The IRS Audit Blog

Posts Tagged ‘cpa’

Question: Why would Matt Murphy, the guy with Barry Bonds 756 home run ball want to sell. Keep it until Bonds retires?

If he sells it, he will be taxed on the money he receives. Think he better talk to a CPA, tax preparer or attorney before he sells it. He’s better off waiting, put it in a safe deposit box, then when Barry retires, sell it then. Having to give at least 40% to the government is ridiculous. Safe deposit box is cheaper and Barry is still playing ball.

Answer: He’s going to be taxed on the value of the ball, whether he sells it or not.

So he can’t afford to keep it.
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Rapid-refund loans dwindling

Getting your tax refund quickly using a rapid-refund loan has gotten more difficult for the second straight year. That may frustrate the customers who are turned down for these expensive short-term loans. But consumer advocates say it’s good news.

Tax Strategies by Sandy Botkin, CPA, Attorney

The basic requirements to set up a company, incorporation procedure, time-line and statutory compliance are some of the factors that need to be taken into account while determining the ease of setting up a company in a given jurisdiction. This article presented by www.guidemesingapore.com contrasts the company registration and related statutory requirements for two of the major countries in Asia namely Singapore and India.

FOREIGN OWNERSHIP
Singapore does not impose any restrictions on foreigners who wish to do business in the country. It allows 100% foreign ownership (i.e. shareholding) of a Singapore private limited company. Any foreign individual or a foreign entity can register a company in Singapore. No special approvals or formalities are required and the new entity can engage in any lawful business activity.
In India, foreign entrepreneurs can set up a foreign direct investment company with 100% ownership only in certain business sectors. Some sectors are subject to caps on investment limits and require prior approval from the Indian government, while certain other sectors prohibit foreign investment.

MINIMUM INCORPORATION REQUIREMENTS
In Singapore, the minimum incorporation requirements include: a local registered address; at least 1 local resident director (a Singapore Citizen, a Singapore PR, or a foreigner holding an Employment Pass, Entrepreneur Pass or Dependent Pass); a local resident and qualified company secretary (must be a natural person); a minimum of 1 and maximum of 50 shareholders (natural persons or corporates); and a minimum paid up capital of SGD 1.
To set up a company in India, foreigners must comply with the following requirements: a local registered address; at least 2 directors (need not be local residents); minimum of 2 and maximum of 50 shareholders (natural persons or corporates); and a minimum paid up capital of INR 100,000.
INCORPORATION PROCEDURE
Company registration in Singapore is fully-computerized and can be completed within 1 day via electronic means. There are only two major steps involved in company formation – name approval and filing incorporation documents.
On the other hand, incorporating a company in India involves several steps and is not only tedious but also time-consuming. It can take up to few months to complete all formalities. You must first seek government approval for setting up a foreign direct investment company in India. Directors must obtain a ‘Director Identification Number’ and ‘Digital Signature Certificate’ prior to company incorporation. Upon company name approval and filing incorporation documents, the Certificate of Incorporation will be issued.

INCORPORATION TIMELINE
Company incorporation in Singapore can be completed in a record time of less than 24 hours, with minimal formalities. By contrast, in India it can take anywhere between 2-3 months to incorporate a company.
ANNUAL FILING REQUIREMENTS
In Singapore, an Annual Return must be filed with Companies Registrar and Income Tax Return with the Singapore tax department each year. Small companies with revenue less than SGD 5 million and no corporate shareholders are exempt from filing audited accounts with the returns.
In India, companies must submit Annual Return along with audited annual accounts to the Registrar of Companies. No company is exempt from the audit requirement. Income Tax Return along with audited accounts must be filed with the Indian tax authority each year. Companies whose annual turnover is less than INR 4 million are exempt from the tax audit requirement.
CORPORATE TAXES

The corporate tax rate in India is 30.9% for taxable income up to INR 10 million and 33.9% for taxable income above INR 10 million. Companies are also subject to dividend distribution tax of 16.995% and capital gains tax of 10%, 15% or 20%. Services tax stands at 10.3%. The state level VAT ranges from 1%, 4%, 12.5% to 20%, while the central level sales tax stands at 2%.
Taxes in Singapore are significantly lower than India. Singapore charges a corporate tax rate of approximately 8.5% for profits up to S$300K and a flat 17% for profits above S$300K. There is neither a separate dividend distribution tax nor any capital gains tax. GST stands at 7%.
According to a recent tax comparison report issued by GuideMeSingapore.com that considers the case of a hypothetical start-up firm expecting to make an annual income of US$300k, the firm will have a total tax bill of only US$34k in Singapore while it would face an approximate tax bill of US$102k in India.
ON A FINAL NOTE
Based on the comparative analysis it is clear that Singapore offers a better business environment for foreign entrepreneurs, as compared to India. Some of the distinct characteristics of company formation in Singapore include: easy incorporation procedure which can be completed in less than 24 hours; liberal foreign ownership policy; minimal statutory requirements and an attractive tax regime.

Home Energy Audit: First Step to Profit from “Cash for Caulkers” Stimulus Plan

A comprehensive home energy audit is the first step to take to prepare for “Homestar,” better known as “cash for caulkers,” a new economic stimulus plan being developed by the US government to boost the economy and make homes more energy efficient.

tax service

Question: Questions on the OIC Form and also the 433 A Form.?

While filling out an “Offer in Compromise” Form,They are asking me how much my gas and electric bill is monthly when in fact it always changes so do I put in the ‘average within the 3 monmths they are requesting? also on the Form 433 A they allow a national average amount of about $7,000 for houshold items,furniture ,etc and a national average for tools used in the trade of about $3,000 (exact numbers not in front of me). My amounts are less for both so do i put in the allowance they allow or end up with a negative number on those lines? Called IRS but the rep’s i need to speak with for these particular answers do not get assigned until after I turn in my OIC.
Thanks

Answer: They want the average of your bills for the past three months. If you can provide a year that will be better. Put the actual value of your tools of your trade and household goods.

JK Harris Reminds Taxpayers with Back Tax Debt of Their Rights and Options

Samuel Trotter, Enrolled Agent with JK Harris and Company, the nation’s largest tax representation company, reminds delinquent taxpayers they have rights and options when it comes to repaying their back tax debt.

Hobby Losses

Corrections

James Conrardy In Tuesday’s article regarding the sex crime case against James Conrardy, the Post Independent was given inaccurate information by the Denver District Attorney’s Office. Conrardy will have to register as a sex offender. Contrary information was received before the court file was completed after his sentencing hearing Monday. Mass transit Three errors appeared in an article about …

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Question: Lending out Ebay/Paypal account and tax return/audit?

I have an ebay account that I lend to a friend of mine. He’s being really succesfull with the ebay business. My ebay account is linked to my paypal account. My friend transfer all the money he makes from my paypal account directly to HIS bank account. I asked him do I need to do taxes since it’s under my account n he said no because the money never touches my bank account and hes filing tax for it. However, I still feel uneasy about this because I’m goin to do my tax return soon and do not want to be in jeopardize of being audited.

Answer: A Paypal account is considered a bank account and it is a bank account tied to your social security number. In effect, you lent him your checkbook.

In a couple of years, Ebay/Paypal is going to be issuing 1099s for monies received and, the way it is now, that 1099 is going to be in your name.

I wouldn’t panic right now but you need to get him using his own account in the near future.

Your tax return: Don’t let guard down

New rules will better regulate tax preparers. But you still need to do your due diligence.

I’m an audit, I’m a tax return