23 episodes

Join tax attorneys Steve Moskowitz and Liz Prehn for Practical Tax, a weekly podcast where you'll learn tips and tricks for navigating taxes in the United States. Learn the laws, learn your rights, and file your taxes -- practically.

Practical Tax with Steve Moskowitz Practical Tax with Steve Moskowitz

    • Business
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Join tax attorneys Steve Moskowitz and Liz Prehn for Practical Tax, a weekly podcast where you'll learn tips and tricks for navigating taxes in the United States. Learn the laws, learn your rights, and file your taxes -- practically.

    Episode 23: Corporate Formalities Pt. 2

    Episode 23: Corporate Formalities Pt. 2

    In this Episode, Steve and tax attorney Chris Housh In this episode, Steve and Chris continue their talk on corporate formalities
    and why they are important. They discuss the importance of board meetings, piercing
    the corporate veil, and shareholder basis record keeping.

    Listen to the full episode to learn more!



    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Welcome to everyone. We're here to talk to you about all the benefits that a corporation can provide to your business. I'd like to introduce my friend and longtime colleague, attorney and EA, Chris Housh. Chris, you have so much experience in this. What's the benefit of being a corporation?

    Chris Housh:
    The main benefit is that you have what's called a corporate shell. So by going and making where you're treating your business as being something separate than your own individual self and having the formalities in place, you're making it where the government and all of your creditors recognize that your personal assets are not something that can be grabbed if something happens with your corporation. Also, if something happens for you individually, your corporation, your business, is protected from your personal creditors. Now you do have to go and make sure that you follow the rules, that you actually put everything in place. But once you've done that, you've created the beneficial element of protection. You also have tax benefits, whereas, especially within current laws, as they were changed in 2018, expenses and deductions that you cannot get as an individual the corporation is allowed to deduct, as long as it's a regular ordinary expense of the business. And that includes things like the state taxes, and other expenses that you're incurring, that you would not be allowed to deduct as an individual.

    Steve Moskowitz:
    So, Chris, that sounds like really a big deal. That's asset protection, 'cause you know, there's a lot of risk in business. And a lot of people would like to go into business, but they don't wanna risk everything they worked for in a lifetime. That sounds like a tremendous deal. And how does it work for taxes? Does it make a difference of your corporation for taxes?

    Chris Housh:
    Yes, now there's two kinds of corporations. There's what's called a C corporation and a S corporation. The C is the default, but you never wanna actually be a C Corp, unless you fit into a specific category. The three times that you are forced to stay as a C corporation, is if you're gonna have a hundred or more shareholders, if you have any foreigners that are shareholders, or if you're planning on actually going and having your stock sold on the stock market, NASDAQ or the top 500, they require you to be a C corporation. The problem is a C corporation is taxed at the corporation level, and then taxed again at the shareholder level for any money that comes out of the corporation to the shareholder. So you're double taxed. You don't want that. It's more frustrating to have to go and deal with that.
    Instead you wanna be able to go down to the S corporation. An S corporation, again, you get to have all those deductions that are regular for a business, reduced down the profit that S corporation, as long as you don't fit into the circumstances of being required to be a C Corp, you then have it where your net profit, after all those expenses, flows down into your individual tax return, the corporation doesn't pay any tax, and then you can have your other items of income and expense deducted against what the corporate profit is. And if your corporation loses money, and you're actively working the business, those losses can actually offset your other income. So you get definite benefit out of that, while also again, protecting your assets, protecting your interests,

    • 20 min
    Episode 22: Corporate Formalities & Annual Meetings

    Episode 22: Corporate Formalities & Annual Meetings

    In this Episode, Steve and tax attorney Chris Housh come together to discuss how Moskowitz LLP can help businesses with Corporate Formation and Formalites by creating an annual plan and meeting throughout the year to stay ahead of the game. An annual plan with Moskowitz LLP is talior-made to help save you time and money, and more importantly, give you peace of mind so you can focus on growing your business.

    Listen to the full episode to learn more!



