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.
It remains to be seen the specific tax plan that Donald Trump will implement as President of the United States. The effects of Donald Trump’s tax plan will depend on taxpayers’ income and tax planning. Some think that Trump’s plan will significantly reduce income and corporate taxes, and eliminate the estate tax. It seems the plan’s largest effect on individual taxpayers will be to reduce the top tax bracket 6.6 percentage points from 39.6 percent to 33 percent.
Many provisions of the Internal Revenue Code are complicated. Proper interpretation of the rules and regulations contained in these provisions requires the assistance of an experienced and knowledgeable tax professional. The first part of the series about the most confusing provisions of the Internal Revenue Code addresses passive activity loss rules.
Why Is It Confusing?
- Many exceptions
- Understanding defined terms
- Calculating losses over time is complicated and cumbersome
A passive activity is any rental activity or any business in which a taxpayer does not materially participate. Nonpassive activities include businesses in which the taxpayer works on a regular, continuous, and substantial basis. Passive income does not include wages, salaries, portfolio, or investment income.
7 Deadly Tax Sins
When it comes to the IRS, some bad acts are worse than others. We have compiled below the top ones to avoid at all costs. However, if you should find yourself in the middle of one, you should certainly call tax attorneys to get you out of the bad situation (yes, it is a bad situation).
Not knowing the details of a business transaction sounds preposterous on its face, especially when the ignorant taxpayer is the party which formulated the transaction. In the case of Makric Enterprises, Inc. v. Commissioner, TC Memo 2016-44, a failure to make sure that the right corporation was sold as part of the agreement literally proved costly to the taxpayers involved, to the tune of $2,839,780.
This tax matter involved two corporations. One of which was a holding company (Makric Enterprises, Inc.) which owned only one asset, the stock of a wholly owned subsidiary (Alpha Circuits, Inc.). A third party expressed interest in purchasing the business conducted by Alpha.
In early March, after a two-week trial and eight hours of deliberations, a Nashville jury awarded TV sports reporter Erin Andrews $55 million in damages for her lawsuit against a Nashville hotel after she was videotaped in 2008 without her knowledge. Andrews sued for $75 million in damages for negligent infliction of emotional distress and invasion of privacy.
Unlike most countries, the U.S. taxes its citizens on all income, no matter where they live and where their income is earned. The current United States tax laws, because of requirements for reporting income, filing tax documentation, as well as the ensuing tax obligations, have made many Americans renounce their citizenship. Section 349(a)(5) of the Immigration and Nationality Act details a U.S. citizen’s right to voluntarily renounce his or her citizenship. Signing an oath of renunciation is an irrevocable act unless the individual is under the age of 18.
By now everyone is familiar with Uber. And in case you’re not, Uber is an online taxi dispatch company that uses its own mobile app that allows its customers to submit a trip request on their smartphones for drivers who then pick up riders using driver-owned vehicles.
Uber’s business is built on an independent contractor (IC) model, which in Uber’s case means that ideally, Uber drivers receive no benefits, use their own vehicles, and pay all expenses for gas, maintenance, and insurance. Twenty to twenty-five (20 to 25) percent of driver earnings are paid to Uber as a fee to use its service. Some estimate that this contractor model can save businesses up to 30% on labor costs.
Is The $1,100,000 Limitation On Mortgage Debt For Purposes Of Determining Deductible Interest Expense Applied On A Per-Taxpayer Or A Per-Residence Basis?
Is the $1,100,000 limitation on mortgage debt for purposes of determining deductible interest expense applied on a per-taxpayer or a per-residence basis?
Related Tax Rules or Regulations
Internal Revenue Code Section 163(h)(3) allows a deduction for qualified residence interest on up to $1,000,000 of acquisition indebtedness and $100,000 of home equity indebtedness. Should your mortgage balance (or balances, since the mortgage interest deduction is permitted on up to two homes) exceed the statutory limitations, the mortgage interest deduction is limited to the amount applicable to only $1,100,000 worth of debt.
In December 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST). Provisions included in this bill authorize the State Department to deny or revoke passports for individuals with delinquent tax debt of more than $50,000. The bill also resurrects the IRS private debt collection program and requires the IRS to use third-party entities to collect tax debt under limited circumstances. The IRS contracted with private debt collection agencies from 2006 to 2009, but then at the end of this period insisted it could more efficiently collect the debt itself, thus ending the private program.