19November
2015
Two Common Types of Financial Fraud That Can Hurt Your Business

Many financial frauds and deceptions fall into two basic categories: 1. Misstatements on company financial reports (balance sheets, income statements, and so forth). 2. Misappropriation of company assets. While the first type of fraud may seem more theoretical and therefore less worrisome, it can hurt your company almost as badly as the second kind — which is definitely not theoretical. Why? When a company’s financial records are inaccurate due to deception or fraud, you might make poor business decisions because you relied on bogus information. Even worse, lenders and other potential sources of capital might lose confidence in your company…

19November
2015
Estate Planning: Check Your Beneficiary Designations

Regardless of your income or net worth, there’s one estate planning move you should probably make right now: Check the beneficiary designations for your life insurance policies, bank accounts, brokerage firm accounts, retirement accounts, and other assets. If you’ve not yet turned in the proper forms to designate beneficiaries, do it now. If your forms are out of date, update them. The consequences of failing to take these simple steps can be serious. If you don’t believe it, consider the following real-life horror stories. Horror Story Number 1 In Herring v. Campbell, the Fifth Circuit Court of Appeals ruled that…

19November
2015
What is An Intentionally Defective Trust?

An intentionally defective grantor trust is an irrevocable trust designed to trigger the grantor trust rules, thus allowing the grantor, rather than the trust, to pay income taxes on trust income. Assets can be moved to the trust through gifts or sales, thus removing the assets and any future appreciation from the grantor’s estate. Larger gifts may trigger use of your lifetime gift exclusion or the payment of gift taxes. Selling the assets to the trust and paying interest income on an installment sale are not taxable events. Since the defective trust is considered an extension of the grantor, these…

05November
2015
Revising Estate Strategy Assumptions

When the rules of the game change, tactics should follow in response to the new landscape. While estate tax exemptions have ridden an uncertain roller coaster in recent years, the rules appear to be stabilizing, prompting many to reconsider conventional estate strategies.¹ A few years ago, Congress raised the estate and gift tax exemption to $5 million per person, and has adjusted for the rate of inflation since then. For 2016, the estate exemption is $5.45 million and the top rate is 40 percent.² (In 2015 the estate exemption was $5.43 million). This exemption increase means that potentially hundreds of…

05November
2015
‘Loan Payments’ Can Be Taxable Corporate Distributions to Shareholders

There can be negative tax consequences when purported loan payments are recast as corporate distributions to shareholders. In some cases, the courts have ruled that withdrawals from two closely held corporations were constructive corporate distributions rather than loan proceeds and repayments. As such, the withdrawals triggered taxable dividends and capital gains for the shareholders. Corporate Distribution Basics For federal income tax purposes, non-liquidating distributions paid by C corporations to individual shareholders can potentially fall into three different layers. Withdrawals from each layer have different tax consequences. First Layer: Taxable Dividends to Extent of Earnings and Profits. Corporate distributions of cash or…