With the marriage of Meghan Markle and Prince Harry last year, the citizenship of the American actress brought tax implications of dual citizens to light. As Markle took on her role as a British royal, many were curious to see if she would renounce her American citizenship, a choice she ultimately ended up deciding against. Not long after the pair officially tied the knot, they announced they were expecting their first child. Although the family is excited as their suspected due date looms, tax experts believe the couple should start planning their child’s tax strategy sooner rather than later.

Although not all newborns have assets, as a royal, Markle’s baby will likely receive some that will begin earning income immediately. As seen in the complications with Markle’s tax situation, the baby will be obligated to file U.S. taxes on those assets since they are categorized as a dual citizen at birth.  Parents are unable to renounce citizenship for their children, so as long as Markle is an American citizen when any of her kids are born, they will become dual citizens as well.

The Foreign Account Tax Compliance Act of 2010 requires the filing of a Form 8938, which would involve the royals’ financials, and mandates that non-U.S. banks and governments give up necessary financial information about their American account holders. In response to the stringent tax income and reporting laws of the IRS, many dual citizens have renounced their American citizenship. On average over the past two years over 5,000 American renounce their citizenship although many others are unaccounted for officially.

For Markle to do this for herself, she would have to prove five years of IRS tax compliance, pay a $2,350 fee, and most likely pay an exit tax on her estimated $5 million net worth. Fortunately for the royal child, if they give up their citizenship having not lived in the U.S for ten years and before reaching the age of eighteen and a half, they will be able to avoid the hefty exit tax. Having handled Markle’s IRS tax situation, the Sussex Royals will no doubt consult a team of tax experts.

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. For more information, contact us today.

When making an estate plan, many contemplate how to allocate their physical possessions, but most do not consider their digital assets. As the world is increasingly digitalized from online banking to social media, managing your digital assets in your estate plan can help preserve their monetary and sentimental value, mitigate the risk of electronic theft, and avoid complications for your loved ones.

All the information in your emails, blogs, websites, social media, and cryptocurrency are considered a part of your digital assets. To be safe, consulting an estate planning advisor can help you understand your state’s laws and your digital platforms’ Terms of Service Agreements (TOSA). The TOSA is the contract you agree to when first setting up an account and may indicate that in the circumstance of your death your account can’t be transferred to another person.

The order of how to handle digital assets of the deceased is found in a state’s version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). The first step is checking if a service provider has a transfer system for beneficiaries, the second is reviewing legal documents, and the third is checking the terms of the TOSA. In any case, having a plan laid out is preferable to leaving your legacy to chance. In some unfortunate but common cases, accounts with stored credit card, billing, and identity information may be subject to post-mortem theft by hackers.

Additionally, with individuals continually creating new accounts and changing passwords, you must make sure your information is as current as possible. Estate planning advisors can assist their clients in making these updates by setting up a system for tracking passwords and accounts. Without your correct passwords, a beneficiary will lose access to essential data and be unable to delete unnecessary accounts. Digging for digital information is a lot harder than digging through someone’s attic for physical assets, making tracking your online activity very important.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

Near the end of 2018, the state of New York experienced a $2.3 billion decrease in tax revenues, with the fleeing of its wealthy citizens to lower-tax states believed to be the cause. Since 46% of their income taxes are sourced from the New York’s top one percent, it’s no surprise that the state may have some worries. As New York has increased limits on state and local income tax deductions, many have sought tax refuge by moving to Florida, a state that has no income or estate taxes. Although this may seem like a simple change of location, attempting to relocate can bring tax liabilities into question and can ultimately result in an audit.

Over the past ten years over 3,000 residency audits were conducted resulting in an estimated $1 billion in collections. In the past three years alone, more than half of those who were audited lost their cases, resulting in an average tax bill of $144,270. New York auditors are using traditional and new methods of digging for information, including credit card statements, schedules, cell phone records, social media, vet and dentist records, and in-home inspections.

Many believe spending 183 days out of New York will automatically exempt them from state taxes. Though the amount of days you spend in and out-of-state matters, these cases ultimately come down to proving “domicile,” being able to demonstrate that a taxpayer’s permanent, primary home is in Florida rather than New York. For people who spend time in two or more states, evidence can come from comparing which house is nicer, where your primary doctors are, where your prized possessions or pets are, and even which refrigerator is stocked with fresh or expired food. Since rulings on “domicile” can be subjective, this gives New York an advantage and most taxpayers being audited end up settling.

Consulting tax experts is one way individuals can educate themselves on policy changes and learn how their life decisions may impact their tax situation.

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. For more information, contact us today.

This week the news was flooded with reports of the college admissions scandal involving cheating and bribery from some very well-known individuals including celebrities and CEOs. Wealthy parents paid thousands of dollars to fake their children’s way into elite schools and will be facing legal repercussions for many months to come. As more information is revealed, those involved are finding themselves entangled in charges including money laundering, obstruction of justice, and ultimately tax fraud.

