In ABCast Episode 25 - US Expatriate Tax Planning - Part 2, we pick up the conversation regarding tax and legal issue U.S. expatriates might face and how Allen Barron can help. The discussion turns to real estate matters, and the issue of moving money from the United States to a Foreign Financial Institution (FFI) for the purposes of buying a home. Many U.S. expats do not realize this is a triggering event for FBAR filing requirements. If an individual account or the aggregated total of all your offshore financial accounts exceeds $10,000 at any point in the tax year, even if for an hour or a day, it triggers the requirement to file associated FBARs. A lot of the deductions we are able to take here in the U.S., such as depreciation and amortization, are not available in foreign tax returns. How should a U.S. expat manage real estate transactions.

ABCast Episode 25 - US Expatriate Tax Planning- Part 2 continues the conversation, turning to international tax treaties and how these treaties and associated tax credits balance out. Janathan Allen shares the heirarchy of tax treaties, bilateral tax treaties, and many of the rules that regulate reportable income. Tax credit computation may seem to be a dollar-for-dollar transaction, but Janathan shares the misleading nature of this assumption and the impact of timing issues and paying one tax entity in order to seek a deduction from another. Jan discusses Form 5471, regarding foreign corporations and Form 8621 regarding Passive Foreign Income Corporations (PFICs). Many U.S. expats fail to understand the tax impact of PFIC investments - which can be as high as 55%.

ABCast Episode 25 - US Expatriate Tax Planning - Part 2 concludes with a discussion about marriage for U.S. expatriates. What issues does a U.S. expat face if they decide to get married overseas, and how can this impact taxes here in the United States. Many expats fail to consider the impact of a foreign marriage and/or divorce, and that either or both may not be recognized here in the U.S. Should you get married / divorced here in the U.S. as well? Jan shares a real life example of a client who faced incredible tax and monetary challenges simply because of an offshore divorce. California also taxes it's citizens based upon worldwide income. Many U.S. expats fail to understand the reach of California and the taxes our state may impose upon those who earned their retirement funds while working and living in California.

In ABCast Episode 24 - US Expatriate Tax Planning Janathan Allen discusses important tax issues from the perspective of a US expatriate. One of the first and most important thing to know for any US taxpayer is the United States taxes its citizens on all income they earn worldwide. US expatriates who remain US citizens (do not renounce their citizenship) remain US taxpayers. Unfortunately, many US expats (and even US taxpayers in general) believe one does not have to report offshore income to the IRS and California. This simply isn't true.

Janathan begins ABCast Episode 24 - US Expatriate Tax Planning with a discussion about common tax risks. One of those factors includes the responsibility to file the FinCEN Form 114 or FBAR, as well as the IRS Form 8938. The FBAR goes to FinCEN at the department of Justice, while the Form 8938 provides much of the same information to the IRS. The next part of the conversation focuses on the fact that US accounting (GAAP) is actually different than the way Europe and most of the rest of the world recognize "income" and that can really come back to haunt a US Expat. Jan discusses PFIC investments and even the costs and taxes associated with mutual funds or retirement plans (pensions).

ABCast Episode 24 - US Expatriate Tax Planning continues with business-related taxes and IRS Form 5471. Janathan provides the example of a US expat who works in China but lives in Japan, and the types of strategies (entities and where and when income is realized) that can actually increase the US tax burden of a US expatriate, when a little international tax planning and transactional planning might substantially reduce the tax exposures of a US expat. Ms. Allen discusses the strategy of "time" - when and where income is actually realized - and the advantages of a US C Corporation with a fiscal tax year of 1 April to 31 March, and how that can be utilized to accelerate or decelerate capital gains or losses. If you are a US expat who is interested in reducing tax exposures in the United States with the IRS, this podcast is for you.

In Episode 23 - What Can A Tax Attorney Do For You Janathan Allen discusses what a tax attorney brings to the table that many other don't. Janathan notes that many attorneys don't like numbers and yet there is so much in the business world that focuses upon the numbers associated with measuring business success and reporting the information driving every aspect of that business. A tax attorney can provide so much more than a CPA and some other type of lawyer.

One of the primary advantages of a tax attorney over a CPA is the protections of the attorney-client privilege. If an IRS auditor wants to see the communications between you and your CPA or the CPA's own notes they are easily discoverable to an IRS or state tax auditor. In Episode 23 - What Can A Tax Attorney Do For You Janathan goes on to discuss the benefits of transactional planning and how intertwined the legal, tax and accounting perspectives are. The tax attorney is able to amalgamate all of the information regarding the business or individual and the type of business they operate, the type of gains/proits and losses they experience and where, when and how those gains/losses are realized. The next steps involve the development of a strategy including entities and fiscal year planning to better match when losses occur and gains are recognized in order to minimize tax exposures.

