...Grossman MICHAEL HIRSCHFELD is a partner, and Shaul Grossman is an associate, in the New York City office of the international law firm of Dechert. Mr. Hirschfeld is a member of the ABA Tax Section’s committees on Real Estate (of which he is the past Chair), Foreign Activities of US Taxpayers, and US Activities of Foreigners & Tax Treaties, among others, and has written for The Journal on many occasions. Copyright © 2000, Michael Hirschfeld and Shaul Grossman. The complexities of FIRPTA and the even broader withholding scheme that backs it up require that a nonresident acquire a thorough understanding of the rules before making an investment in real estate. The choice of whether to use an entity—and which one—or to hold the investment directly, as well as the type of investment—equity or debt—can have significant and sometimes expensive consequences. Edited By Sanford H. Goldberg, J.D., and Herbert H. Alpert, J.D. The global economy is a fact of life at the start of the new millennium. One consequence is that cross-border investments in real estate will expand significantly. Twenty years have elapsed since Congress enacted the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) to ensure that foreign investors are subject to at least one level of federal income tax when they dispose of U.S. real estate investments. Notwithstanding FIRPTA’s simple, clear-cut directive, foreign investors still face a host of planning opportunities and potential...
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...Denomination- the face value of money 8. electronic fund transfers (EFT)- money transferred from one bank account without any actual money (paper or coins) changing hands 9. electronic funds- 10. encryption- code 11. endorse- approve or sign 12. federal income tax- the tax you pay the federal government on the income you earn 13. Federal Reserve- institution responsible for creating and tracking all of the country’s money 14. FICA (Federal Insurance Contributions Act) – Social Security tax 15. fixed income/expense- income that does not change month to month 16. gross income- pay before withholdings 17. income- all the money that you earn or receive 18. net income- pay after withdrawals 19. payee-the person a check is written to 20. personal Identification Number (PIN)- identification number used with a debit card 21. purchasing power- the number of goods or services that can be purchased with a unit of currency 22. standard of living- a measure of how comfortable you are based on the things you own 23. state income tax- tax determined by individual states on the income you earn 24. surplus-when more money is earned then spent 25. variable income/expense- Activity 1: Research the Federal Reserve System – Create a short PowerPoint to inform – I will...
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...200 500 x 200 = 100,000 Total Incremental Cost *Then, we calculate the Profit - The difference between the Incremental Revenue – The Incremental cost $ 660,000- $ 100,000 = $ 560,000 Incremental Profit Initial outlay=cost of lift + preparing and installing cost =2,000,000 + 1,300,000 = 3,300,000 The before-tax cash flow is then: Year 0: -3,300,000 Year 1-20: 560,000 Before-tax NPV is then -3,300,000 + 560,000 ( 1/1.14 + 1/1.142 +…+ 1/1.1420 ) =-3,300,000 + 560,000 x 6.62313055 =-3,300,000 + 3,708,953.11 = 408,953.11 Because the NPV is positive, it is then a profitable investment. 2. The After Cash Flow = 100%- 40% = 60% Net Income = $ 560,000 60% x $ 560,000 = $ 336,000 = The After Tax Cash Flow The rate of return will drop to 8% The NPV factor for 20 years @ 8% = 9.8181. To find the tax savings on the investment I multiply the investment amount of $3.3 million times the tax rate of 40% to find the tax savings of $1,320,000.00. The NPV of the after tax cash flow is taking the after tax net income ($336,000) 336,000 x 9.8181 = 3,298,881 Tax savings: 3,300,000 x 40% = 1, 320,000 To determine the NPV of the tax savings: Tax savings ($1.32 million) x NPV factor (6.62313055) = $8,742,532.33 =...
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...shares but does not actively work in corporation can draw dividends only. This paper will focus on the active owners of a small business corporation. The analysis will compare the methods and the impact on owners as well as the corporation using each approach. The mix method will also be analyzed and discussed. Basic tax concepts are based on the theory of integration. BDO defines Integration in The Tax Factor, they say that” A tax system is said to be integrated if the same amount of overall tax is paid when the income is earned indirectly through a corporation or directly by an individual.” (BDO Dunwoody, 2009, p.1) According to this theory there should be no difference to the individual regardless of the method chosen. But we know that in order for there to be integration the rates have to be perfectly matched. The tax system in Canada is not perfect and there will be a savings or a cost when drawing dividends (BDO Dunwoody LLP, 2009). Provincial corporate and personal tax rates vary significantly from provinces to province. The corporate tax rates have been very active, consistently dropping in many provinces. Along with tax rates dropping, small business limits have been...
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...( Read full story on taxes ) * Standard rate of excise duty held at 10 percent; no change in CENVAT rates * Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers *For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh. *Citizens over 80 years to have exemption limit of Rs 5 lakh. * To reduce surcharge on domestic companies to 5 percent from 7.5 percent. * A new revised income tax return form 'Sugam' to be introduced for small tax papers. * To raise minimum alternate tax to 18.5 percent from 18 percent ( Read story ) * Direct tax proposals to cause 115 billion rupees in revenue loss * Service tax rate kept at 10 percent * Customs and excise proposals to result in net revenue gain of 73 billion rupees * Iron ore export duty raised to 20 percent *Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. *Peak rate of customs duty maintained at 10 per cent in view of the global economic situation. *Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent. *Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests. *Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes...