    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Welcome everyone and thank you for listening to our podcast, and this is part two. So if you haven't heard part one, that's okay 'cause you could really do either one of these parts, first or second. But if you like what you're hearing here, do go ahead and listen to the other part 'cause we have a lot of good information in there.
    And just basically as a real quick summary, on the other one we talk about the asset protection of a corporation or other entity. Where if you get sued or something bad happens or you can't pay the bills, how the entity protects you from the other side going after your personal assets or other corporate assets? We've talked about how there's tax advantages. We've talked about how there's a special workaround for certain corporations to get around the limitation on deducting state taxes on the federal returns, for those of you that are in states that charge state taxes. And some of the states charge a lot of state taxes.
    We've also talked about potential pension benefits of a corporation and a lot of other things. And an awful lot of people are in business as a sole proprietor and that's sometimes fine, but a lot of times it's not. And a lot of times that person would be much better off if they were in an entity like a corporation. And we explained the differences between a C-Corp and an S-Corp. Where C-Corp has a double taxation, whereas an S-Corp doesn't. And a partnership, and LLC. And sometimes one entity is better for something than something else. But the bottom line is, go ahead and listen to the other podcast for this. Today, on this podcast, we're gonna work on the formalities and the formation. And one of the things that I hear when I recommend this to people is, "Well, what about, oh, there's all of these technicalities. Now I'm busy doing business, I can't be bothered with all this formal stuff." And to answer that, I'd like to introduce my friend and colleague of over 20 years, Attorney and EA, Chris Housh.

    Chris Housh:
    Thanks Steve. Yes, we understand. If you did the time for every crazy formal thing that is requested for you, you'd have no time to actually do the business that you actually are out there doing, the thing that you're best at. So as the attorneys that are working with you on this, we let you know what the formalities are, and also help you take care of them.

    Steve Moskowitz:
    So do you help 'em take care or do you just do it for 'em?

    Chris Housh:
    I look at it as that we are a team. And so I will do the actual writing up of the elements. I'll do the hard work, but I need their input. I need their help on things. I also schedule times to make it easier. Make it where you can say, okay I'm gonna set aside this time because I understand time is very valuable for everybody especially a business owner. And I try to make it where it's as easy as possible for you to go and be able to do these things.
    So I narrow down at the beginning, when I'm setting up for a business, I send out a eight question questionnaire so that it's not a overwhelming burden. I've seen some places that will send you a 20 page questionnaire. If you had time to do that, you know, you're not really going in needings that situation. I can narrow it down, get you started, and then ask you a couple of key questions to make it where I...

    • 20 min
    Episode 21: Stock Options; Common Tax Mistakes and Secrets

    Episode 21: Stock Options; Common Tax Mistakes and Secrets

    In this Episode, Steve and Cliff discuss common tax issues with Stock Options. This discussion is aimed at the employee who receives stock options as part of their compensation. Discussion of Tax Strategies for ESOP, RSUs, and ISOs. 83b elections, tax timing and rules and common tax preparation mistakes.

    Listen to the full episode to learn more!



    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Welcome back, folks. This is Steve Moskowitz and Cliff Capdevielle, and we wanna show you how we can save you some taxes. I'm the head of the firm, I am a tax attorney, and before I was a tax attorney I was a CPA. I started life off in a big firm, and then opened up my own practice many years ago.
    My friend and colleague, Cliff Capdevielle, is also a tax attorney and accountant. He also came out of a big firm. And there's so much here that we wanna talk to you about. A lot of times when you go to work someplace, they say, "Well, your salary is so much, "but we're gonna give you extra benefits "like stock options." And one of the things that you say, "Well, okay, that's good, "but I wanna do what the wealthy do, "I wanna go ahead and make all kinds of money, "and take all kinds of tax advantages of this."
    So you have a stock option. There's something that you should know about called an 83 election. And basically what an 83 election will do for you, is greatly reduce the amount of taxes which you have to pay on that stock option. And you say, "What's 83 , Steve?" Well, that one refers to 83 in the Internal Revenue Code. But Cliff, tell us about what's an 83 election.