Janathan discusses the similarity between how the United States and California look at their own taxpayers. In both cases, the government expects it's citizens to pay taxes on worldwide income. Why is it always important to file a tax return, even if you aren't going to owe anything? Janathan Allen discusses real life examples such as the worker who received stock options or simply contributed to a 401(k) or other retirement vehicle while living and working in California. It surprises many to learn that if it was earned in California, the State of California intends to tax it.

In Episode 22 - Domestic Tax Planning Janathan Allen discusses the importance of the process of domestic tax planning. Many people don't think to consider tax planning by assuming "I'm a W2 employee, how can domestic tax planning help me?" The fact is there are a lot of ways to structure your financial affairs in a way that reduces the amount of tax you owe to the IRS and the State of California (or any state) each year. In this substantive episode, Janathan discusses the concepts of tax planning and how they connect with a transactional plan.

Episode 22 - Domestic Tax Planning goes on to lay out a general outline of domestic tax planning: "The first is what I would call the marshaling of the assets and the marshaling of the assets is really learning about what it is an individual or their individual and a spouse actually hold, earn, and have. So it could be investments in real estate, it could be investments in stocks, it could be investments in fine art or maybe old cars. But it's really sitting down with the client and understanding what it is that they have. Secondarily is what it is and how it is that those assets are held. Because I can't tell you how many times when I ask a client how it is that they hold an asset that that can be an issue in terms of tax planning itself. And then third is the types or the entities that may be utilized or are not being utilized that could go back and effectively save individuals taxes."

Episode 22 - Domestic Tax Planning covers a wide range of topics from pre-tax tools such as a 401k or SEP IRA, FSA, or HSA to the creation of entities to hold specific assets in order to reduce taxation while providing additional protections for the assets themselves. Jan discusses PIGs and PALs and how the use of real estate can be a great domestic tax planning strategy. How long should you keep your tax returns and supporting documentation? What are a few of the "wives' tales" about moving assets and income offshore in order to avoid taxation? What do US expatriates need to know about the responsibility to file an IRS return? How can you avoid the costs and delays of probate and structure your affairs to accomplish all these goals?

In ABCast Episode 21 - Due Diligence Janathan Allen discusses a crucial element of Mergers & Acquisitions or M & A: comprehensive and thorough due diligence. Due diligence is a process and a review of financial information, tax and corporate documents in order to verify the validity of what the buyer and seller are sharing with one another as it relates to the acquisition of a company or controlling stock interest.

In ABCast Episode 21 - Due Diligence Jan shares the three components of an effective due diligence process. The first is to verify the organizational and corporate governance component of the equation. Is the corporate entity associated with the transaction a well run and professional corporation? The second component focuses upon a comprehensive and thorough financial review. This is one of the most complex and detailed aspects of an effective due diligence. The third component focuses on the tax implications of the transaction for both the buyer and the seller. In addition, one must consider the market and products of the target acquisition as well as primary customers and key employees.

ABCast Episode 21 - Due diligence is a thorough discussion of the checklists which drive a comprehensive review of the transaction from the perspective of the buyer or the seller. Each party has some interests in common (a successful transaction) but there are many aspects of the merger or acquisition where their business and financial interests are somewhat or entirely opposed. How does one verify every aspect of the transaction to ensure protections for the client of Allen Barron and Janathan L. Allen, APC?

We invite you listen to an interesting and thorough discussion of the due diligence process in an M & A transaction.

In ABCast Episode 20 - Preparing a Company for Sale our founder, Janathan Allen, discusses all of the steps required to get ready to sell your business and the concepts and goals you should evaluate before you begin the process. What do you, the seller, want out of the transaction? What are your cash needs going forward? Are you willing to remain in place to help with the transition or do you need to move on? What are the tax ramifications of the transaction? What are the specific steps and how long will this process take?

It may surprise most business owners to learn it can take more than a year to prepare their company for sale. In Episode 20 - Preparing a Company for Sale Jan begins with the question of "why do you want to sell?" and moves through each step of the process. Usually this begins with organizing the corporate entity, the books and other aspects of the business which will maximize the value of the entity and ease the process of selling it. The decision of an asset sale or a stock purchase transaction is crucial. The buyer and the seller have opposing interests in each of these types of transactions and the structure of the transaction itself will have a substantial yet differing tax impact on the buyer and seller.

Episode 20 - Preparing a Company for Sale discusses the process to update and/or audit the financials and the books. How will key employees and key customers be managed? Are there any contingent liabilities or crucial creditors which must be addressed? Once the organization is prepared for sale and a Letter of Intent is in place, the extensive process of due diligence will begin. This can also take several months and helps the buyer to validate the information provided by the seller.

