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AustinBusinessLawyer.info is a business law blog published by the business, tax, and health care lawyers at TexasBusinessLawyer.biz (AttorneyBritt - Gary L. Britt, CPA, J.D.).  Our blog presents commentary and information regarding the laws and regulations applicable to individuals, corporations, partnerships, and limited liability companies (LLCs); as they relate to the myriad of business transactions, contracts, and agreements every business owner, shareholder, member, physician, and/or health care provider must consider.

WASHINGTON –The Treasury Department and the Internal Revenue Service issued guidance that provides a safe harbor method for determining depreciation deductions for passenger automobiles that qualify for the 100-percent additional first year depreciation deduction and that are subject to the depreciation limitations for passenger automobiles. Under the Tax Cuts and Jobs Act (TCJA), the additional first year depreciation deduction applies to qualified property, including passenger automobiles, acquired and placed in service after September 27, 2017, and before January 1, 2027. In general, the section 179 and depreciation deductions for passenger automobiles are subject to dollar limitations for the year the taxpayer places the passenger automobile in service and for each succeeding year.  For a passenger automobile that qualifies for the 100-percent additional first year depreciation deduction, TCJA increased the first-year limitation amount by $8,000.  If the depreciable basis of a passenger automobile for which the 100-percent additional first year depreciation deduction is allowable exceeds the first-year limitation, the excess amount is deductible in the first taxable year after the end of the recovery period. The guidance provides a safe harbor method of accounting for passenger automobiles. The safe harbor allows depreciation deductions for the excess amount during the recovery period subject to the depreciation limitations applicable to passenger automobiles.  To apply the safe-harbor method, the taxpayer must use the applicable depreciation table in Appendix A of IRS Publication 946.  The safe harbor method does not apply to a passenger automobile placed in service by the taxpayer after 2022, or to a passenger automobile for which the taxpayer elected out of the 100-percent additional first year depreciation deduction or elected under section 179 to expense all or a portion of the cost of the passenger automobile. Taxpayers adopt the safe harbor method of accounting by applying it to deduct depreciation of a passenger automobile on their return for the first taxable year following the placed-in-service year. For more information on the additional first year depreciation deduction, see TCJA, Depreciation. For information about other TCJA provisions, visit IRS.gov/taxreform. For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
The Texas Supreme Court rendered a decision on the issue of a contractual waiver of punitive damages in a case alleging fraud. This case was based on a transaction involving the purchase of a new airplane that actually contained repaired engines. The plaintiffs in the underlying case were successful in the trial court on a fraud claim and received an award of punitive damages.  However, there were limitations of punitive damages contained in two applicable agreements. The purchase agreement provided that Bombardier will not be liable for punitive damages arising out of “services rendered or delivered under this Purchase Agreement.” The second agreement, a management agreement, stated “Neither party hereto may be held liable to the other party for any indirect, special or consequential damages and/or punitive damages for any reason.” In upholding the validity of the waiver of punitive damages case, and reducing the judgment, the Texas Supreme Court explained: "As the plaintiffs point out, we have held that 'fraud vitiates whatever it touches.' . . . We have never held, however, that fraud vitiates a limitation-of-liability clause. We must respect and enforce terms of a contract that parties have freely and voluntarily entered." The Court continued, "And the plaintiffs 'cannot both have [the] contract and defeat it too.' . . . Rather than seeking rescission of the agreements based on Bombardier’s fraudulent conduct, the plaintiffs have tried to enforce the agreements, seeking an award of actual damages, while at the same time seeking to strike the limitation-of-liability clauses to receive an exemplary damages award." The Court reasoned, "In balancing the competing interests between protecting parties from 'unintentionally waiving a claim for fraud' and 'the ability of parties to fully and finally resolve disputes between them,' we believe parties can bargain to limit exemplary damages. We note that the purchasing parties did not waive a claim for fraud; they only waived the ability to recover punitive damages for any fraud. As such, the valid limitation-of-liability clauses must stand." The case is Bombardier Aerospace Corporation v. SPEP Aircraft Holdings, LLC, The Texas Supreme Court's Opinion can be found here. Full Article At: Kilpatrick Townsend & Stockton LLP - Brian R. Gaudet For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