    Cliff Capdevielle:
    Sure, so what you wanna do when you're planning for employee stock options, is make sure that to the extent possible, you are capturing any gains as long-term capital gains versus short-term capital gains.

    Steve Moskowitz:
    What's the advantage between capital gains and ordinary income tax, Cliff

    Cliff Capdevielle:
    And it's huge, it is huge, Steve. It's almost double. So ordinary rate for most people is 30 to 37%, guess what, if you can convert ordinary income to capital gains, you can reduce that rate to 20% or below. So you're essentially cutting your tax in half if you do that, Steve.

    Steve Moskowitz:
    Well, I like cutting the tax in half, and I would be willing to venture, Cliff, that everybody watching this or listening to this would like to cut their tax in half too. So, okay, this is great. Tell me how do I cut my tax in half?

    Cliff Capdevielle:
    Yeah, so with an 83 election, you essentially notify the government that you're picking up an income, a very small amount, which is the the fair market value on the date that the options are granted to you and you pick that up, and that starts the running of the holding period for capital gains rate. So in other words, if you hold that stock more than a year, you've converted what would typically be ordinary income tax at ordinary income rates to capital gains rates. So it makes a huge difference. And we see a lot of mistakes, Steve, unfortunately.

    Steve Moskowitz:
    Whole lots of mistakes here.

    Cliff Capdevielle:
    With the startups in Silicon Valley and even with mature companies, we see major mistakes when people go to their local CPA firm or their local tax preparer, not making these basis adjustments, not calculating the capital gain rates, it's unfortunate these laws are pretty complicated, and if you don't know how they work, you can end up paying a lot more tax than you need to.
    I'll give you an example, with non-qualified stock options. These are typically called RSUs, sometimes ESPP. These options are actually included in the gross income part of wages, so these are actually included in W-2 wages. Guess what? Oftentimes the broker dealer will report these without the basis adjustment. In other words,

    • 19 min
    Episode 20: Practical Tax feat. Kerry Lutz

    Episode 20: Practical Tax feat. Kerry Lutz

    Steve sits down with guest Kerry Lutz to talk all things finance. From how to pay the minimum amount legal taxes, to tax incentives that motivate Kerry, and even some hot predictions about inflation. You'll want to make sure to listen to every minute!

    Listen to the full episode to learn more!



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    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Hello and welcome to everyone out there. We'd like to thank you for joining us today. And I'm Steve Moskowitz, the host and I'd like you to go ahead and introduce yourself and tell the audience about yourself.

    Kerry Lutz:
    Okay, well, I'm Kerry Lutz, recovering attorney, podcaster, communications consultant, work in alternative investments and have got a podcast, the "Financial Survival Network" that has been running since 2011, over 7,500 episodes.

    Steve Moskowitz:
    Very nice. And tell us what your thoughts are when you think about this time Lutz, the favorite time of the year, tax season.

    Kerry Lutz:
    My favorite. My thoughts are how can I pay as little as possible and stay out of trouble? Legally, ethically, pay the least amount of taxes possible. As judge Learned Hand said "It's every Americans duty to minimize their tax burden through legal means."

    Steve Moskowitz:
    I remember many moons ago studying that case in law school. And there's so much to that. And that's what we're all about in our firm. Where you say, "Okay how do we legally save taxes?" And what everybody should realize is that the tax laws are two purposes. Everybody knows one purpose. They know extracting taxes from us but the other purpose is a system of incentives. Because in a democracy, the government can't order us to do something. But how do they get us to do something they want us to do because it's good for the economy but they can't order us? They give us tax incentives. And tell us what are some of the tax incentives that motivate you to make an investment or do something differently?

    Kerry Lutz:
    Well, obviously when it comes to conventional investments, real estate really has no equal. And I look at that tax deductibility of interests and non-cash outlays like depreciation, bonus depreciation section 179, all of that. When I look at it I like real estate, I like assets that have cashflow that can be leveraged. Different types of assets because not only the tax advantage but they do well in inflationary times.

