Beginning next year several tax filing due dates will be changing. The existing filing schedule has been in place since I manually prepared tax returns with pencil and paper before the computer age began so these changes are significant. The new filing dates were established under the Protecting Americans from Tax Hikes (PATH) Act of 2015 without much publicity outside of the tax practitioner community. The new filing dates are effective for tax years beginning January 1, 2016, so taxpayers unaware of the new dates may have an unexpected surprise next year.
Fortunately, the traditional April 15th due date for individual tax returns has not changed but the due dates of business returns have been modified. The changes were implemented to help smooth the tax filing process for taxpayers owning interests in pass-through entities such as partnerships and S-Corporations. (more…)
It is very common for U.S. parent companies to include key non-resident alien employees of their foreign subsidiaries in their stock option plans. What happens when the non-resident exercises the options or sells the options? Is the non-resident subject to withholding tax? Is there a U.S. tax filing requirement?
By Blake Larum, Senior Tax Manager
Senate Bill No. 483 was enacted into law on June 10, 2015. The tax is effective on July 1, 2015 for business entities with Nevada annual gross revenue in excess of $4 million. Gross revenue is defined as the total amount of revenue a business entity recognizes that contributes to the production of gross income exclusive of cost of goods sold and other expenses.
It is that time of the year again when I am working on audits of U.S. companies with significant international operations, either in the form of wholly owned subsidiaries or branch offices. And my observations while performing these audits have resulted in this compilation of common errors while accounting for foreign currency, recording translation adjustments and finally the culmination into consolidated financials.
Related party transactions seem straightforward. For privately-held companies, related party transactions are a fact of business, and they may seem totally harmless. However, recently related party transactions have caught my attention. My fellow blogger, Deepa Bhat, identified steps to reduce risks associated with related party transactions. But what about transactions that happen that seem such a normal part of business that no one thinks of them as related party transactions? And what’s the big deal anyways?…
If a foreign contractor/vendor (payee) claims that payments are made for income that is effectively connected with a US trade or business, you are required to obtain from him a Form W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States, which effectively exempts him from tax withholding as he is to file his own US tax return. In this case, you are not responsible for withholding US tax from your payments to this foreign contractor/vendor. You need Form W-8ECI in order to…
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, is requested from a foreign payee by a U.S. payer to:Establish the payee’s foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished, and; If applicable, claim a reduced rate of, or exemption from withholding under an income tax treaty. This form is used for the following types of payments:
Interest; Dividends; Rents; Royalties; Premiums; Annuities; Compensation for, or in expectation of, services performed (but not for independent personal services performed in the US – use Form 8233 instead); Other fixed or determinable annual or periodical gains (also referred to as FDAP). It is one of the most…
Recently, I’ve come across various instances of related party transactions with several of my clients, such as stockholder notes to or from the company, a stockholder leasing office space to a company at favorable rates, forgiveness of compensation or reduced compensation for the initial startup period, and favorable credit terms to another entity with common ownership to name a few examples. And it worries me sometimes when companies enter into these transactions without thinking through the accounting ramifications, which can be problematic. What could the risks of related party transactions be?…
What is Benford’s Law? Given a large population of numbers, what percentage of the time would you predict each leading digit (1 through 9) would appear first in the list? After thinking through the ways this might be a trick question, most people would still guess that the probability for each would be close…about 11%. Well…apparently…