12.02.2019
Gary Britt
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The IRS offers several payment options where taxpayers can pay immediately or arrange to pay in installments.  Taxpayers can pay online, by phone, or with their mobile device and the IRS2Go app. Taxpayers should pay in full whenever possible to avoid interest and penalty charges.    Here are some electronic payment options for taxpayers: Electronic Funds Withdrawal. Taxpayers can pay using their bank account when they e-file their tax return. EFW is free and only available through e-File. Direct Pay. Taxpayers can pay directly from a checking or savings account for free with IRS Direct Pay. Taxpayers receive instant confirmation after they submit a payment. With Direct Pay, taxpayers can schedule payments up to 30 days in advance. They can change or cancel their payment two business days before the scheduled payment date. Taxpayers can choose to receive email notifications each time they make a payment. Credit or debit cards. Taxpayers can also pay their taxes by debit or credit card online, by phone, or with a mobile device. Card payment processing fees vary by service provider and no part of the service fee goes to the IRS. Telephone numbers for service providers are at IRS.gov/payments. Pay with cash. Taxpayers can make a cash payment at a participating retail partner. Taxpayers can do this at more than 7,000 locations nationwide. Taxpayers can visit IRS.gov/paywithcash for instructions on how to pay with cash. Installment agreement. Taxpayers who are unable to pay their tax debt immediately may be able to make monthly payments. Before applying for any payment agreement, taxpayers must file all required tax returns. They can apply for an installment agreement with the Online Payment Agreement tool, which also has more information about who’s eligible to apply for a monthly installment agreement. Anyone wishing to use a mobile device should remember they can access the IRS2Go app to pay with either Direct Pay or by debit or credit card. IRS2Go is the official mobile app of the IRS and is available for download from Google Play, the Apple App Store or the Amazon App Store. Taxpayers can also visit IRS.gov/account and log in to their account. From here, they can view their taxes owed, payment history, federal tax records, and key information from their most recent tax return as originally filed. More information: Filing for Individuals e-File Options for Individuals Paying Your Taxes What to Expect for Refunds in 2019 Tax Reform: Basics for Individuals and Families Multimedia Center: IRS on Social Media For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
Most public companies have developed long-term compensation programs that measure performance metrics over time (often over three years), and that typically reward senior executives for meeting clearly identified benchmarks. These plans seek to align the interests of employees with those of owners (i.e., shareholders in the public markets).    Alignment, along with the retentive value of long-term incentives, has proven to be a successful way to ensure “pay-for-performance” and continuity within an organization. But what about the compensation plans within private companies, including family offices? Whether led by a family member or another governance structure, a comprehensive compensation program that aligns stakeholder interests is critical to a successful organization. Following the public company model, rewarding key executives for value enhancement is the cornerstone of a pay-for-performance approach to compensation planning. Pay-for-performance clearly incents internal stakeholders and aligns the interests of the family office in providing the capital for those who are directing its investments (and upon whose performance the compensation depends). Further, pay-for-performance has become an integral tool for family offices to attract and retain top talent. Most compensation programs have a three-pronged goal to incent, motivate and retain. Prudent investment, coupled with a properly structured compensation program, enables organizations to satisfy those three prongs because the ability to tie compensation directly to profitability incents and motivates and is often an expectation of top talent. The long-term nature of many family office investments fosters retention. Here are some key considerations and best practices for the development of compensation plans that enable family offices to engage and retain top level talent. Compensation factors A well-thought-out compensation structure for executives comprises three elements: base salary, annual bonus, and long-term incentive plans (LTIPs): Base salary. Seemingly obvious, but meaningful base compensation rewards a professional’s time and efforts since, without guaranteed success of every initiative/transaction, compensation cannot be solely tied to successful outcomes. Otherwise, most professionals will seek to limit risk. Annual bonus. Although annual bonuses tend to be discretionary (see chart below), annual bonuses are useful if there are certain specific objectives that leadership would like to see achieved.  