Introduction. The Tax Cuts and Jobs Act of 2017 (the “Act”) added Section 199A to the Internal Revenue Code (the “Code”). Section 199A provides a deduction that reduces the effective tax rate on qualified business income (“QBI”) for owners of businesses taxed as sole proprietorships, partnerships, limited partnerships, limited liability companies, S corporations and similar pass-through entities (each hereinafter, a “pass-through Continue Reading …
In two recent decisions, both of which will be precedential, the California Office of Tax Appeals (OTA) ruled against taxpayers and in favor of the California Franchise Tax Board (FTB), as the FTB demonstrated its long reach when it comes to collecting taxes.
In its opinion in The Matter of the Appeal of Aroya Investments I, LLC, issued on July 7, 2020, Continue Reading …
As we make it through 2020 and into 2021, one should consider revisiting the choice of entity in ascertaining which type of business entity is the best entity for a client’s particular needs. Historically, flow-through entities such as partnerships, limited liability companies and S corporations have prevailed over C corporations. Generally, this is a good choice for planning an exit from Continue Reading …
In recent years, the California Franchise Tax Board (the “FTB”) has become known for auditing like-kind exchanges under IRC Section 1031. A scenario frequently challenged by the FTB is known as a “drop & swap.” In that situation, an entity taxed as a partnership (such as an LLC or limited partnership) transfers an undivided interest in real property to one or Continue Reading …