By David Keligian on 5/28/2020 3:39 PM

In his classic book “Think and Grow Rich”, Napoleon Hill said “Every failure brings with it the seed of an equivalent success”. Finding the “seed of equivalent success” seems difficult when we see valuations—regardless of asset class—collapsing before our eyes. With few exceptions, as the U.S. economy has been shut down, the COVID 19 pandemic has hurt business values, real estate values, and investment holdings alike.

However, for those of significant wealth, there is an opportunity to take advantage of the crisis. You can maximize tax savings by acting while asset values are still depressed. In part, this opportunity is based on the consensus view that given the government’s massive spending to avoid a financial collapse, taxes will increase.

In a recent Forbes interview, Leon Cooperman, Chairman of Omega Advisors and a billionaire investor, opined that the recent government intervention in the U.S. economy would result in more government regulation and higher taxes. With respect to the pending presidential election, Cooperman stated: “Regardless of who wins, taxes will have to be raised. Quickly, if Biden wins; slowly, if Trump wins—but taxes have to go up”.

By David Keligian on 7/12/2016 9:34 AM
In my previous articles on avoiding California residency, we saw that residency questions are ultimately decided by establishing the state with which someone has the "closest connection" during a tax year. It was noted that relying on presumptions and mechanical tests (including the 29 factor test listed in the Corbett case) will not necessarily win the day.

As pointed out in the prior articles, certainly someone who wishes to avoid California residency should align and document as many favorable objective (Corbett) factors as they possibly can. But if the stakes are high (such as leaving California in advance of a major stock sale), an understanding of the practicalities of a Franchise Tax Board ("FTB") challenge is important.

For example, I'm frequently asked "how long do I have to stay out of California after the sale?" The practical answer is "at least 4 years". That is because, assuming a California tax return is filed for the year of the sale, that return may not be selected for audit for...
By Kathy Mericle on 11/12/2013 1:54 PM
We are pleased to announce that Brown & Streza LLP has been featured in the 2013 Super Lawyers Business Edition. We received this honor because of the number of attorneys from our firm who were selected to a Super Lawyers list within a business-related practice area. Super Lawyers Business Edition is an annual resource that serves as the go-to guide for general counsel and executives in charge of making legal hiring decisions. This publication features top firms from all sizes specializing in: • Business and Transactions • Construction, Real Estate and Environmental • Employment • Intellectual Property • Litigation Super Lawyers, a Thomson Reuters business, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. The mission of Super Lawyers is to bring visibility to those attorneys who exhibit excellence in practice. Super Lawyers Business Edition is distributed annually to more than 50,000 general...
By Casey Hale on 12/3/2012 1:24 PM

Forbes published an interesting article earlier this month predicting five ways social entrepreneurship will evolve over the next few years.  Only time will tell how accurate their crystal ball is.


By Casey Hale on 11/8/2012 11:03 AM

Interesting article published today in Corporate Counsel about the coming flurry of regulatory activity from the second-term Obama administration - both in terms of new regulations and enforcement - that will impact employers.

The article also discusses how the Department of Labor, which has received much better funding under Obama, will increase its focus on proper employee classification by finally implementing the "right-to-know" rule proposed back in 2010 under the Fair Labor Standards Act ("FLSA"). That rule requires that employers notify workers of their rights under the FLSA and provide certain information regarding hours worked and wage computation. Also, employers will have to perform and document a classification analysis if they wish to classify any worker as an independent contractor.

The take away: Employers "need to be introspective, . . . examine many of their policies and procedures...
By David Keligian on 2/17/2012 1:15 PM
Businesses that use independent contractors have always been in the crosshairs of federal and state taxing agencies. Taxing agencies are unusually aggressive, because they feel it is easier to collect taxes from the companies who use independent contractors rather than the independent contractors themselves.

Independent contractor audits are again becoming a hot priority for the IRS. The legal rules really haven’t changed, it’s just that the IRS is becoming increasingly aggressive in targeting companies that use independent contractors to raise revenue. The state of California is even worse, because the state rules for independent contractor treatment are even less favorable than the federal rules.

The federal rules incorporate a “safe harbor” that most taxpayers don’t know about. The “safe harbor” is contained in the provisions of the Revenue Act of 1978. There are definite strategies involved in positioning businesses to take advantage of the safe harbor. The safe harbor allows a taxpayer to...
By Stephen Stafford on 1/27/2012 2:57 PM
California employers should be aware that a new law (California’s Wage Theft Prevention Act of 2011 codified as Labor Code Section 2810.5) went into effect on January 1, 2012 that requires California employers to provide all new nonexempt hires with written notice of specific wage information at the time of hire, including:

• The employee's rate or rates of pay (including overtime rates), and whether the employee is paid hourly, by the shift, by the day, by the week, by salary, by piece, by commission, or otherwise. • Any allowances claimed as part of the minimum wage (i.e., allowances for meals or lodging). • The regular payday. • The name of the employer, including any D/B/A names the employer uses. • The physical address of the employer's main office or principal place of business, and a mailing address if it is different. • The employer's telephone number. • The name, address, and telephone number of the employer's workers' compensation insurance carrier. • Any other information that the Labor Commissioner deems necessary.

