All states but one that impose a sales and use tax now have laws requiring out-of-state companies to collect tax if they have a significant economic presence in a state.  The Governor of Missouri, the last remaining state, is expected to sign a similar law this month.  The change stems from a 2018 United States Supreme Court case, the impact of which is far broader than many realize.
Continue Reading The Expanded Reach of States for Sales & Use Tax Purposes – More Than Just e-Commerce Retailers are Impacted

As reported in our earlier blog post The CARES ACT – Tax Relief, the federal CARES Act provides for forgiveness of indebtedness for eligible recipients of Paycheck Protection Program (“PPP”) loans in an amount equal to the sum of the recipient’s payroll costs, interest on mortgage obligations, rent obligations and utility payments (subject to certain conditions and limitations).  Under federal law, any amount of covered loans forgiven under the CARES Act is excluded from gross income for federal income tax purposes.
Continue Reading California Conforms To Federal Income Tax Treatment Of PPP Loan Forgiveness

November is approaching and in an election year, that means candidates are making plans and promises.  These promises and plans inevitably include something about taxes; and when it comes to taxes, it pays to be prepared.  While we take no position on the candidates or proposals, in the event you are considering the timing of your tax decisions for the balance of the year and 2021, it is important to consider the potential impact of the election.  The following items explain the current status of various tax proposals that might impact your planning.
Continue Reading Tax Planning Considerations Raised by Election-related Proposals

In Taylor Lohmeyer Law Firm P.L.L.C. v. United States, No. 19-50506, 2020 WL 1966844 (5th Cir. Apr. 24, 2020), the United States Court of Appeals for the Fifth Circuit held that a Texas-based estate and tax-planning law firm (“Taylor Lohmeyer” or the “firm”) could not invoke the attorney-client privilege to quash a summons by the Internal Revenue Service (“IRS”) seeking the identities of firm clients.  In affirming the district court’s decision, the Court of Appeals ruled that Taylor Lohmeyer could not use the privilege as a “blanket” to circumvent compliance with the summons, but may have viable arguments to shield disclosure of specific documents through the use of a privilege log.
Continue Reading Fifth Circuit Holds that Law Firm Cannot Claim Privilege Over Client Identity in IRS Probe

Businesses, employees, and other taxpayers are incurring new and often significant expenses as they adapt and respond to the changes brought on by the COVID-19 pandemic.  Several tax provisions may help to mitigate the impact of those costs, including new provisions enacted as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act as well as certain previously existing provisions of the Internal Revenue Code (“Code”).
Continue Reading COVID-19 Related Expenses

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” to provide nearly 2 trillion dollars in aid and relief to individuals, businesses, and other entities in the wake of the spread of COVID-19.  Included in the CARES Act are tax and loan provisions intended to provide financial relief to people and businesses suffering as a result of the disease.

The following summarizes certain key tax-related provisions in the CARES Act.
Continue Reading The CARES ACT – Tax Relief

As we all learn to cope with the unprecedented changes to our daily lives imposed by the COVID-19 crisis, we want to assure you that the Sheppard Mullin estate planning team is thinking of you and stands ready to assist you in any way possible.

These uncertain times have caused many of us to think about steps we might take to confirm that our affairs are in order and that we have prudently provided for our family members and other loved ones.  To assist with that review, we provide the following tips:
Continue Reading Estate Planning In Turbulent Times

As part of the federal government’s efforts to soften the economic effects from the Covid-19 pandemic, on Wednesday the IRS issued Notice 2020-17 announcing that federal income tax payments for the 2019 tax year otherwise due on April 15th may be postponed until July  15th 2020 without incurring interest or penalties on the amount due.  In addition, the Notice also postponed to July 15th the due date for quarterly estimated federal income tax payments otherwise due on April 15th.  Earlier statements by government officials had not indicated that the due date for quarterly estimated tax payments would also be extended.
Continue Reading Updated: Treasury and IRS Extend Time to both File and Pay Federal Income Taxes to July 15th; States Taking Their Own Approaches on Income and Similar Taxes

Qualified Opportunity Funds

The Opportunity Zone tax incentive program allows taxpayers that invest in a Qualified Opportunity Fund to (i) defer paying taxes on the capital gain from the sale or exchange of appreciated assets; (ii) receive a permanent exclusion from taxation of up to 15% on that deferred gain, and (iii) for taxpayers that hold their investment for at least 10 years, a permanent exclusion from taxation for any appreciation in excess of the deferred gain.
Continue Reading Opportunity Zones Update NEW PROPOSED TREASURY REGULATIONS (Part III)

Qualified Opportunity Zone Businesses

BACKGROUND

In December 2017, as part of the Tax Cuts and Jobs Act (“TCJA”), Congress established a new tax incentive program to promote investment in certain low-income communities designated by the IRS as qualified opportunity zones. The tax incentives obtained by investing in a qualified opportunity fund (“QOF”) allow taxpayers to (i) defer paying taxes on capital gain from the sale or exchange of appreciated assets; (ii) receive a permanent exclusion from taxation of up to 15 percent of the originally deferred gain; and (iii) for taxpayers that hold their investment in the QOF for at least 10 years, a permanent exclusion from taxation for any appreciation in excess of the deferred gain.

On April 17, the Treasury Department released its second round of guidance on Opportunity Zone investments in the form of proposed regulations (the “New Proposed Regulations”). These newly proposed regulations supplement and in some cases revise the proposed regulations issued in October of 2018 (the “October Proposed Regulations”). [1]

The New Proposed Regulations provide further clarity, but leave many questions unanswered. This is Part II of our series of blog posts on the New Proposed Regulations. This post addresses key issues relating to the requirements for qualified opportunity zone businesses and qualified opportunity zone business property. For Part I of our explanation, which addresses qualified investments in qualified opportunity funds, please click on the link here.
Continue Reading Opportunity Zones Update: NEW PROPOSED TREASURY REGULATIONS (PART II)