For example, specific HR or operational objectives are common. Long-Term Incentive Plans (LTIPs). These plans intend to incent and retain talent by enabling them to create wealth alongside the family through metrics that align professionals with owners.  More recently, family offices have begun to allow (or even require) their senior-most executives to co-invest (with their own funds or funds lent by the family office), which cultivates a sense of ownership and further aligns the interests of all parties. Vesting. Due to the long-term nature of successful initiatives/transactions, family offices often require several years of vesting even after value has been created. See full article at NixonPeabod, by Jarret Sues, Mark Rubin, and David Toth For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
Taxpayers should choose their tax return preparer wisely.   This is because taxpayers are responsible for all the information on their income tax return. That’s true no matter who prepares the return. Here are ten tips for taxpayers to remember when selecting a preparer: Check the Preparer’s Qualifications. People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool helps taxpayers find a tax return preparer with specific qualifications. The directory is a searchable and sortable listing of preparers. Check the Preparer’s History. Taxpayers can ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, people can check with the State Board of Accountancy. For attorneys, they can check with the State Bar Association. For Enrolled Agents, taxpayers can go to the verify enrolled agent status page on IRS.gov or check the directory.  Ask about Service Fees. People should avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When asking about a preparer’s services and fees, don’t give them tax documents, Social Security numbers or other information. Ask to E-File. Taxpayers should make sure their preparer offers IRS e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit. Make Sure the Preparer is Available. Taxpayers may want to contact their preparer after this year’s April 15 due date. People should avoid fly-by-night preparers. Provide Records and Receipts. Good preparers will ask to see a taxpayer’s records and receipts. They’ll ask questions to figure things like the total income, tax deductions and credits. Never Sign a Blank Return. Taxpayers should not use a tax preparer who asks them to sign a blank tax form. Review Before Signing. Before signing a tax return, the taxpayer should review it. They should ask questions if something is not clear. Taxpayers should feel comfortable with the accuracy of their return before they sign it. They should also make sure that their refund goes directly to them – not to the preparer’s bank account. The taxpayer should review the routing and bank account number on the completed return. The preparer should give you a copy of the completed tax return. Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers must have a Preparer Tax Identification Number. By law, paid preparers must sign returns and include their PTIN. Report Abusive Tax Preparers to the IRS. Most tax return preparers are honest and provide great service to their clients. However, some preparers are dishonest. People can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a taxpayer suspects a tax preparer filed or changed their return without the taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. More information: Understanding Tax Return Preparer Credentials and Qualifications Tax Topic 254 - How to Choose a Tax Return Preparer Choosing a Tax Professional How to Make a Complaint About a Tax Return Preparer How to Report Suspected Tax Fraud Activity IRS Tax Pro Association Partners For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
06.02.2019
Gary Britt
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The Delaware Court of Chancery recently affirmed the long-standing principle that directors of Delaware corporations are vested with “virtually unfettered rights to inspect books and records” of the company they serve. Schnatter v. Papa John’s Int’l., Inc. C.A. No. 2018-0542-AGB (Jan. 15, 2019). The Chancellor went on to reiterate that a director of a Delaware corporation that makes a demand to inspect the books and records of the corporation pursuant to Sec. 220 of the Delaware General Corporation Law should generally have “access at least equal to that of the remainder of the board.” Directors of a company make a prima facie case for a statutory inspection of books and records where they show that: (a) they are a director, (b) they have demanded an inspection, and (c) the demanded inspection has been refused. Upon that showing, the company will then bear the burden of proving that the director making the demand for inspection was for an improper purpose–that is, the director’s “motives are improper, or that they are in derogation of the interest of the corporation. . . .” Full story at https://www.lexology.com/r.ashx?i=5852147&l=89FG9K5 For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
