The Internal Revenue Service announced last week it will begin to ramp down the 2014 Offshore Voluntary Disclosure Program (OVDP), closing the program on Sept. 28, 2018. By alerting taxpayers now, the IRS is encouraging any U.S. taxpayers with undisclosed foreign financial assets use the OVDP before the program closes. 

Everyone knows the scrutiny given to Cayman Island banks, as well as the hidden accounts revealed by the Panama Papers. But “offshore” in the Internal Revenue Service’s eyes means any location outside United States boundaries. The IRS certainly knows about all these places where U.S. taxpayers stash their cash. And they do all they can to find the money and get the taxes due.

US tax and Report of Foreign Bank Accounts (FBAR) filing requirements for Expats

In addition to employing traditional enforcement actions against offshore accounts, the IRS has used a voluntary program since 2009 to encourage foreign account owners to report their offshore holdings to Uncle Sam at a reduced penalty rate as well as avoid criminal charges.

That option, however, will end in September.

Since the OVDP’s initial launch in 2009, more than 56,000 taxpayers have used one of the programs to comply voluntarily. All told, those taxpayers paid a total of $11.1 billion in back taxes, interest, and penalties. The number of taxpayer disclosures under the OVDP peaked in 2011 when about 18,000 people came forward. The number steadily declined through the years, falling to only 600 disclosures in 2017.

Tax Enforcement

The IRS notes that it will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, Whistleblower leads, civil examination and criminal prosecution. Since 2009, IRS Criminal Investigation has indicted 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indicted on international criminal tax violations.

Streamlined Procedures and Other Options

A separate program, the Streamlined Filing Compliance Procedures, for taxpayers who might not have been aware of their filing obligations, has helped about 65,000 additional taxpayers come into compliance. The Streamlined Filing Compliance Procedures will remain in place and available to eligible taxpayers. As with OVDP, the IRS has said it may end the Streamlined Filing Compliance Procedures at some point.

Talley’s experienced team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us today.

Changes in the rules for like-kind exchanges under the Tax Cuts and Jobs Act may lead professional sports teams to trade fewer players, according to tax experts.

It has been long established in the past that player contracts are treated as business assets. Assuming there was no cash involved in the trade, teams would recognize no gain or loss when they traded players. They were just trading the business asset that was their contract. The Tax Cuts and Jobs Act that was passed in December amends 1031 to only certain real estate deals now. Since professional athletes’ contracts aren’t considered real property, some tax experts believe that 1031 exchange treatment will no longer apply to professional sports teams trading players after 2017. Starting this year, sports teams might need to begin recognizing a taxable gain when they trade players, though so far that hasn’t slowed the pace.

While taxes are probably never going to drive sports teams’ trade decisions, they may become a factor in their decisions, considering every time a team traded a player it would be treated as a taxable event, affecting the economics of the trade.

The change in 1031 exchange treatment could prompt several reactions from pro sports teams. Team owners might do fewer overall trades, fewer player-for-player trades, more cash-for-player or player-for-draft picks deals, or the development of an alternative trading procedure that allows trades without triggering adverse tax consequences.

Our assessment of the Tax Cuts and Jobs Act is that it is the most impactful tax law enacted in the last 30 years. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

After 11 years as one of the buzziest startups in tech, file-sharing company Dropbox filed its S-1 on Friday, kicking off the road to an initial public offering.

Since its launch in 2007, Dropbox’s customer base has grown to more than 500 million registered users, with 100 million joining just in the last year. Dropbox hasn’t managed to convert many of those to paying customers just yet. Unlike many cloud companies that rely on enterprise sales teams, over 90 percent of Dropbox’s revenue comes from users purchasing their own subscription, the company said. In its S-1 filing, Dropbox said it has 11 million paying users between individual accounts and people who are part of a paying team.

Still, the loss-making company has about $1.7 billion in contractual obligations, like leases, outstanding. Dropbox also has a multi-million dollar relationship with Hewlett Packard Enterprise. The San Francisco-based company, which started as a free service to share and store photos, music and other large files, competes with much larger technology firms such as Alphabet Inc’s Google, Microsoft Corp and Amazon.com Inc, as well as cloud-storage rival Box Inc.

