Baker Law Firm
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November 2014 Archives

U.S. Treasury Study Highlights Significant Tax Savings Achieved by Using Section 1031 Like-Kind Exchanges

The U.S. Treasury has just released a study highlighting the popularity and effectiveness of like-kind exchanges under Tax Code Section 1031. In tax year 2007 (the last year for which detailed numbers are available) taxpayers achieved slightly more than $82 billion of deferred gain due to such exchanges with more than $63 billion attributable to real estate. Under Code Section 1031, no gain is recognized currently if a taxpayer exchanges eligible property for a like-kind property. As most exchanges of real estate are difficult to arrange, most exchanges are deferred through the use of qualified intermediaries. The taxpayer sells his real estate to a third party through an intermediary who handles the sale closing and holds the net sale proceeds. Within 45 days after the sale, the taxpayer must identify the replacement property, and through the intermediary, acquire that property generally within 180 days of the sale. After the exchange, the taxpayer's cost basis in the new property becomes the basis of the old property given up. When the new property is subsequently sold, because of the cost basis adjustment, the capital gain is eventually taxed. While the tax benefits are significant, the rules and procedures are detailed and complex, requiring the assistance of a knowledgeable and experienced tax attorney.

Can't afford to pay your taxes? Some options may be available

No one likes owing money, and we all have different ways of dealing with it (or avoiding dealing with it). While certain debts can be ignored (whether or not they should be), tax debts cannot. The Internal Revenue Service has a number of serious enforcement options, which means that your best bet is usually to work with the IRS to settle your tax issue.

Negative Press Causes IRS to Clarify Position on Civil Forfeiture in Uncharged Structuring Cases.

Following a number of recent negative press stories, culminating in a front page article in the New York Times, the IRS's Chief of Criminal Investigation just announced that the IRS will no longer pursue the seizure and forfeiture associated with legal source "structuring cases", except under exceptional circumstances. Bills have been introduced in both the Senate and House of Representatives requiring the government's standard of proof in civil forfeiture proceedings to be by "clear and convincing evidence", a much higher standard than presently required. Sen. Chuck Grassley (R-IA) Ranking Member and possibly the new chairman of the Judiciary Committee suggested it was time to reform civil forfeiture laws and procedures.

Employee or independent contractor? The IRS demands accuracy

Many Americans enjoy a steady paycheck directly deposited into their bank account every two weeks or so. If you work for a company as an employee, the company’s payroll department has likely already deducted all necessary payroll taxes, including taxes for Medicare and Social Security.

How much money is wasted by the IRS on tax collection?

An old business adage that’s still popular today tells us that “it takes money to make money.” This most often refers to the costs businesses incur in overhead, advertising and other expenses before they can bring in revenue. But does the adage apply to the U.S. government as well?

Don't fall for scams from thieves claiming to be with the IRS

Now that we’re well into the final quarter of the calendar year, the new tax season is just around the corner. Of course, there are plenty of special occasions to celebrate between now and January, so you probably won’t have taxes on your mind just yet.

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