05.02.2019
Gary Britt
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The December 2017 Tax reform legislation affects almost every taxpayer. Taxpayers can continue to rely on the IRS, tax professionals and tax software programs when it’s time to file their returns. As people prepare to file their 2018 tax returns this year, they can visit IRS.gov for answers to their questions about tax reform. Here are several of the resources that will help taxpayers find out how this law affects them: Tax reform provisions that affect individuals This is the main tax reform page with information for individual taxpayers. It includes dozens of links to more information on topics from withholding and tax credits to deductions and savings plans. Tax reform basics for individuals and families This publication provides information to help individual taxpayers understand the Tax Cuts and Jobs Act and how to comply with federal tax return filing requirements. Tax reform resources On this page, taxpayers can find helpful products including news releases, tax reform tax tips, revenue procedures, fact sheets, FAQs and drop-in articles. Steps to take now to get a jump on next year’s taxes This page has dozens of resources and tools that people can visit now or any time before they file their 2018 tax returns. Paycheck Checkup This page has information for people doing a Paycheck Checkup to see if they’re withholding the right amount of tax from their paychecks. Taxpayers can perform a Paycheck Checkup at the beginning of 2019 to make sure their withholding is correct for the rest of the year. IRS Withholding Calculator One way taxpayers can do a Paycheck Checkup is to use the Withholding Calculator. Checking withholding can help taxpayers protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time. Taxpayer Advocate The Taxpayer Advocate Service’s Tax Reform Changes website, available in English and Spanish, explains what is changing and what is not this year for individuals. Its interactive information can be reviewed by tax topic or line by line using a Form 1040 example and is updated to show the new 2018 Form 1040 references. Tax reform The main tax reform webpage on IRS.gov features information for individuals, but also takes users directly to info for people who are self-employed. It is also a great resource for anyone who does taxes or accounting for a business or charity. For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
29.01.2019
Gary Britt
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List of 2018 Expired IRS Federal Tax Provisions As we enter tax season, here is a listing of those extenders, that, as noted in a recent report by the Joint Committee on Taxation (JCT), have not been extended to 2018. Background. The Code contains dozens of temporary tax provisions—i.e., provisions with a fixed termination date. Often, these expiring provisions are temporarily extended for a short period of time (e.g., one or two years). Many of these extender provisions would have been extended through the end of 2018 by a the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018 (H.R. 88). However, on Dec. 10, 2018, that bill was revised so as to not include those extensions. On January 15, Charles Grassley (R-IA), Chairman of the Senate Finance Committee stated that his goal is to guide extenders legislation to final enactment. However, he acknowledged that he does not have a specific plan and that no hearings on the subject have been scheduled. List of extenders that haven't been extended to 2018. On January 19, the JCT released its annual report on the temporary individual, business, and energy tax extender provisions. This report contains a section that serves as a reminder of the extender provisions that expired at the end of 2017. The provisions can be fit into three categories—those primarily affecting individuals, those primarily affecting businesses, and being energy-related provisions. The expired individual provisions are: The above-the-line deduction for certain higher-education expenses, including qualified tuition and related expenses, under Code Sec. 222; The treatment of mortgage insurance premiums as qualified residence interest under Code Sec. 163(h)(3)(E); and The exclusion from income of qualified canceled mortgage debt income associated with a primary residence under Code Sec. 108(a)(1)(E). The expired business provisions are: The Indian employment tax credit under Code Sec. 45A(f); Accelerated depreciation for business property on Indian reservations under Code Sec. 168(j)(9); The American Samoa economic development credit (P.L. 109-432, Sec. 119); The railroad track maintenance credit under Code Sec. 45G(f); 7-year recovery for motorsport racing facilities under Code Sec. 168(i)(15); The mine rescue team training credit under Code Sec. 45N(e); The election to expense advanced mine safety equipment under Code Sec. 