President Trump’s 2005 Tax Return – What It Tells Us
Yesterday, Tuesday March 14, 2017, while most of the New England area was buried in snow, MSNBC published President Trump’s 2005 income tax return – or at least the first two pages of it. What does the return tell us and what does it not?
The Basics – We know he had a positive income in the amount of $152,737,866 and $103,201,242 in tax write-offs. He paid a total of $38,435,451 in taxes for the year.
One redeemable quality about humans is that we tend to be more willing to loan money than borrowing it. No one really likes to borrow money, but if a friend is in need, many of us help as much as our financial means allow. When this occurs, it is important to understand that there are income tax consequences for both lenders and borrowers when interest is earned, paid or forgiven on a loan. This blog will address the tax consequences of unpaid loans.
Startup business owners must consider the legal and tax considerations associated with selecting a particular type of business structure. This is the fifth part of a series of blogs on the tax treatment of business entities. This final segment will address the tax treatment of S corporations.
S corporations are entities that elect to pass corporate income, losses, deductions, and credits through to their shareholders who report any flow-through income and losses on their personal tax returns and taxed at individual income tax rates, similar to a partnership. Thus, S corporations avoid double taxation on corporate income, unlike C corporations. However, S corporations are responsible for tax on some capital gains and passive income at the corporate level. The rules for Subchapter S corporations are found in Subchapter S of Chapter 1 of the Internal Revenue Code.
Here’s the story of a middle child who made one heckuva investment! Eve Plumb, who played Jan Brady on the iconic 70s TV show, The Brady Bunch, recently sold her Malibu bungalow for $3.9 million. Ms. Plumb purchased the seaside property in 1969 for a mere $55,300, equivalent to approximately $360,000 in our present economy. Sure, it will be subject to tax as a long term capital gain, but it still made Marcia and Greg’s younger sister a rich gal.
Demutualization is the process in which a member-owned business becomes owned by shareholders. Traditionally, Insurance companies have used the word “mutual” in their name (i.e., Liberty Mutual) indicating mutually-held ownership by their policy holders as a group, rather than ownership by shareholders. These policyholders possess ownership rights such as voting and distribution. Recently, a strong trend has emerged for such companies to demutualize, converting to a shareholder-held ownership base.
Typically, policy holders are offered shares or money in exchange for ownership rights. Demutualization increases the profit potential of shareholders who can sell or trade their stock, in contrast to mere ownership rights, which cannot be sold or traded. The term “demutualization” no longer applies to just insurance companies but also to the process by which any member-owned organization becomes shareholder-owned.
A capital gain occurs when you transfer or sell a piece of property for more than its acquisition cost. To be more succinct, it’s the profit realized on the sale of a non-inventory asset. Capital gains are realized from the sale of all types of property, both real and personal such as investments and other traditional non-investment types of personal property. In the United States, with certain exceptions, individuals and corporations pay income tax on the net total of all their capital gains.