The first step is to find a partner who can help with all of the legal, tax, accounting, estate planning and business issues associated with the transaction and provide sound insight, advice and counsel based upon decades of experience

Episode 19 - Business Succession Planning focuses on one of the most important part of protecting an owner, member, partner, shareholder or investor in any company, and yet less than one in four businesses have a succession plan. In this insightful episode Jan establishes the purpose of a business plan: "how it is that you wish to transfer the operations of whatever you're doing in the event of death or disability so that the company can continue and customers can be served, or you close the company and it ceases to exist.

In Episode 19 - Business Succession Planning Jan discusses the "reasons" business owners and stakeholders have for putting off this important process, while providing real life examples of what has happened to two example clients who failed to establish succession planning prior to the passing of the primary owner or key executive.

Episode 18 - International Tax Strategies and Forms provides insights for any US taxpayer with offshore interests, and any international person or expat with US interests. Jan begins the conversation with an interesting observation: "I think the perception is that Americans don't realize that once they leave our shores and they move to another country or they obtain residency in another country, that they have foreign reporting issues (to the IRS). I think sometimes the term foreign reporting is interpreted to mean it's not me because I'm an American citizen, when in fact if you are an American citizen outside of the states or you have foreign holdings, real estate, bank accounts, et cetera, outside of the United States, (filing an IRS tax return) does apply to you. And most people are quite surprised by that."

The episode goes on to discuss various foreign investments, entities and real estate ownership as well as oft used IRS tax forms such as the 5471, 8858, FBAR (Form 114) and 8938. Jan goes on to explain the importance of transactional planning as it relates to international and US tax exposure with two simple goals: minimize tax exposure while protecting and preserving the associated assets.

In our conversation regarding real life scenarios to avoid and to attain, Part 2 begins with a comprehensive conversation regarding cryptocurrency and Non-Fungible Tokens or NFTs. Janathan Allen discusses the quagmire cryptocurrency has become for many US taxpayers and the complexity of tracking, recording and reporting qualifying "events" for crypto and NFTs under US Tax laws. Jan discusses the question at the top of the IRS form 1040 as well as the taxpayers' signature "under penalty of perjury." The discussion converges upon how the IRS will find individual US taxpayers with unreported crypto assets and transactions and the risks they face by failing to report activity to the IRS. "It's not a matter of if...It's a matter of when." In the next segment, the discussion turns to real life challenges and how these decisions are made. Jan uses the example of the challenge of whether a business should pay the quarterly sales tax deposit to the CDTFA or pay suppliers. If the company in the example fails to pay suppliers they will literally go out of business. Jan explains the challenge and how the CDTFA would much prefer to help the company to stay in business and grwo stronger by establishing a payment plan or some other deferred strategy. Jan discusses how the IRS views taxpayers who try to work with the agency through challenges as opposed to those who hide and hope not to be noticed. Jan also gives the real life example of a business who took a PPP loan during COVID, but the bookkeeper mis-recorded the transaction as "income" when in fact it should have been to debit cash and credit a liability. The importance of accounting from a business and personal perspective cannot be overstated. Accounting not only helps to reduce tax exposure and increase retained earnings, but helps in all aspects of transactional planning - the strategy of structuring transactions to reduce taxation exposures. The lively conversation turns to PIGs and PALs and how these offsetting tools help US taxpayers to reduce tax exposure and increase the amount retained in "hip pocket national bank."

In this episode of ABCast Janathan Allen discusses some real life scenarios of how Allen Barron has been able to provide valuable services to solve our client's problems and fix integrated legal, tax and accounting issues both domestically and internationally. The conversation begins with issues relating to a trust (or lack of one). What happens when you pass away without a trust or will? What is funding a trust and why is this so important? When might it not be a good idea to put something into a trust? Jan reviews the high cost of probate and how an effective trust strategy saves substantial time, money and hassle. The conversation turns to domestic tax planning, international tax planning and transactional planning. We discuss a few examples of how international tax planning has helped to restructure our client's strategy to reduce taxation and increase profits. Jan discusses the substantial difference between how investments and income are taxed abroad versus here in the United States and how Europe's method of reporting investment income actually results in almost doubling an American investor's taxation due to PFIC calculations. The conversation turns to FBAR reporting, Crypto investments and other associated vehicles. Jan discusses the concepts of "willful" versus "non-willful" behavior on the part of a US taxpayer and how to come into compliance easily and efficiently if you have failed to report offshore accounts or activity. The conversation includes a discussion on the protections of the attorney-client privilege and why it is almost never in the interests of a US taxpayer to speak directly to the IRS.