179E(g); Special expensing rules for film, television, and live theatrical production under Code Sec. 181; Empowerment zone tax incentives under Code Sec. 1391(d)(1)(A); 3-year depreciation for race horses two years or younger under Code Sec. 168(e)(3)(A)(i); and The expired energy provisions are: The beginning-of-construction date for nonwind facilities to claim the production tax credit (PTC) or the investment tax credit (ITC) in lieu of the PTC under Code Sec. 45(d) and Code Sec. 48(a)(5); The special rule to implement electric transmission restructuring under Code Sec. 451(k); The credit for construction of energy efficient new homes under Code Sec. 45L; The energy efficient commercial building deduction under Code Sec. 179D; The nonbusiness energy property credit under Code Sec. 25C; The alternative fuel vehicle refueling property credit under Code Sec. 30C(g); Incentives for alternative fuel and alternative fuel mixtures under Code Sec. 6426(d)(5) and Code Sec. 6427(e)(6)(C); Incentives for biodiesel and renewable diesel under Code Sec. 40A(a), Code Sec. 6426(c)(6), Code Sec. 6426(e)(3) and Code Sec. 6427(e)(6)(B); Second generation (cellulosic) biofuel producer credit under Code Sec. 40(b)(6)(J); Credit for production of Indian coal under Code Sec. 45(e)(10)(A); Special depreciation allowance for second generation (cellulosic) biofuel plant property under Code Sec. 168(l); The credit for qualified fuel cell vehicles under Code Sec. 30B; and The credit for 2-wheeled plug-in electric vehicles under Code Sec. 30D(g)(3)(E)(ii). Tax forms and instructions. A sampling of the relevant 2018 tax forms/instructions, as they existed at the time we went to press, indicates that those forms/instructions reflect the fact that the above extenders do not apply for 2018 tax years. For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
Treasury, IRS issue final regulations, other guidance on new qualified business income deduction; Safe harbor enables many rental real estate owners to claim deduction The Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction). The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act (TCJA) allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income.  Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.  The QBI deduction is available in tax years beginning after Dec. 31, 2017, meaning eligible taxpayers will be able to claim it for the first time on their 2018 Form 1040. The guidance, released today includes: A set of regulations, finalizing proposed regulations issued last summer, A new set of proposed regulations providing guidance on several aspects of the QBI deduction, including qualified REIT dividends received by regulated investment companies A revenue procedure providing guidance on determining W-2 wages for QBI deduction purposes, A notice on a proposed revenue procedure providing a safe harbor for certain real estate enterprises that may be treated as a trade or business for purposes of the QBI deduction The proposed revenue procedure, included in Notice 2019-07, allows individuals and entities who own rental real estate directly or through a disregarded entity to treat a rental real estate enterprise as a trade or business for purposes of the QBI deduction if certain requirements are met.  Taxpayers can rely on this safe harbor until a final revenue procedure is issued. The QBI deduction is generally available to eligible taxpayers with 2018 taxable income at or below $315,000 for joint returns and $157,500 for other filers. Those with incomes above these levels, are still eligible for the deduction but are subject to limitations, such as the type of trade or business, the amount of W-2 wages paid in the trade or business and the unadjusted basis immediately after acquisition of qualified property. These limitations are fully described in the final regulations. The QBI deduction is not available for wage income or for business income earned by a C corporation. For details on this deduction, including answers to frequently-asked questions, as well as information on other TCJA provisions, visit IRS.gov/taxreform. For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:
  Here Are Some Useful Links To Various Business Resources. Especially useful for people starting or thinking of starting a new business venture:   New Business Resources USA.GOV Small Business Resources Texas Business and Commerce Code, Chapter 71, Assumed Business or Professional Name Official Portal of Texas Office of the Governor of Texas: Starting A Business Office of the Governor of Texas: Small Business Programs Office of the Governor of Texas: Business Permits Office Texas Secretary of State Texas Comptroller of Public Accounts Small Business Administration: Small Business Planner SCORE: Counselors to America’s Small Business Small and Minority Business Resources Disability.gov: Self-Employment & Owning a Small Business For help with your legal needs contact a business, tax, and health care law attorney at the offices of AttorneyBritt. Review-Like-Follow AttorneyBritt On:

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