Calm down wine-o’s, this blog isn’t about you. Over the last decade, numerous states have passed statutes that allow trust decanting. Delaware, Florida, Illinois, Michigan, Nevada, and Texas are just a few of approximately half the states that explicitly allow a trustee to decant a trust.

Trust decanting is the process of distributing trust assets from one trust to a new trust with different terms. It gets its name because it’s similar to the process of decanting wine. The wine (trust assets) is poured out of its original bottle (old trust) and into a new bottle (new trust), leaving the unwanted sediments (undesirable terms) in the original bottle. Generally, the trust can be decanted using the following steps.

First, all beneficiaries of the trust should be notified of the intent to decant...

Perhaps your company isn’t doing so well or you would like to transfer the assets of one company to another. Whatever the reason for dissolving your company, you need to know that there is both a wrong way and a right way to dissolve it with its respective Secretary of State or Department of Corporations. An improper dissolution could prove to be detrimental to the officers, but a proper one provides business owners with another layer of protection from liability.

First, you shouldn’t just allow your company to be administratively dissolved. This can be done in many ways such as failing to file an annual report, failure to pay a required fee, or ignoring another state requirement. While these methods seem like an easy way to do things, they could potentially have serious consequences. For e...

Readers of this blog may remember a post from about two months ago titled “Cryptocurrency and the IRS” (https://www.taxplanning.com/single-post/2019/09/12/Cryptocurrency-and-the-IRS). The IRS must be paying attention, because they recently released some guidance and frequently asked questions (FAQs) on cryptocurrency. Under the guidelines, a taxpayer does not have gross income from a “hard fork” of the taxpayer’s cryptocurrency if the taxpayer does not receive units of a new cryptocurrency. Also, a taxpayer has ordinary income as the result of an “airdrop” of a new currency following a hard fork if the tax payer receives units of the new cryptocurrency.

A hard fork is a radical change to a network's protocol that makes previously invalid blocks and transactions valid, or vice-versa. An aird...

A series limited liability company is a limited liability company that is allowed to form multiple “series” that are shielded from liability against other series. For example, imagine a tree. The trunk of that tree is the main LLC that is formed, often referred to as the “parent LLC” or “umbrella LLC”. The branches of the tree are the series formed as entities that are separate from each other and only connected via the main LLC. The series LLCs are beneficial because they are treated as separate entities for liability purposes, but for tax purposes they are all a part of the same main LLC therefore only one tax return needs filed. Recently, Delaware allowed for two new series LLCs to come into existence, the protected series LLC and the registered series LLC.

If you previously had a series...

Any corporation or company formed with the Secretary of State should keep a corporate record book. While there are no federal laws requiring a corporate record book, the IRS may inquire about one in the event of a company audit. Illinois, Florida, Washington, Oregon, California, and Delaware either specifically require or strongly encourage an up-to-date corporate record book. Even if your state does not have a corporate record book requirement, failing to do could open yourself and other officers up to liability by piercing the corporate veil. Finally, in the event of a merger, acquisition, or your company seeks to obtain funding, a corporate record book could help expedite the process. It is also quite possible that the lack of a corporate record book could derail your endeavor.

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          The first step to determining whether your clothes can be used as deduction is to figure out whether your clothes are also suitable for other uses other than work. For example, the IRS has repeatedly said that a suit cannot be deducted as part of a uniform because it has other uses. Just because an anchorwoman or attorney bought the suit exclusively work, it could also be used for everyday wear or events such as a wedding, court, bar mitzvah, etc.

                However, the IRS has accepted deductions for theatrical costumes, hard hats, and other safety gear. The IRS has also accepted deductions for police and military uniforms. For example, a police officer can deduct both the cost of their uniform, and, should they choose to have it professionally cleaned,...

An intended consequence of the TCJA is that the combined tax liability of a married couple may be higher or lower than the combined tax burden if they had remained single. If their burden is lower, it is considered a marriage bonus. However, if their burden is greater than before, it is considered a marriage penalty.

                Many variables can go into whether how a marriage will affect someone’s tax burden such as combined income, whether or not the incomes are similar, or the number of dependents claimed each year. For example, an unmarried couple earns a total of $60,000 with $20,000 from the first spouse and $40,000 from their partner. As an unmarried couple their tax bill would be roughly $8,560 under the TCJA. However, should the couple choose to marry, their tax bracket would...

First off, congrats! Beginning your own business is an exciting and rewarding experience. But now, let’s get down to business (pun intended). Luckily, the IRS has put together a suggested list of what needs done with regards to federal taxes in order to prepare for your opening day.

                To begin, you should register for an FEIN (federal employer identification number). This is the number used to identify your business with the IRS and if you choose to obtain funding from a financial institution, it’s likely that they’ll also want to know your FEIN. Also, if you have employees, you should ensure that they fill out their tax forms such as their W-4 and I-9.

                You should also expect to choose a tax y...

Sometimes, a company will decide that it is in their best interests to relocate to another state or country. Unfortunately in this event, it often means that some employees will not be along for the ride and they’ll be forced to find other employment. However, this could open the door to the employer offering an employee either a buyout or an early retirement package.

                A buyout is typically offered to younger employees who will most likely be searching for another job, but need some liquid assets while searching for a new employer. Early retirement packages are more often offered to older workers that are leaning towards retirement. How much an employee is set to receive can depend on a lot of factors such as time spent with the company, accrued sick/vacation days, or whether...

Despite the fact that it has been around for approximately a decade, cryptocurrency has been a huge hit over the past couple of years. More and more people are investing money into virtual currency (also known as cryptocurrency) such as Etherium, Ripple, and most well-known, BitCoin. It would be an understatement to say that the value of cryptocurrency has moderately increased. In 2010, a man in Florida spent 100,000 BitCoin on pizza and other trivial items. As of today, the value of one BitCoin is approximately $10,100. You can’t convince me otherwise; there is no pizza on this Earth worth $1.01 billion dollars. The IRS has even taken an approach to how they view cryptocurrency when it comes to tax purposes.

Interestingly enough, cryptocurrency is not viewed as currency but as property. Wh...