Philip Falco, Attorney, CPA

01/28/2024

Mandatory Filing for LLC’s, Corporations- FinCEN

Quite simply, assume your entity must file a transparency report with the Financial Crimes Enforcement Network. This report resembles foreign/international transparency forms that we have been filing for years. It is part of the ongoing effort of the U.S. to reign in secret, unreported transactions.

We are authorized to file this report on your behalf if you choose to engage our firm. We will also consult and advise you as to any wrinkles in the process. Being a dual licensed CPA and Attorney firm, we are without question the best choice for this report. The first filing is the most important as it will set a precedent.
In general, the deadline to file is December 31, 2024.

https://coloradolegal.com/mandatory-filing-for-llcs-corporations-fincen/

02/01/2018

We are now performing tax compliance for taxpayers with Cryptocurrency, the Cryptocurrency net worth of which exceeds 1 million (U.S. convertible). We are the best at what we do. Tax year 2017 is a critical tax year for Cryptocurrency. Getting 2017 correct will provide a foundation for huge gains in later years. You must seize the moment. The Internal Revenue Service is focusing on noncompliant taxpayers in this space. [ 101 more words ]

12/29/2017

S.A.L.T. deduction cap of $10,000 effect in Colorado

The State and local tax (SALT) deduction is limited to $10,000 for tax years beginning 2018. As such there has been confusion as to whether a taxpayer can prepay 2018 SALT in 2017 and take a full deduction in 2017 thereby avoiding the $10,000 limitation in 2018. As to Colorado, this has been my experience.

To put this in context, this refers to cash method taxpayers. Under certain circumstances, cash method taxpayers may prepay liabilities to take a deduction in the year paid as compared with year accrued. As such, if a Colorado county would not accept payment of a 2018 tax due, then the cash method defeats the prepayment strategy, not the new tax bill.

The cap includes both real estate and income tax. State income tax cannot be prepaid because of the second to last sentence of the amendment below. However, real property tax can possibly be prepaid. Whether the real property tax can be prepaid depends on whether 2018 real property tax has been assessed by that particular county. Denver has assessed 2018 and it is payable now so Denver could be prepaid. I checked some other counties and visibility is not clear so call to check with your particular county as to whether the real property tax has been ASSESSED. If so, and the combined anticipated 2018 SALT (income and property tax) exceeds $10,000), go pay that real estate tax for some tax savings.

It has been my experience in real estate transactions to provide a credit to purchasers for the prior year real estate taxes because they were assessed although not yet due. This provides further basis to make the case that prepaying 2018 tax is a deduction in 2017.

I have received a case example from a reader of this post. Taxpayer went to the Arapahoe County Treasurer today, December 29, 2017. The Treasurer informed taxpayer that Arapahoe considers the tax assessed on May 1, when they value properties. He promptly paid his 2017 taxes due 2018 and the treasurer gave him a receipt with 2017 printed on it.

Colorado does seem perfectly aligned to prepay your taxes due 2018 in 2017 for a deduction in 2017 to thereby avoid the $10,000 cap in the new bill. Of course, there is AMT!

Here’s the text:

SEC. 11042. LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. TAXES. (a) IN GENERAL.-Subsection (b) of section 164 is amended by adding at the end the following new paragraph: ”(6) LIMITATION ON INDIVIDUAL DEDUCTIONS FOR TAXABLE YEARS 2018 THROUGH 2025.-In the case of an individual and a taxable year beginning after December 31, 2017, and before January 1, 2026- ”(A) foreign real property taxes shall not be taken into account under subsection (a)(1), and ”(B) the aggregate amount of taxes taken into account under paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection for any taxable year shall not exceed $10,000 ($5,000 in the case of a married individual filing a separate return). The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before January 1, 2018, with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.”. (b) EFFECTIVE DATE.-The amendment made by this section shall apply to taxable years beginning after December 31, 2016.

http://coloradolegal.com/index.php/s-a-l-t-deduction-cap-of-10000-effect-in-colorado/

Also review the IRS bulletin on this topic: https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017.

IR-2017-210, Dec. 27, 2017 - The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

04/04/2016

The disclosure of the Panama Papers promises to cause global unrest as exemplified by the recent protests in Iceland. As more and more leaders are tied to illicit offshore bank accounts continued unrest will follow. What appears to be a time-consuming nuicance for banks is perhaps now proving to be the cure of full disclosure of our global economy. FATCA, the Foreign Account Tax Compliance Act, was implemented to target non-compliant United States taxpayers by forcing banks around the world to report bank balances to the United States government. [ 45 more words. ]

http://coloradolegal.com/?p=1718

03/16/2016

There are a lot of pressures surrounding our voluntary tax system. There are deadlines and then there is honesty, to name a couple. What, however, is most important is your portrayal of your taxes to the IRS. This is the empowering moment of taxpaying Americans. At this moment you have the liberty to express your capitalist side as a business. You take the liberty to deduct business expenses in that regard while reporting the winnings of your entrepreneurial spirit. [ 32 more words. ]

http://coloradolegal.com/?p=1699

02/24/2016

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12/27/2014

FBAR Filing Service Provided By Philip Falco, Attorney, CPA http://coloradolegal.com/?p=1507

What could be more important than filing your tax return? An FBAR, FinCEN 114 (formerly TD-F 90-22.1), here's why. FBAR's are due June 30, 2014, period. No extensions allowed. FBAR penalties are as harsh as penalties come. Our service includes: Philip Falco, Attorney, CPA is a registered Bank Secrecy Act electronic filer. We provide consultation as to what accounts must be disclosed. [ 47 more words. ]

10/12/2014

What is a “Willful” Failure to Disclose Offshore Bank Account http://coloradolegal.com/?p=1482

This is the central question as to whether a taxpayer enters Offshore Voluntary Disclosure or Streamline. It also fixes potential penalties under 31 U.S.C. §5321. 31 U.S.C. 5314 is the statute that requires reporting of foreign bank accounts. Pursuant to the statute, reporting is required by the following: United States Citizen, a resident of the United States or a person in, and doing business in the United States. [ 468 more words. ]

10/11/2014

Blank Receipt – No Tax Deduction for Charitable Contributions http://coloradolegal.com/?p=1465

The U.S. Tax Court issued a decision concerning tax deductions of charitable contributions in Thad Deshawn Smith v. Commissioner of the Internal Revenue, October 2, 2014. The case is a great way to discuss what the IRS and Tax Court require as far as documentation. Mr. Deshawn attempted to deduct a whopping $27,277 in noncash charitable contributions in 2009. He donated clothes, electronics, etc to AMVETS. [ 80 more words. ]

10/11/2014

Interest Deductible Even On Non-Taxpayer’s Mortgage http://coloradolegal.com/?p=1454

I came across this today in passing while working on a tax case. Most homeowners deduct home mortgage interest on Schedule A of their 1040. Actually, this is usually a taxpayer's largest deduction. Well, what if the taxpayer is not liable for the mortgage can taxpayer still take the deduction? For example, taxpayer's parents transferred title of a home to taxpayer. [ 167 more words. ]

10/09/2014

Taxation of Artists: Business or Hobby Losses – Tax Tips http://coloradolegal.com/?p=1438

Artists typically have financial challenges while they build a market for their artwork. During the many years of likely tax losses, the IRS might re-characterize losses as nondeductible hobby losses. So if an artist is an employee while also building a business as an artist, the IRS might disallow the losses to be deducted against employment income. This can be very unfair since the artist could be genuine pursuit of a business. [ 2138 more words. ]