Proceeds from the IPO will be used to fund an expansion plan of upgrading more users to subscriptions and expanding integration with third-party software. Goldman Sachs, J.P. Morgan, Deutsche Bank and Allen and Company are among the top underwriters for the IPO.

Revenue grew 31% in 2017 to $1.1 billion, up from $844.8 million in 2016. Dropbox’s net losses also shrank from $210.2 million in 2016 to $111.7 million in 2017. The company also had a positive free cash flow of $305 million in 2017.

While typically compared to competitor Box, Dropbox’s business approach to attracting paying customers is a little different. The company said in its S-1 that 90% of its revenue comes from “self-serve” customers, or users who “actively purchase a subscription through our app or website.” Dropbox spent $314 million on sales and marketing in 2017.

Dropbox will list its shares on the Nasdaq under the stock ticker “DBX.” The company was last valued at $10 billion during a 2014 funding round. Its closest publicly traded competitors, Box and Atlassian, had market caps at close on Friday of $3.17 billion and $12.37 billion, respectively.

With over 25 years’ experience consulting with industry-leading companies, Talley understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

Amazon.com Inc. knocked Microsoft Corp. off the podium on Wednesday, to take over as the third-largest U.S. company by market capitalization for the first time in its history.

Amazon’s stock 2.6% to a record close of $1,451.05, lifting its market value by $17.69 billion to $702.46 billion. Meanwhile, Microsoft shares climbed 1.6% to increase its market cap by $10.78 billion, but only to $699.22 billion.

Amazon has been busy since it reported better-than-expected quarterly earnings in early February, announcing that it will be working with J.P. Morgan Chase & Co. and Warren Buffett’s Berkshire Hathaway Inc. on improving employee health care. The company also said it would start offering free two-hour delivery of Whole Foods groceries via its Prime Now service. Investors also appear excited about bigger projects that might be on the company’s horizon, following media reports that Amazon is interested in entering the hospital-supply business, building its own shipping service, and designing an artificial-intelligence chip to speed up the response time of its voice-controlled products.

Amazon is still well behind Google-parent Alphabet Inc. which currently sits in second place at $745.47 billion. First-place Apple Inc. has a big lead with a market cap of $849.24 billion.

Although Amazon made its move today, Jeff Bezos, Amazon’s founder, chief executive and largest shareholder, made his months ago, when he passed Microsoft founder Bill Gates to become the world’s richest man. Bezos is currently worth about $118 billion, while Gates is worth about $90.3 billion, according to the Bloomberg Billionaires Index.

Entrepreneurs partner with Talley LLP and its affiliates to take advantage of our wide range of services, such as technology-oriented accounting solutions, financial reporting, tax planning, and estate planning. Talley can help you design and execute fully customizable solutions to fit the unique needs of your business.

 

Source: Marketwatch 2/16/18.

As the world descends upon South Korea for the 2018 Winter Olympics, business professionals across the United States will have their eyes peeled on Pyeongchang. Less discussed: U.S. businesses can expect a $1.7 billion loss in productivity due to employees watching the Olympics at work, according to an Office Pulse study.

More than half of business professionals plan to follow the action in Pyeongchang this month. During work hours, about a quarter of employees will spend up to an hour watching the Olympics, and an additional 12 percent will watch for over an hour, the study shows.

Fortunately, this Winter Olympics is not expected to decrease productivity nearly as much as the 2016 Summer Olympics in Rio de Janeiro. That year, businesses lost $5.4 billion as a result of a massive productivity drop.

There are those who argue that encouraging people to watch the Olympics together at work can actually increase productivity. Margot Ross-Graham, a workplace columnist at the Canadian Broadcasting Corporation (CBC), explained that some companies provide TVs in common areas so employees can watch the Olympics together. The “camaraderie of sports” serves as a good bonding opportunity, she said.

Integrating the Olympics into the workplace also encourages people to take lunch breaks, which actually increases productivity, Ross-Graham reported. Research shows that getting up from your desk and taking a break in the middle of the day improves your concentration, creativity, and efficiency.