The “Operation Varsity Blues” scheme, ran by William Rick Singer, involved fixing SAT scores and faking students’ credentials as promising athletic recruits. Parents, with or without the knowledge of their children, struck a deal with Singer who bribed various admin staff members, exam proctors, and coaches. Payments were made in the form of “charitable donations” to Singer’s non-profit, the Key World Foundation (KWF). KWF was an official IRS-recognized organization established in 2014 and received approximately $2-4 million in yearly contributions from 2015-2016.

KWF “donated” to schools across the country, including Chapman University, DePaul University, NYU, University of Miami, University of Texas, USC, UCLA, among others. Over the years KWF would distribute over $7 million in grant “bribes.” Given the non-profit status of the organization, these donations qualified as tax deductions for those who contributed, which many of the accused took advantage of. Because of this, whether intentionally or not, when hiding their crimes through the KWF non-profit, parents were also committing tax fraud. As each case is brought to trial, those involved in the scandal will face the legal repercussions of defrauding the IRS.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us today.

Last week, free-agent right fielder Bryce Harper finalized his move to Philadelphia, Pennsylvania to play for the Phillies for a whopping $330 million thirteen-year commitment. When choosing a team, MLB players have a lot to consider from location to loyalty to long term payoff. Something most players don’t initially consider is that different states have very different state taxes and how their salaries are structured may have major league tax implications.

Besides the Phillies, the other big contenders taking a swing at landing Harper were the Dodgers, Padres, and Giants in California. Being that the California state tax rate on personal income taxes is one of the country’s highest at 13.3% vs. Pennsylvania’s low 3.07%, it’s not surprising the Phillies might have had a slight advantage. When making offers, teams and consultants must use numbers that bring this into consideration. California’s players pay millions more in taxes each year, meaning many of the teams must make higher initial offers or face rejection.

With a smart management team and the help of tax consultants, players can assess the pros and cons of competing offers. His former team, the Washington, D.C Nationals, had allegedly offered him $300 million for ten years, but even with a 0% state tax rate Harper declined the bid. Consider Harper’s $20 million signing bonus, which is usually exempt from state taxes. This isn’t the case In Pennsylvania, where signing bonuses are recognized as allocable income, meaning a portion of his signing bonus is taxable, to the tune of $603,109. In his 13 years as a Phil, Harper will pay over $9 million to the state and city, not a bad deal as he will still end up with around $320 million.

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. For more information, contact us today.

After the passing of world-renowned fashion designer and icon Karl Lagerfeld last week, many have wondered what will happen to his estimated $300 million fortune. Having no children, there is much speculation over the specifics of Lagerfeld’s estate plan. Many even believe that his beloved cat Choupette will be one of the primary beneficiaries. Considering the validity of pet trusts varies by country and state, Lagerfeld leaving his fortune to his cat may have taken some very hairy estate planning.

The furry Lagerfeld heiress is famous in her own right, having an income from modeling and her own maids and chef. She also has almost 300k Instagram followers, two books written about her, and a makeup line. It’s not surprising that one of Lagerfeld’s main wishes was to continue providing Choupette the same lavish lifestyle after his passing.

The laws surrounding leaving money to your pets differ from country to country, which is essential in Lagerfeld’s case since he was a German citizen residing in France. Unfortunately for Lagerfeld, France’s laws state that money can only be left to a physical person or foundation, meaning Choupette could not be left an inheritance directly. If Lagerfeld did in fact plan for Choupette to receive something, he would have needed an estate planning advisor to give him the viable options to achieve this goal. He could either create a foundation whose goal is to take care of Choupette, donate to a non-profit that would agree to care for Choupette, or leave Choupette and her inheritance to a trusted friend.

On the other hand, in the United States, pet trusts are legal, though there needs to be a human in charge of the funds. Additionally, many courts have the freedom to make changes to the dollar amount if they feel that the inheritance amount is unreasonably large. All these different laws stress the importance of consulting a professional estate planning advisor to help you reach your end goals including the care of your beloved pets.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

After a two and a half year legal battle, Colin Kaepernick’s collusion grievance against the NFL has been settled. While it is speculated that Kaepernick will receive an estimated $60-80 million before taxes, the official number is unknown since both parties are bound by a non-disclosure agreement. Like other windfall events, the large payout presents Kaepernick with equally as large tax implications. With the IRS constantly updating laws, there are a few ways a tax advisory expert can coach Kaepernick on understanding the tax game and help him avoid unnecessary fumbles.

In Kaepernick’s situation, the money he receives as part of the settlement would be counted as lost earnings and therefore treated like ordinary income on his tax filings. The only exception to this rule would be in cases involving personal physical injuries from accidents or illness that would be tax-free thanks to Section 104 of the tax code. In 1996, the IRS differentiated “personal injuries” and “personal physical injuries” meaning cases related to emotional distress, sexual harassment, and defamation are no longer included in this tax-free category.

