Wednesday, May 30, 2012

Debeers Diamond Settlement FINALLY close

If you have been following my blog for a long, long time, you would remember that we let those of you who purchased diamonds, at a particular time, know that you might be due a refund from Debeers.  Well 4 years later this is almost done....
1) Initial trial outcome:
The Fairness Hearing was held on April 14, 2008, and the District Court approved the Settlement on May 27, 2008.
2) Appeals begin:
Appeals were subsequently filed contesting final approval of the Settlement. A hearing on these appeals was held on January 28, 2010, at the Third Circuit Court of Appeals in Philadelphia. On July 13, 2010, the appeals court sent the settlement back to a lower court for further consideration. On August 27, 2010, the Court issued an order granting plaintiffs' request for a rehearing by the entire Court, thereby making the first appellate court decision no longer in effect. The Court heard the appeal again on February 23, 2011. On December 20, 2011, it held that the settlement complied with the law and should be approved.
3) Decision rendered:
On May 21, 2012, the U.S. Supreme Court denied the final petition for review. The claims administrator is conducting final claim audits, and distribution of settlement funds should take place within the next few months.

Thursday, May 17, 2012

Possible relief for employees working in multiple states!

Employees who live in one state but who travel to and work for an employer in other states are currently subject to the the income tax laws of the other states while occupying space in the other state.  Recent legislation has passed the house that would give these "traveling" employees some relief. 
The U.S. House of Representatives has passed the Mobile Workforce State Income Tax Simplification Act of 2012, which, if enacted, would prohibit an employee’s wages from being subject to personal income tax or withholding and reporting requirements in any state other than the employee’s state of residence and a state in which the employee is present and performing employment duties for more than 30 days during a calendar year. The Act would not apply to professional athletes, professional entertainers, or certain public figures. It would be effective January 1 of the second year after the date of enactment.

Tuesday, May 15, 2012

These are some of the potential pitfalls that can occur when investors and movie producers get together and make decisions....

Movie Director Sentenced for Abusing Film Tax Credits

A film director and his producer who inflated their movie expenses while shooting two movies on Cape Cod in order to claim larger Massachusetts film tax credits has been sentenced to between two and three years in prison and 10 years’ probation.

Daniel Adams pleaded guilty in April to charges of larceny and making a false claim. Adams received over $4.7 million in tax credits for the 2009 movie “The Lightkeepers,” starring Richard Dreyfuss, and the 2008 picture “The Golden Boys,” with the late David Carradine.  They both included scenes on Cape Cod.
Among the inflated expenses claimed was one for $2.5 million to Dreyfuss, when in fact the “Jaws” star only received $400,000.

Monday, May 07, 2012

Advantages of the S corp!

Besides its single level of taxation, an advantage of an S corporation over a C corporation is that a shareholder’s share of the corporation’s net income is not considered self-employment earnings and therefore is not subject to self-employment tax (13.3% in 2011 and 2012). This treatment is in contrast to that of a general partner, LLC member, or sole proprietor, for whom net earnings from self-employment include any trade or business income and a partner’s distributive share of income from a trade or business carried on by the partnership (Sec. 1402(a)).
However, if the S corporation shareholder provides services to the S corporation, he or she must receive an adequate or reasonable amount of compensation for these services. The S corporation may deduct the compensation expense and must pay the employer share of employment taxes: 6.2% Social Security tax and 1.45% Medicare tax. The shareholder-employee is responsible for 4.2% Social Security tax (in 2011 and 2012) and 1.45% Medicare tax. The S corporation is also responsible for Federal Unemployment Tax Act (FUTA) taxes. Minimizing these taxes provides an incentive to keep the S corporation shareholder’s wages low and to characterize most of the passthrough income as distributions.