Watch out for scams when selling your business

You’ve spent years developing your business, building its value, enhancing its reputation. Now you’re ready to move on. You place a “Business for Sale” advertisement in the Internet classifieds, and the next day an eager – overly eager – buyer approaches you with a deal that seems too good to be true. The buyer offers full price and wants to structure the deal as a stock sale. A stock sale means the buyer will get the entire business, including all its assets (cash, checking accounts, receivables, inventory, and so on) at closing. The buyer doesn’t ask tough questions about the firm and seems in a hurry to close the sale. He or she offers a 10% down payment and says the full balance will be paid off within a year. [Read more…]

IRS expands innocent spouse relief

If you file a joint income tax return with your spouse, you are considered “jointly and severally” liable for the payment of all taxes owed. The IRS can come after either you or your spouse for the entire amount of tax due, plus any penalties and interest due.

The law has “innocent spouse” rules that may limit an individual’s responsibility for unpaid taxes resulting from filing a joint return. If the “innocent spouse” can establish that he or she did not know, or have reason to know, that there was an understatement of tax when signing the joint return, relief can be requested. [Read more…]

Last-minute 2011 deal reached on payroll tax cut

On December 23, 2011, Congress finally approved a two-month extension of the payroll tax cut for American workers. The agreement was reached after weeks of partisan bickering. Though both Democrats and Republicans wanted a one-year extension of the tax cut, they could not agree on how to pay for a year-long extension and settled on a paid-for two-month extension.

The new law extends the 4.2% social security tax on wages through February 29, 2012. Without this extension, the tax rate would have gone to 6.2% on the first $110,100 of wages earned in 2012. [Read more…]

It’s tax time again

It’s time to file various tax returns once again. If any of the following tax deadlines will apply to you, circle the dates on your 2012 calendar.

  • January 17 – Due date for the fourth quarterly installment of 2011 estimated taxes for individuals unless you file your tax return and pay any taxes due by January 31.
  • January 31 – Employers must furnish 2011 W-2 statements to employees. Payers must furnish payees with Form 1099s for various payments made. The deadline for providing Form 1099-B and consolidated statements to customers is February 15. [Read more…]

Face the alternative minimum tax (AMT) head-on

The alternative minimum tax (AMT) – often called a “stealth tax” – snares unsuspecting or uninformed taxpayers each year. With a better understanding of the rules, you may be able to avoid or reduce adverse tax consequences.

Overview: The AMT is a separate tax system that runs parallel to the regular income tax system. This complex calculation includes additions for “tax preference items” and reductions for personal exemptions and certain tax deductions. There are five basic steps to computing the AMT.

  1. Determine your taxable income for regular income tax purposes.
  2. Make the technical AMT adjustments required by law. [Read more…]

Tax tips for year-end charitable giving

As the year draws to a close, you may decide to donate cash or property to one or more worthy causes. Besides the satisfaction of helping others, there’s another reward for your benevolence: a tax deduction on your 2011 return. But keep the following points in mind:

  • For starters, you may only deduct contributions made to a legitimate tax-exempt charitable organization. Note that a qualified charity cannot be established to benefit a specific individual or family.
  • Generally, your deduction is limited to 50% of adjusted gross income (AGI) for the year (30% of AGI for contributions to certain charities and private foundations). Any excess may be carried over for up to five years. The deduction for gifts of property have other AGI limits. [Read more…]

New worker classification program offered by the IRS

Companies that have had worker classification issues are being offered a settlement program by the IRS. The program, labeled the “Voluntary Worker Classification Settlement Program,” will let employers who previously misclassified employees as independent contractors make a minimal payment to settle the tax dispute. The program will give eligible employers substantial relief from federal payroll taxes they may have owed for past periods. Employers must agree to pay just over 1% of wages paid to reclassified workers for the past year and to treat these workers as employees going forward.

New law signed by President Obama on November 21, 2011

On November 21, 2011, President Obama signed the Three Percent Withholding Repeal and Job Creation Act into law. This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the Vow to Hire Heroes Act which provides tax credits to employers who hire unemployed veterans.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. [Read more…]

Grantor’s power to substitute insurance policy won’t cause inclusion in estate

Revenue Rule 2011-28 concludes that an individual’s retention of the power, exercisable in a nonfiduciary capacity, to acquire an insurance policy on his life held by a trust he created by substituting other assets of equivalent value won’t cause the value of the policy to be includible in his gross estate under Code Sec. 2042.

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

IRS could reallocate interest and penalties under class action settlement to wages

In a highly redacted Legal Memorandum, IRS has concluded that it isn’t bound by the settlement allocation of payments under a class action lawsuit and could instead convert portions of the settlement allocated to penalty and interest payments into wages subject to employment taxes.  Legal Advice Issued by Field Attorneys 20114704F

Beliveau Law Group: Massachusetts | Florida | New Hampshire

The tax attorneys at the Beliveau Law Group provides legal services for federal and state tax law as well as tax returns. The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Facebook may be involved in 20% of all divorces

Facebook is playing a role in as many as a fifth of all divorces in the U.S., according to a study by the American Academy of Matrimonial Lawyers.