Additionally, with recent tax laws on gross recoveries, individuals’ payments are taxed in full regardless of what lawyers may retain. If your lawyer is receiving half of your settlement, you will still be liable for income taxes on the total amount which finds many people unprepared. For professional athletes and average people alike, laws are increasingly preventing and complicating deductions both above and below the line. Understanding these complex regulations, especially during a windfall event, is one of the biggest challenges facing many today. With comprehensive knowledge of current laws, tax expert advisors offer financial, tax and legal insights needed to call the best plays.

Talley LLP offers a broad spectrum of services to fulfill the needs of professional athletes, high net worth individuals, and entrepreneurially driven companies and their owners. 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.

Each year as February 14th rolls around, individuals are looking for the perfect gift for their significant other, friend, family member, or themselves. According to the National Retail Federation, the jewelry business was expected to sell over $3.9 billion worth of product. With so many options as to where to buy and who to work with, purchasing a piece of jewelry can mirror high level business matters such as transitioning your company through an M&A deal. In both cases, there are two important ways a trusted advisor can help you navigate these complex financial transactions and find a deal that you love.

Understanding the marketplace. Whether you’re looking for a simple everyday piece or trying to find the right engagement ring, you may or may not have a general idea of your desired quality and price. In jewelry, most buyers, especially first-timers, head to retail stores and try to go through the whole process themselves. By doing this, they risk missing out on better quality items and a better maximization of their budget. A private jeweler may sound intimidating, but these advisors offer direct private assistance and a wealth of knowledge on the market.  Similarly, M&A advisors level the playing field for entrepreneurs by understanding the rules of engagement and developing the right strategy to buy or sell their companies. These experts help you identify investors, strategic and financial, that are a good fit to fuel business growth and can ultimately secure a better end-result than if you went it alone.

Protecting your investment. Private jewelers offer more than a one-time buyer-seller relationship. Many will be able to assist your jewelry purchases for years to come and help you solve any problems with those pieces that may arise in the future. Although working with an expert might seem expensive, the benefits outweigh the cost when considering the complex nature of the industry. An M&A advisor also helps you manage your investments and protects your best interests. Working side by side with management, advisors confirm that your buy or sell-side acquisition criteria are clearly defined, executable and measurable against future results to determine whether adjustments are needed. They help create a win-win situation for each party and optimize a successful outcome.

Whether in a new jewelry purchase or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley LLP is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your buy-side or sell-side strategy.

After almost two years of facing off, Cristiano Ronaldo’s match with the Spanish government has ended with a guilty plea to four counts of tax fraud. The soccer star has agreed to pay a $21.7 million fine and serve a 2-year probationary period in lieu of jail time. Like his fellow fraudulent footballers Lionel Messi, Neymar, and Samuel Eto’o found, tax authorities will continue to demonstrate that celebrity athletes are not above the law.

In mid-2017, Spanish tax authorities launched an investigation into Ronaldo, alleging that he underreported his financials related to his image or likeness rights’ deals. As arguably the most famous soccer player in the world, a huge chunk of his earnings derives from his appearance and brand. As #3 on Forbe’s list of the World’s Highest Paid Athletes and #5 on the World’s Highest Paid Celebrities, it’s not a shock that Ronaldo’s finances would undergo a rigorous investigation by Spanish authorities to uncover any wrongdoing.

High net worth individuals and celebrities will continue to face increased scrutiny by tax authorities, both domestically and internationally. Seeing as U.S. celebs such as Mike “The Situation” Sorrentino from “Jersey Shore” and Teresa Giudice from “The Real Housewives of New Jersey” have faced harsher sentences, serving actual prison time, Ronaldo may have got off easy.

With over 30 years’ experience consulting with industry-leading companies, we understand the challenges facing individuals 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.

What happens once your business experiences initial success or substantial growth? Having “real” money can bring about complex problems that your business had yet to encounter. With the help of professional advisors, there are a few ways to make sure you handle these issues effectively and ensure your successes only continue.

Be aware of burnouts. Burnouts are a big reason for business failure especially in the first year and taking that time to appreciate your accomplishments can help prevent this.  Part of avoiding burning out is ensuring that you maintain your personal and mental health. All the business and productivity advice in the world won’t help you if you’re already stressed out, sleep deprived, and running yourself into the ground before you take that first sip of coffee or tea in the morning.

Be mindful of taxes. While running your business, it’s easy to focus on the day to day operations, forgetting about important long-term details such as tax planning. Working with an experienced tax planning advisor can help you mitigate taxes and proactively plan for the future of your business.

Plan for your long-term future. There will always be more money to be made as an entrepreneur and reaching your first goal is only the beginning.  Although using your earnings to fund entertaining purchases is an earned right, investing your money in things that can appreciate will set you up for continued wealth. Having an expert counsel can help you make these decisions as they are familiar with the challenges that characterize an entrepreneur’s business ventures.

Form habits that create continued success. Specific motivators made you successful in the first place, so do not stop focusing on them. Running a business calls for ongoing work but managing your time effectively and forming useful business habits can help take the stress off of you. Always set new goals for you and your business to ensure you achieve continued growth and success.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

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