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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments
The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial
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Will Inflation Hurt Stock Returns? Not Necessarily
Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on
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Maximize Your Charitable Impact with These Four Strategies
As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There
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Protecting Assets: Jurisdiction And Entity Structure Are Key
The limited liability company has become the most popular entity for a small business owner to use, and they may also offer some benefits in the form of asset protection planning. Choosing the LLC instead of a corporation structure can be a wise decision, but it raises the question of where the entity should be established. There are a few different factors to consider when opting for an LLC.
Some states have specific language in the statutes that serves to protect single-member LLCs, such as Alaska, Wyoming, and Nevada. Wyoming in particular was a popular choice for establishment because of the low cost and also the fact that managers and members within the LLC didn’t have to be disclosed publicly. A recent court case in that state, however, raises questions about the value of continuing to use Wyoming for planning.
That court case, Greenhunter Energy, Inc. v. Western Ecosystems Technology, Inc, upheld a previous ruling that allowed the corporate veil to be pierced. A creditor was able to pierce the veil to hold a parent company responsible for the subsidiary’s debt.
Under IRS guidelines, single-member LLCs are eligible for taxation as disregarded entities. In fact, one of the major advantages of a single-member LLC is this perception of greater liability protection when compared with a corporation in conjunction with this disregarded tax treatment.
As this one case indicates, planning and current knowledge of issues is critical for the proper structure of your business. Consult with an asset protection specialist about your concerns. Schedule an appointment today at info@lawesq.net.