blog

This October's DoJ Tax Division's highlights includes: 

John Everson, who owned an electrical engineering business in Ohio, was convicted of tax evasion. Everson tried to conceal more than $1.3 million of income he earned from his business by instructing clients to make payments to a trust he controlled. Everson then used the money in the trust to pay personal expenses. Everson's conduct caused a tax loss of more than $500,000.

Scott Chappelle, a real estate developer in Michigan, was sentenced to 38 months for obstructing the IRS' attempts to collect his unpaid withholding and income taxes. Chappelle admitted he kept the taxes he withheld from his employees' wages but when the IRS tried to collect those taxes, Chappelle made false statements about his and his companies' assets to avoid having to pay the IRS.

Eugene R. Britt III, a bar and restaurant owner, pleaded guilty to tax evasion. Brit disguised his ownership in three bars and restaurant, skimmed cash from the gross receipts of the businesses and failed to report that income for approximately two decades.

Zeki Donuk, who operated a New Jersey construction business, was charged with tax evasion, employment tax crimes, filing false tax returns and making false statements in bankruptcy. According to the indictment, Donuk cashed checks payable to his business instead of depositing them into the business's account and didn't report the income on either the business or his personal returns. In addition, for at least a year Donuk failed to withhold employment taxes from his employees or file employment tax returns.

Clarence A. Joles Sr., the owner of an asphalt paving business, pleaded guilty to filing a false tax return. Joles admitted that he deposited his business's gross receipts into nine different bank accounts but failed to give his tax preparer the records from some of those accounts. This caused Joles to underreport his business income by more than $1 million.

Ronald Ray Wilson, a former member of the Texas House of Representatives, pleaded guilty to evading payment of taxes. In 2008 and 2011, Wilson stipulated to two Tax Court decisions finding that he owed taxes to the IRS. Subsequently, Wilson used his law firm's client trust account to conceal his income to avoid paying the stipulated amounts. Wilson also tried to conceal his pension and other assets causing a tax loss of approximately $794,632.

Joseph Garza, an attorney, was indicted by a federal grand jury in Dallas on charges of wire fraud and helping his clients file false tax returns. According to the indictment, from 2012 to 2021 Garza promoted a tax shelter that allowed his high-income clients to claim fraudulent tax deductions. The indictment alleges that Garza directed his clients to transfer funds into shell companies that then returned the money to the clients. To conceal the circular flow of funds, Garza allegedly commissioned fictitious business valuation reports, created invoices for fake business expenses and drafted sham contracts. Garza's scheme allegedly allowed his clients to hide approximately a billion dollars from the IRS and caused a tax loss exceeding $200 million.

 Thinking Not Paying Your Taxes?

You Better Thank Again, if You Like Your Freedom!

  Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact Us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888-882-9243) 

Read more at: Tax Times blog

According to Law360, The Eleventh Circuit upheld a Florida jury's decision that a corporate secretary was responsible for the failure of her father's air conditioning company to pay employment taxes, saying jurors reasonably concluded that she had authority within the company. 

Evidence showed that in her role at Scott Air Inc., Ashley Scott satisfied the Internal Revenue Service's definition of a responsible person in that she held a corporate office, controlled the company's finances and had power to make payments from company accounts, a three-judge panel said in a per curiam opinion.

Three rounds of jury trials had resulted in an overall reduction of Scott's responsibility to pay IRS penalties for the company's tax failures, from a total of 13 quarters for which she was considered responsible to 2. 

The IRS assessed Scott $680,000 in trust-fund penalties in 2010 for the company's failure to pay employment taxes over 13 quarters from 2004 to 2007, according to court filings. Scott appealed the decision twice, saying both times that the jury didn't have enough evidence to find that she was the person who should be considered responsible for paying the company's employment taxes, according to court filings.

The Eleventh Circuit sided with Scott in 2019, ordering a jury to reconsider its finding that Scott should pay nearly $620,000 of the penalties, saying the lower court did not clarify the legal authority of a corporate secretary.

• The panel said that in addition to being a corporate officer of the company, Scott had power to spend its money. She admitted she could shop for supplies of up to $1,000 without her father's permission, according to the opinion. Scott was also in charge of the company's payroll and paid its unemployment taxes and child-support withholdings on the behalf of some employees.
• Scott also signed the company's payroll tax returns during the two quarters she was found responsible, the panel said.

Have an IRS Responsible Party Penalty Problem?

Want to Know:

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

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for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243) 

Read more at: Tax Times blog