Facebook can come up in a divorce case in several ways. One is that marriages sometimes end because people have affairs with people they met – or re-connected with – over the social networking site.

One of the most common uses of Facebook is getting in touch with old friends. But if a marriage is in some trouble already, and a spouse gets back in touch with an old friend (or an old flame) who is emotionally available, a simple “hello” could turn into something much more complicated. [Read more…]

Husband’s credit card debt was his problem, not his ex-wife’s

Generally, whatever assets and debts a couple accumulate during a marriage can be split between them at divorce.

But what if a husband racks up an enormous amount of credit card debt without his wife knowing about it? Should she still be responsible for half the bill?

In one recent case, the Kentucky Supreme Court said “no.”

The couple in that case divorced after being married for 42 years. Late in their marriage, the husband ran up $65,000 in credit card debt trying to help their adult son recover from financial setbacks. [Read more…]

Wife shares in husband’s future partnership profits

A husband’s interest in a business partnership that produced a consistent stream of profits “counted” as marital property, and his wife can receive a share of his interest at divorce, the highest court in Massachusetts recently ruled.

The husband was a partner in an investment advisory firm. Under the terms of the partnership, he received annual cash payments in the form of salary, incentives, return on capital and merit pay.

The wife claimed a share of the value of his partnership interest. The husband objected, arguing that his partnership interest wasn’t “property” since he had no right to the annual payments, which were merely an “expectancy” of future income. (State law says that a divorcing spouse has no right to share in a mere “expectancy” of a benefit.) [Read more…]

Divorced mother couldn’t demand home schooling

When a divorced couple have different religious beliefs, and when children are involved, it can sometimes lead to court.

That’s what happened recently in New Hampshire, where a mother wanted to home-school her daughter according to her religious beliefs, but her ex-husband wanted the child to go to public school.

A judge ruled that it was in the daughter’s best interest to attend public school. The mother appealed to the New Hampshire Supreme Court, arguing that requiring the daughter to go to public school violated her parenting and religious rights under the Constitution. [Read more…]

Father’s child support is reduced by SSDI benefits

A father’s child support obligations could be reduced by the amount of his Social Security Disability Insurance payments that went directly to his children, the Vermont Supreme Court recently decided.

The father had been ordered to pay $326 a month in child support when he and his wife divorced. Soon afterward, he went to prison for five years.

When he got out of prison, he applied for SSDI benefits. He received a retroactive payment that included more than $14,000 that went directly to his ex-wife on his children’s behalf.

The father argued that his child support obligations should be reduced by the amount of this payment to his children. [Read more…]

Military promotion might not increase ex-wife’s pension share

The ex-wife of an Air Force officer might not be able to share in an increase in the officer’s pension benefits that resulted from a promotion he received after the couple divorced, according to a New Jersey appeals court.

The couple divorced when the husband was a captain. The divorce settlement gave the wife 50 percent of his military pension, which was based on his 11 years of service to that point.

By the time the husband retired, he’d reached the rank of major. His promotion entitled him to a larger pension benefit.

But the court said the wife couldn’t automatically share in the increase. Rather, it ordered a hearing to determine how much of the husband’s promotion was due to the couple’s joint efforts while married, and how much was due to the husband’s individual efforts after the divorce.

Thinking about divorce? Redo your estate plan, too

Divorce is stressful, and if you’re considering a marital split, the last thing you’re probably focusing on is your estate planning documents.  But if you’re thinking of getting divorced, it’s usually wise to revise your estate plans now rather than later.

For example:

  • You might have signed a power of attorney document that allows your current spouse to make gifts, sign contracts, and make financial decisions for you.
  • You might have a life insurance policy that names your spouse as the beneficiary.
  • You might have a lot of your money in joint accounts to which your spouse has unlimited access.
  • You might have a health care proxy that allows your spouse to make medical decisions for you if you become incapacitated. [Read more…]

Employers may need to tell workers they can form a union

The National Labor Relations Board recently proposed a rule that would require employers to post a notice in the workplace informing employees of their right to form a union.

The rule hasn’t been adopted yet, but if it is, employers who fail to comply could be fined or sued for unfair labor practices.

Such a notice could conceivably have an effect in smaller workplaces – such as those with 10 or 15 workers – where a union could form quickly if a majority of employees agree to organize.

Company’s ‘one strike’ drug-testing policy is okay

An employer can have a “one-strike” drug-testing policy that permanently disqualifies applicants who have previously flunked a drug test, according to a federal appeals court in California.

In this case, an employer rejected an applicant for a longshoreman job when he failed a pre-employment drug screening.

Some time afterward, the man allegedly stopped using drugs, but when he reapplied, the employer rejected him again under its one-strike rule.

He sued, claiming that the one-strike policy violated the Americans with Disabilities Act. That law prohibits employers from discriminating against rehabilitated drug users. [Read more…]

New mothers might be exempt from physical ability tests

A woman who had recently had a baby and who was denied a job as a security guard after failing a physical-fitness test could sue the company for pregnancy discrimination, a federal judge in Alabama recently ruled.