    Steve Moskowitz:
    Excellent. And we have a lot in common. I see we've graduated from the same law school.

    Kerry Lutz:
    Oh, hey, the best little law school on Worth street. We used to call it.

    Steve Moskowitz:
    Indeed. And we're talking about real estate. Just yesterday in The Wall Street Journal, I was quoted about the value of DSTs, Delaware Statutory Trust. And most people are familiar with 1031s but DSTs, Delaware Statutory Trust provides such an additional benefit for clients. How do you feel about 'em?

    Kerry Lutz:
    Well, very familiar with trusts. I have several of myself. The benefits of trusts. So many people really don't have a clue but that's how the super wealthy manage to hold onto their wealth and pass it on to success of generations without devastating taxes, asset protection, so many different benefits accrue to you. The ability to buy things in the trust and basically deduct all expenses that you wouldn't otherwise be able to, had you not owned an asset in the trust. Meaning, well, you're the expert Steve, but the list goes on and on and on.

    Steve Moskowitz:
    Well, one of the reasons you do it is for asset protection 'cause today in our society, a lot of people feel that if you have something it's unfair and the only way to make it fair is to take it away from you....

    • 25 min
    Episode 19: Government Incentives and Tax Breaks for Real Estate Investors

    Episode 19: Government Incentives and Tax Breaks for Real Estate Investors

    Steve and Cliff discuss the many tax benefits and incentives available for real estate investments.

    Listen to the full episode to learn more!



    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Welcome everyone. Thank you for joining our podcast. And we're looking forward to telling you a lot of tax savings in a very good area here, real estate. Traditional wealth has been built with real estate and there's all kinds of advantages to it. One of my favorites is OPM, other people's money. And there's all kinds of things here. For example, one of the things that Cliff is gonna tell you about, there's a government deal where the government will pay for 39% of the real property you choose to buy. You like that? I'll say it again. The government will pay 39% of the price and guess what? That's a gift. They just give it to you. It's not a loan. You don't have to pay it back. They just give it to you. And when somebody gives you something nice, what do you say? Well, most people say, thank you, but lawyers say more. I want more. Want to talk about all kinds of things like how you can make a real estate investment, a tremendous amount of money, profit and legally not pay any taxes on it. And this is the type of things that people look at and they say, look at the wealthy, look at the Fortune 500. They're making all this money, sometimes billions of dollars they'd be in profits and not paying any taxes legally, how can that be? And here's why. There's two purposes for the tax law. One we all know about is get money out of us, extracting taxes, but the other one is in democracy, the government can't order us to do things, even though it's good for the economy or it's good for society, they can't order us.
    So, how's the government get you to do something they want you to do, but they can't order you? They give you a tax benefit. And that's what this is all about. And you know, a lot of people just grumble and cry about, oh they take so much taxes out of my earnings. And that's true. But what we're gonna talk to you about today, although the wealthy people do it, you don't have to be wealthy. This applies to any socioeconomic group. You can be a regular normal middle class person, do all these things, and our goal is to get you to be those people that other people point to and say, look at that wealthy guy, look at all the money he's making and he's not paying any taxes on it. And maybe some of that's because you listen to us on this webinar. Without further ado, I'm gonna introduce my friend and colleague, the head of our tax department, who's also an accountant as well as being an attorney, Cliff . Cliff, you want to take it away?

    Cliff Capdevielle:
    Sure, Steve, thanks. So, lot of wealth in America has been generated with real estate. And as you say, Steve, one of the key differentiators is the ability to leverage, use other people's money, take out loans and put down a fraction of the cost of a piece of real estate and then reap the rewards as the value of that real estate increases. I'm up in Incline Village. It is now the average, Steve, the average price for a home up here and this zip code, can you guess?

    Steve Moskowitz:
    That's a toughie. Coming from San Francisco, shacks go for millions.