So while we shouldn’t let the action in Pyeongchang distract us from work, it highlights how organizations need always stay on the lookout for ways to improve workplace performance.

For over 25 years, Talley has provided clear, knowledgeable and applicable financial data and analysis solutions to our clients, enabling management to intelligently track performance, progress, and profits. To determine whether your business is taking advantage of all the metrics available to make the most informed decisions for future success, schedule a time to talk with us today.

 

As football fans are expected to consume 1.33 billion chicken wings during this weekend’s contest between favored New England and the Philadelphia Eagles, players on both teams are set to get additional bonus pay as a result of their postseason success. 

In addition to the taking home the Vince Lombardi Trophy, bragging rights, and potential endorsement deals, media appearances and fanfare galore, the winners of this year’s big game will receive $112,000 each for winning the big game. Players on the losing team will get $56,000. 

Here’s the breakdown: Players on NFL teams that made the 2017-2018 season playoffs in either division got a $28,000 starter bonus if they won their divisional playoff game, plus an additional $51,000 just for playing in their respective conference championship, for a grand pre-Big Game total of $79,000. Should the Patriots win their sixth championship ring this weekend, the total take for New England players for postseason play would be $191,000 (the championship winner’s $112,000 bonus in addition to the $79,000 already pocketed).

Many NFL players, as was highlighted in the 2012 ESPN film “Broke,” show that success on the field doesn’t always equal long-term financial well-being. Performance bonuses for individual players, like any other windfall event, often create a need for additional planning as well as strategies to handle extra tax burdens.

Like NFL athletes, many entrepreneurs hit new revenue strides and find themselves the decision-makers of an increasingly intricate business playbook facing many additional tax “flags on the play”. Many soon come to see that having an expert advisory team can help avoid unnecessary fumbles and maximize growth. With a broad spectrum of services complimenting the needs of entrepreneurs and their closely-held businesses, Talley provides the financial, tax and legal insights you need in order to call the best plays for you and your business.

Whether you are considering an M&A transaction or experiencing a financial windfall event, the professionals at Talley LLP can make the most of both your earnings and winnings.

Apple, which had long deferred paying taxes on its foreign earnings, unveiled plans on Wednesday that would bring back the vast majority of the $252 billion in cash that it held abroad and said it would make a sizable investment in the United States.

With the moves, Apple will take advantage of the new tax code signed into law last month. A provision allows for a one-time repatriation of corporate cash held abroad at a lower tax rate than what would have been paid under the previous tax plan. Apple, which has 94 percent of its total cash of $269 billion outside the U.S., said it would make a one-time tax payment of $38 billion on the repatriated cash.

Apple is one of several multinational giants that have kept a total of roughly $3 trillion in global profits off their domestic books to sidestep the previous 35 percent federal corporate tax rate. Under the new tax law, companies that make a one-time repatriation of cash will be taxed at a rate of 15.5 percent on cash holdings and 8 percent on nonliquid assets. That is lower than the new 21 percent corporate rate. Under the new tax code, Apple would also have been taxed whether it brought the money back or not.

By shifting the money under the new terms, Apple will save approximately $43 billion in taxes, more than any other American company, according to the Institute on Taxation and Economic Policy, a research group in Washington.

Our assessment of the Tax Cuts and Jobs Act is that it is the most impactful tax law enacted in the last 30 years. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

The estate of the late award-winning singer and actress Whitney Houston has reportedly reached a deal with the Internal Revenue Service to pay $2,275,366 in taxes, far less than the $11.7 million the IRS said it was owed.

Houston’s estate was initially ordered to pay $11 million (plus interest) in 2012, shortly after the artist died at the age of 48. The IRS concluded the estate had “underreported the singer’s royalties, residuals, and value of her image by $22.6 million.” The estate, however, claimed the feds’ calculations were incorrect and insisted Houston’s “music royalties, digital performance royalties, motion picture, and TV residuals, and publicity rights” were worth $11.7 million.

