Legal Protections Franchise Dealers Have Against Direct Manufacturere Sales

As posted to the Bellavia Blatt YouTube Channel on 9/30/22, and the Fixed Ops Roundtable YouTube Channel on 10/8/22 (Run Time: 17 min, 52 sec) With automakers speeding toward electrification, many are more than hinting at a new distribution model for those electrified vehicles involving customers ordering vehicles online.  Are dealers at risk of being cut out of the sales process? In this clip, automotive attorney Len Bellavia sits down virtually with Ted Ings at the "Fixed Ops Roundtable" to discuss the future of the franchised dealership network model. Len's position is that the real risk is whether or not dealers are going to invoke their rights under their respective states' franchise laws which have been on the books for decades, designed to protect against this very subject. "State Dealer...

Dont Let Tax ID Thieves Steal Your Refund

Any form of identity theft can be costly, unsettling, and take months — sometimes years — to fully recover from and repair. But tax-related identity theft can be particularly disturbing because it involves the IRS, about which many people already harbor suspicion and anxiety. Although the IRS has taken significant steps in recent years to help minimize the occurrence of tax-related identity theft, this type of fraud continues to occur. Here’s how to avoid becoming a victim. Individuals and businesses are vulnerable If criminals use your information to file an income tax return to claim your refund, the first notification of fraud you receive may be a denial of your return. Tax returns are identified via Social Security numbers (SSNs) and the IRS won’t accept two returns...

IRS Announces Dirty Dozen Tax Scams for 2022

The IRS has compiled the annual Dirty Dozen list for more than 20 years as a way of alerting taxpayers and the tax professional community about scams and schemes. The list is not a legal document or a literal listing of agency enforcement priorities. It is designed to raise awareness among a variety of audiences that may not always be aware of developments involving tax administration. #1-4 - POTENTIALLY ABUSIVE ARRANGEMENTS (Source: IR-2022-113, June 1, 2022)   The potentially abusive arrangements in this series focus on four transactions that are wrongfully promoted and will likely attract additional agency compliance efforts in the future. Those four abusive transactions involve charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales.   "Taxpayers should stop and think twice before...

Dont Forget Income Taxes When Planning Your Estate

As a result of the current estate tax exemption amount ($12.06 million in 2022), many estates no longer need to be concerned with federal estate tax. Before 2011, a much smaller amount resulted in estate plans attempting to avoid it. But now, because many estates won’t be subject to estate tax, more planning can be devoted to saving income taxes for your heirs. While saving both income and transfer taxes has always been a goal of estate planning, it was more difficult to succeed at both when the estate and gift tax exemption level was much lower. Here are three considerations. Plan gifts that use the annual gift tax exclusion. One of the benefits of using the gift tax annual exclusion to make transfers during life is...

Putting a Price Tag on Intangible Assets

Intangible assets — such as patents, copyrights and trademarks — are essential to the operations of many companies, but they’re rarely reported on the balance sheet. And even when they are reported due to an acquisition, book value is often based on historical cost under U.S. Generally Accepted Accounting Principles (GAAP). However, historical cost may not represent current market value, especially if the acquisition happened long ago and the asset’s value has appreciated over time. Valuing intangible assets is essential in many situations, including shareholder disputes, divorce cases, infringement claims, and gift and estate planning. So how do you determine what intangibles are worth in today’s volatile marketplace? Critical factors When valuing intangible assets, business valuation professionals generally consider the following factors: The economic benefits, direct or indirect,...

Can Homeowners Deduct Seller-Paid Points?

In its latest report, the National Association of Realtors (NAR) announced that July 2022 existing home sales were down but prices were up nationwide, compared with last year. “The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June,” said NAR Chief Economist Lawrence Yun. However, he added that “home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers.” If you’re buying a home, or you just bought one, you may wonder if you can deduct mortgage points paid on your behalf by the seller. The answer is “yes,” subject to some important limitations described below. Basics of points Points are upfront fees charged by a mortgage lender,...

Dont Let Fraud Break the Bonds of Your Family Business

According to Family Enterprise USA, 87% of U.S. companies are family businesses, which are responsible for 54% of gross domestic product or $7.7 trillion. Although family businesses are an economic pillar of strength, several studies have found that they’re more vulnerable to occupational fraud than other companies. Here’s what you need to know if you run a family business. Loyalty can hamper prevention Why might family businesses be more vulnerable to fraud than other companies? For one thing, prevention efforts can be hampered by loyalty and affection. One of the biggest obstacles to fraud prevention is simply not being able to acknowledge that someone in the family would be capable of initiating or overlooking unethical or illegal activities. Like any other business, family enterprises must include a system...

Separating Your Business from its Real Estate

Does your business need real estate to conduct operations? Or does it otherwise hold property and put the title in the name of the business? You may want to rethink this approach. Any short-term benefits may be outweighed by the tax, liability and estate planning advantages of separating real estate ownership from the business. Tax implications Businesses that are formed as C corporations treat real estate assets as they do equipment, inventory and other business assets. Any expenses related to owning the assets appear as ordinary expenses on their income statements and are generally tax deductible in the year they’re incurred. However, when the business sells the real estate, the profits are taxed twice — at the corporate level and at the owner’s individual level when a distribution...

Is Your Income High Enough to Owe Two Extra Taxes?

High-income taxpayers face two special taxes — a 3.8% net investment income tax (NIIT) and a 0.9% additional Medicare tax on wage and self-employment income. Here’s an overview of the taxes and what they may mean for you. 3.8% NIIT This tax applies, in addition to income tax, on your net investment income. The NIIT only affects taxpayers with adjusted gross income (AGI) exceeding $250,000 for joint filers, $200,000 for single taxpayers and heads of household, and $125,000 for married individuals filing separately. If your AGI is above the threshold that applies ($250,000, $200,000 or $125,000), the NIIT applies to the lesser of 1) your net investment income for the tax year or 2) the excess of your AGI for the tax year over your threshold amount. The “net...

Valuing Goodwill in Divorce: Recent Cases Provide Insight

Goodwill is one of the most confusing aspects of valuing a business interest for divorce cases. In many states, goodwill needs to be valued and then divided into two pieces: business and personal goodwill. Unfortunately, significant differences in methods and theories exist on this complex issue, as recent case law demonstrates. Key definitions According to the International Valuation Glossary — Business Valuation, “Goodwill can arise as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.” A business interest may possess two types of goodwill: Business (or entity) goodwill. This belongs strictly to the entity itself. Business goodwill may arise from many sources, including the company’s name, phone number, location and special attributes, such as special menu items or recipes at...