The test required job applicants to perform 29 sit-ups in two minutes.

The woman claimed she was unable to complete enough sit-ups because her stomach muscles were weak from childbirth several months earlier. She sued the employer under the federal Pregnancy Discrimination Act. [Read more…]

Employer could require a doctor’s note after sick leave

A city didn’t violate its employees’ right to medical confidentiality by making them provide a doctor’s note when coming back from sick leave, a federal appeals court ruled recently.

The city of Columbus, Ohio had adopted a policy demanding that police department employees who took sick leave give supervisors a physician’s note stating the “nature of the illness” and whether the worker could return to regular duty.

Several employees sued, arguing that the policy violated patient confidentiality rules under the Americans with Disabilities Act. [Read more…]

Company sued for ‘pressuring’ employee on medical leave

A company can be sued if it “pressures” an employee who is on medical leave by repeatedly calling to find out when the employee plans to return to work.

That’s the message of a new case from a federal court in Arkansas.

In that case, a woman took leave from her housekeeping job at a hospital to recover from back surgery. She claimed that while she was out, her immediate supervisor called her every week to ask when she was coming back. In one conversation, she asked if her job was in jeopardy, and the supervisor responded by telling her that she should return as soon as she could. [Read more…]

Medical marijuana law doesn’t preempt workplace drug policy

Many states have passed laws in recent years allowing people to use marijuana for medical reasons.

But while these laws may protect users against the police, they won’t necessarily protect them against their employers.

For example, a Wal-Mart employee in Michigan recently sued the company for firing him under its drug-use policy when he tested positive for marijuana. The employee claimed he was wrongfully fired because he used marijuana after work for medical reasons. [Read more…]

Workers can sue for ‘cat’s paw’ discrimination

In an old French fable, a sneaky monkey talks an unwary cat into grabbing roasting chestnuts from a fire. The cat burns its paw and drops the chestnuts, and the monkey walks off with them.

From this fable comes the phrase “cat’s paw,” meaning an innocent person who’s used as a tool for someone else’s dirty work.

In the employment world, a “cat’s paw” situation is one where a supervisor is prejudiced against a worker, but rather than firing the worker for an illegal reason, he or she persuades a higher-up manager to fire the worker for some trumped-up but legitimate-sounding reason. [Read more…]

Supreme Court helps workers who are fired for complaining

Once again, the U.S. Supreme Court has made it easier for workers to go to court and claim that they were fired in retaliation for asserting their rights.

In recent years, the Court has decided a number of cases that made it easier for workers to sue if they were fired for complaining about discrimination.

But what if a worker was fired for complaining about something else? What if a worker was fired (or otherwise punished) after making a comment about the way the employer allocates tips? Or about unsafe equipment? Or overtime practices? [Read more…]

‘Secrets’ of maintaining your credit score revealed

The Fair Isaac Corporation, creator of the FICO credit score, usually doesn’t reveal many details about how missing a mortgage payment will affect people’s scores. But the company recently issued a commentary to lenders that contained some unusually specific information.

FICO scores range from 300 to 850. Scores of 750 or higher generally qualify for the best credit terms.

Here are some of the newly released details:

  • Being 30 days late on a mortgage payment – even if it was an accident – can lower a 780 score by 100 points. That’s a huge drop. [Read more…]

What to do if the government wants your land by ‘eminent domain’

If a government entity wants to take all or part of your property by eminent domain, it’s required to pay you the land’s fair market value. Typically the government will send you a notice telling you what it thinks the land is worth, and offering to pay that amount. Its valuation will usually be based on an appraisal that it has commissioned.

Some property owners who get an eminent domain notice rush out and get their own appraisal, but this is often a mistake. It’s almost always better to talk with an attorney first before hiring an appraiser. [Read more…]

Can landlords limit the number of people in an apartment?

Do landlords have a right to limit the number of people who can occupy an apartment?

The answer, as often happens in the law, is, “It depends.”

In general, landlords own the property and they can decide how many people can live there. However, a landlord is not allowed to discriminate against tenants based on their “familial status.” (This rule was added to the federal Fair Housing Act back in 1988.)

What does “familial status” mean? It means that a landlord can’t refuse to rent to a family with children. So if a family with seven children wants to rent an apartment, the landlord can’t say “no” based on that fact alone. [Read more…]

Cash is now king in real estate sales

Cash is playing a more significant role in residential real estate sales right now than at any time in recent memory.

Consider the following:

  • The median down payment on houses was 22% last year.

That’s according to a study by Zillow.com of sales involving conventional mortgages in nine major U.S. cities. It’s the highest figure ever since the data started being kept back in 1997.

By comparison, just three years ago the figure was 11%. And back in late 2006, it was only 4%.

The main reason for the change: Banks are tightening their standards and demanding larger down payments to qualify for mortgages. Banks are figuring that borrowers who can afford a larger down payment are less likely to default, and less likely to end up in a situation where they are “underwater” – meaning the value of their house falls to the point where they owe more than the house is worth. [Read more…]