By David Keligian on 5/13/2011 11:29 AM
We tax lawyers like to talk about all the creative ways our clients can transfer wealth and save millions in taxes. For transfers of operating businesses (including a real estate portfolio), there are a number of often overlooked business issues.

For example, does the next generation have the management capability to run the business? How will new lines of authority be established? (You can’t have three CEO’s). Does the next generation have the desire to manage the business? What about all the interpersonal dynamics—sibling rivalry, spouses, etc.—that can affect business operations after the founder is gone?

There are also external business issues. How will key customers react if the founder of the business is no longer around? What will the reaction of key employees be? Has the next generation had a chance to establish independent relationships with key employees, or are those personal to the founder? What will the impact of successor management’s relationships with banks and key vendors be?...
By Stephen Stafford on 10/19/2010 9:05 AM

The Small Business Jobs Act of 2010 creates a special rule that allows self-employed individuals to deduct health insurance costs incurred in 2010 for determining net earnings from self-employment for the purposes of calculating the tax on self-employment income.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

By Stephen Stafford on 10/18/2010 3:18 PM

The Small Business Jobs Act of 2010 removes cell phones and similar telecommunications equipment from the definition of “listed property.” Consequently, for tax years beginning after December 31, 2009, the heightened substantiation requirements and special depreciation rules that apply to listed property no longer apply to cell phones. This makes it easier for almost all small businesses to deduct or expense the use of cell phones.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

By Stephen Stafford on 10/18/2010 3:13 PM
Under Internal Revenue Code Section 280F, first-year depreciation deductions for passenger autos, light trucks and vans are subject to dollar limits that are annually adjusted for inflation. For 2010, the dollar limit cap for passenger autos is $3,060, and $3,160 for light trucks and vans. The Small Business Jobs Act of 2010, however, increases the first-year depreciation limit by $8,000. Therefore, the maximum depreciation deduction for a passenger auto that is put into use in 2010 just increased from $3,060 to $11,060 (i.e., this deduction is more than tripled in 2010). If the vehicle is a light truck or van, the maximum first-year depreciation just increased from $3,160 to $11,160.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

By Stephen Stafford on 10/18/2010 3:06 PM
In order to help small businesses quickly recover the cost of certain qualifying property - generally, machinery, equipment and certain software - small business taxpayers had, subject to Internal Revenue Code Section 179 limitations, been able to elect to write off the cost of some or all of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. The Small Business Jobs Act of 2010 encourages capital investments by allowing for faster cost recovery of business property, including certain qualified real property, and extends bonus first-year depreciation through 2010.

Section 179 Expensing Increased to $500,000, but only for 2010 and 2011

For tax years beginning in 2010 and 2011, the Act increases the Section 179 limit from $250,000 to $500,000, and the investment ceiling/phase-out threshold from $800,000 to $2,000,000. These expensing changes will create a windfall for those businesses that have already placed in service Section 179 eligible...
By Stephen Stafford on 10/18/2010 2:43 PM
For entrepreneurs that started a new business or who are planning to start a new business in 2010, the Small Business Jobs Act of 2010 provides an increased deduction for start-up expenditures.

For tax years beginning in 2010 only, the Act increases the amount of start-up expenditures a taxpayer can elect to deduct from $5,000 to $10,000. The Act also increased the deduction phase-out threshold from $50,000 to $60,000 (i.e., the $10,000 amount is reduced, but not below zero, by the amount in which the cumulative start-up expenditures exceeds $60,000). The remainder of the start-up expenditures can be claimed as a deduction over the 180 month period beginning with the month the active trade or business began.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

By Stephen Stafford on 10/18/2010 9:57 AM
President Obama recently signed into law H.R. 5297, the Small Business Lending Funding Act. The tax title of this bill, the “Small Business Jobs Act of 2010” (the Act, P.L. 111-240), contains a number of significant tax provisions affecting individuals and businesses. The Act includes approximately $12 billion in tax cuts - most notably an increase in asset expensing and a continuation of bonus depreciation - and attempts to ease credit lending to small businesses.

This blog entry highlights some of the Act’s tax breaks and incentives that may provide an immediate benefit to entrepreneurs and small businesses, including:

Increased Deduction for Start-up Expenses;

Increased Expensing Deductions plus Extension of Bonus Depreciation;

First-Year Depreciation for Autos and Trucks Increased by $8,000;

Cell Phones Removed from Definition of “Listed Property;” and

Deduction for the cost of Health Insurance in Calculating Self Employment Taxes.