    Cliff Capdevielle:
    It's five million dollars is the average house. So, that is skewed because you have Larry Ellison and the other Silicon Valley billionaires up here with properties in the 50 hundred million dollar range. But you can make a lot of money in real estate just by holding it for a long period of time. And you can purchase real estate, as you said, using other people's money, leveraging that and deducting the interest that you pay for real estate. Now, it's recently been limited on personal residences, but on investment property,

    • 21 min
    Episode 18: Tax Debt Resolution Strategies Pt. 2

    Episode 18: Tax Debt Resolution Strategies Pt. 2

    Learn about options for dealing with tax debt and what happens when you can’t pay your taxes. This episode focuses on businesses with tax problems. This week Steve is joined by his long-time colleague Chris Housh. Chris chairs the firm’s tax resolution and business entity compliance practice groups and is the Vice President of the Golden Gate Society of Enrolled Agents.

    Listen to the full episode to learn more!



    Episode Transcript

    Intro:
    You're listening to the Practical Tax podcast with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz LLP, a tax law firm.

    Steve Moskowitz:
    Welcome everyone. And thank you for tuning into our podcast. And this is part two of what happens when taxes can't be paid. Part one was for individuals. Part two is for businesses. And I'd like to introduce my friend and colleague, Chris Housh. Chris is both a tax attorney and EA, and Chris and I have worked together at the firm for over 20 years. He's the head of department that handles these type of cases, basically when a person or a business just can't pay their taxes. And in part one of this, we talked about what happens when an individual can't pay their taxes. Part two we're gonna talk about businesses and there is certainly some overlap between parts one and parts two. But in the business area, we're gonna go over some areas that we didn't go in individually because they don't apply to individuals. So, Chris, I have a question for you. What happens when somebody comes in and says, "I can't pay my payroll taxes?" What's the difference between payroll taxes and income taxes?

    Chris Housh:
    Payroll taxes is one of the special kinds of taxes that exist, sales taxes also in this boat. They're called trust fund taxes. And the government's explanation of it is that the person that you collected that tax from, trusted you to pay it over to the government. Your employee trusted you to go and take that tax that you with held out of their paycheck, to pay it to the government on their behalf. Your customer that you charge sales tax to trusted you to go and put that sales tax into the hands of the government. So with that, the government has that as one of the few things that can break out of a corporate or LLC shell and go against the individual alongside of the business.
    So the IRS on a payroll tax liability is going to ask to have an interview with the head of the company and any other responsible people that were in charge of making that decision, to be able to assess against the individual, a penalty to collect against that tax. Now they are only allowed to go and put to the individual, the amount of tax that was withheld from the people that are trusting. So your employee, they can only do to you the owner, the portion that was actually withheld from the paycheck, they can't go in and hold the businesses, share of FECA or the interest penalty assessed against the corporation. They can't do that against an individual.
    Now at the same time what they then do is ask to go and collect against the business and against the individual at the same time to pay into the same pot. Once the pot is full, they can't collect more than what's owed. So what often happens is at the business level, they have four pots for each year, that is getting paid by the business for payroll taxes. The employers share of FECA, the employee share of FECA, the employees federal tax withholding, and then the penalties and interest. At the business level you go and first pay the business' liability then the amount that was withheld from the employee's paychecks, and then the penalties. The business owner, if they're making a payment agreement at the same time, they're paying in solely into what was withheld out of the employees. So that that part gets filled up faster. And if you owe on multiple periods, they can start having that payment go down to period two, while the business is still paying period one.

    • 32 min

Customer Reviews

5.0 out of 5
12 Ratings

12 Ratings

Julius_Tweezer ,

Sage advice from attorneys who know their stuff!

Wow! Steve, Cliff, and their guests are consistently putting out information on the most cutting edge tax savings strategies. Their philosophies are something every business owner should be paying attention to!

Beenie415 ,

Great show! Necessary Show!

I learned from my ‘Rich Dad’ that taxes aren’t fun… but they are necessary if you want to succeed. This show is a added gem to anyone trying to understand one of the most powerful forces in the universe…. TAXES.

lp12345876 ,

The title says it all

Practical useable tax information for individuals and businesses

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