Important Notice

To ensure compliance with the requirements imposed on us by IRS Circular 230 (31 C.F.R. 10.33 – 10.37, et. Seq.), we inform you that to the extent the information on this page mentions any federal tax matter, it is not intended or written and cannot be used, for the purpose of avoiding Federal Tax penalties.

The information contained in this website is for informational purposes only and is not and does not constitute legal advice on any subject. Receipt of this information does not create an attorney-client relationship. Do not act or refrain from acting based upon this information without seeking your own professional legal counsel.

Tuesday, December 7, 2010

The Estate Tax in the Midst of the Obama Compromise

Without legislation, we all know that the estate tax is set to return in 2011 with an exemption equivalent to $1 million and a tax rate of 45%. In the deal that Obama struck with the lawmakers, we could have an exemption equivalent to $5 million and a tax rate of 35% for 2011 and 2012. Stay tuned.....

Thursday, March 11, 2010

Benefits of a Disregarded Entity - Choosing the LLC

Are you running a one-man or one-woman operation? Looking for the limited liability protection of a corporation or LLC? Concerned about the complexity involved in the administration and tax obligations of that entity?

Why not consider an LLC?

One of the often overlooked benefits of operating a closely held business as an LLC is that, if there is only one member (owner), the entity is disregarded for tax purposes. This allows the LLC to report income and loss on the personal income tax return of the owner rather than having to file (and pay for) a separate partnership or corporate tax return.

In addition, the LLC would allow the owner to take "draws" from the business without having to set-up payroll. This is particularly attractive if there will be no other employees of the business. However, the owner is still responsible to pay estimated taxes (and self-employment taxes) on a quarterly basis.

Friday, January 15, 2010

Estate Tax Repeal: Is it for Real?

The estate tax is officially repealed effective January 1, 2010. Unless new legislation is passed, the repeal will last for all of 2010. Then the current law will revert back to a $1 million exemption for 2011. This creates uncertainty for estate planning and some potential land mines for those subject to the tax.
To further complicate matters, many states, including Illinois, have not repealed estate taxes. They have de-coupled their tax, which also creates planning challenges.
The bottom line is that paying close attention to your estate plan is now more important than ever. If you already have a plan in place, it may be wise to sit down with your estate planner to review and possibly revise your plan. If you have no planning in place, uncertainties in the law make this an opportune time to establish a relationship with an estate planning lawyer and get yourself covered.