Houston’ daughter Bobbi Kristina Brown was initially named the sole beneficiary of her estate but then died in 2015 at the age of 22. Bobbi Kristina Brown’s estate has been the subject of a separate dispute among various family members who are also celebrated singers, including her father, Bobby Brown, and grandmother Cissy Houston.

Getting the IRS to agree on the value of an estate does not only affect famous musicians and celebrities. It’s true very few of us will have to deal with the marketability of our name and likenesses after death. -But even so, making sure appraisals of stocks, real estate, businesses, or any other tangible assets are defensible can make all the difference when it comes to sailing swiftly through a potential audit – and maybe even avoiding one altogether.

Disney on Thursday announced that it is buying a huge chunk of 21st Century Fox in a deal that promises to reshape the media industry and help the entertainment giant fend off digital rivals such as Netflix. The $52.4 billion deal will combine two of Hollywood’s biggest juggernauts.

As part of the transaction, Disney is also acquiring cable channels FX, National Geographic, and get Fox’s stakes in Hulu and European pay-TV provider Sky.

Prior to the deal closing, 21st Century Fox will separate the Fox broadcasting network, Fox News Channel, Fox Business Network, and some national sports networks into a new company that will be spun off to its shareholders. The remaining properties would ideally in the coming years merge with News Corp., from which they split in 2013, Fox’s Rupert Murdoch said on Fox Business Thursday morning.

Disney, which counts ESPN among its crown jewels, has suffered as consumers switch off their TVs and spend more hours watching streaming services such as Netflix that are distributed directly to consumers.

The deal allows Disney to expand its content, especially for streaming services. In addition to a majority stake in Hulu that it will have once the deal closes, Disney is preparing to launch two separate streaming services, one for sports and another focusing on entertainment. And it is pulling its content from Netflix in preparation for the launch. Adding Fox’s television and movie studios and the content they own means adding to the stable of must-watch content it can offer directly to consumers, bypassing their streaming competitors’ platforms.

The deal will need to undergo regulatory review and will likely take at least a year to close.

Talley LLP understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability or build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

 

Source: www.cnn.com 12/15/17

It was already a rough year for Steely Dan fans: Walter Becker, the band’s co-founder and guitarist, died in early September. Now the surviving member, Donald Fagen, is embroiled in a complicated legal feud with Becker’s estate.

At the center of the suit is a buy/sell agreement signed in 1972, the year the band formed, which stated that upon the death or departure of a Steely Dan bandmember, the group would purchase that member’s shares. By 1975 Steely Dan was effectively a duo, with Becker and Fagen accompanied by session musicians.

Fagen’s suit is apparently an effort to head off a move from Becker’s estate: He alleges that four days after Becker’s death from esophageal cancer on September 3, he received a letter that said: “We wanted to put you on notice that the Buy/Sell Agreement dated as of October 31, 1972 is of no force or effect.” The letter also reportedly demanded that Becker’s widow, Delia, be appointed a director or officer of the group, and that she was entitled to 50 percent ownership of Steely Dan.

The buy/sell agreement, if enforceable, would entitle Fagen to purchase Becker’s 50% ownership of the band and, therefore, be the sole owner and retain 100% control of the band. While Becker’s estate says the suit is “riddled with half-truths and omissions,” and regardless of the ultimate outcome of this dispute, there is a lesson both aspiring bands and entrepreneurs can learn from this story:

Estate/Legacy Plans Need To Be Updated Frequently. The buy/sell agreement in question in the Steely Dan lawsuit was apparently executed just before the release of their first album. In other words, it was done when Steely Dan was relatively unknown and had not achieved international success or amassed such a large catalog of music and other properties and rights. At the time, it was a fairly forward-thinking move (most bands have no agreements in place when they first start out). The problem is, however, it was never updated. The structure and governing documents through which a band (or any organization) operates need to be treated as a plan that can and will evolve over time as the band itself evolves. A legacy plan requires continual oversight and must be proactively implemented on an ongoing basis to truly work in the best interest of all parties involved. Bottom line: having an agreement that is 45 years old still govern any type of relationship is usually not a good idea.

Talley LLP understands the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability or build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.


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