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...Equilibrium on the demand side Y* solves the following equation Y = C + I + G + X – IM = 200 + 0.5(Y - 100) + 200 + 100 + 300 – 0.2Y Rearranging, we find Y* = (200 – 50 + 200 + 100 + 300) / (1 – (0.5 - 0.2)) = 1071 In general, Marginal Propensity to Import (MPI) is % of extra $1 of income that is spent on imports, e.g. suppose MPC = 0.9 and MPI = 0.1. This implies that C = 0.9DI + some constant and IM = 0.1Y. Out of each new dollar of income, $0.90 is spent, but of that $0.90, $0.10 is spent on foreign goods. So, Marginal Propensity to Consume Domestic Products MPC domestic = MPC - MPI = 0.90 - 0.10 = 0.8 only $ .80 of an extra $1 in income is spent on domestic goods. MPC domestic is the number we need to accurately calculate the multiplier Multiplier with imports = 1 / (1 – MPC domestic) = 1 / (1 - (MPC – MPI)) in our example, with MPI = .1: Multiplier with imports = 1 / ( 1- ( .9 - .1)) = 1 / (1- .8) = 1 / 0.2 = 5 Example from hw3 Suppose there are only two countries: the US and Mexico. Consider the following data: MPCMX = 0.4 (MPC in Mexico) MPIMX = 0.03 (so 3% of an additional $1 of income in Mexico is spent on the American goods) 1 MPCUS = 0.6 (MPC in the US) MPIUS = 0.1 (so 10% of an additional $1 of income in the US is spent on the Mexican goods) a) Suppose Mexican government increases government spending by $1 billion. By how much does Mexican GDP grow? To solve this we use the Multiplier with imports. MMX = 1/(1 - (MPCMX - MPIMX)) = 1/(1-(0.4 – 0.03)) = 1.587 So in Mexico...
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...Design Within Reach: Strategic Analysis and Recommendations Emily Weiss Advisor: Dr. Richard Linowes Completed Spring 2011 University Honors in Business Administration Kogod School of Business, BSBA in Accounting MEMORANDUM TO: John Edelman, CEO, President and Director, Design Within Reach Theodore Upland III, CFO, Design Within Reach John J. McPhee, COO, Design Within Reach Glenn J. Krevlin, Managing Partner, Glenhill Capital Management LLC, and Chairman, Board of Directors, Design Within Reach CC: FROM: DATE: RE: Professor Richard Linowes, American University Emily Weiss, Strategy Consultant May 2, 2011 Strategic Analysis and Design Within Reach’s Next Steps EXECUTIVE SUMMARY In 2009, problems at Design Within Reach reached a critical mass. Under CEO Ray Brunner, known more for his antics and wild management style than his success, the company unraveled the close ties to the design world that had made it such a successsince its founding in 1999. These issues, coupled with the burst of the housing bubble, destroyed the company’s financial structure, and in 2009 DWR delisted from the NASDAQ, to be purchased by Glenhill Capital, a private equity firm. 2 CEO John Edelman replaced Brunner in the following months, and made some of the key plays necessary to keep DWR afloat. But now that the crisis is over, Design Within Reach has been slow to move on. While it may take years or decades for the company to see the same sort of sales and buzz that marked the mid...
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...Corporate taxation in Kenya Income Tax, or the tax on income, is charged on income of a person (individual & or Companies) for each year in accordance with section 3(1) of the Income Tax Act. S 3(1)’’..... a tax to be known as income tax shall be charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.’’ It is important to understand the words and phrases used in the taxation of income for easier interpretation. These include: Year of income. Year of Income is a period of 12 months commencing 1 January and ending on 31 December in each year. It is the same as calendar year. Income tax is charged for each year of income. The year of income should be distinguished from the accounting year. There is a date to which accounts of a business are prepared each year, and this date would indicate the accounting year end. The accounting year ending on 31 December would coincide with the year of income. Other accounting year-ends would however fall in a given year of income and the profit or loss per the accounts would be for that year of income. For example, an accounting date ended 30 May 2011 would fall to be treated as the year of Income 2011. (Taxable) income this is a gross income from various sources minus allowable deductions i.e. expenses incurred wholly and exclusively in the production of the income. (Taxable) person, A person whose income is taxed is either: a) an...
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...DC, USA Review of the Tax System in Bangladesh A Prerequisite for Industrial Growth T. A. M. Nurul Basher* E-mail: nurul-basher@betelco.com Abstract - This paper has been written to highlight the sustainable industrial growth problems being faced by the entrepreneurs in Bangladesh. There are multifarious problems for Industrial growth in Bangladesh but the major bottleneck is the adverse tax system. There exists no consideration for industrial raw materials import in so far as application of duties and taxes compared to those of finished consumer goods. The net result is increase in production cost which in turn makes the product noncompetitive. So as not to create an extra burden on industrial productions, the government needs to remove duties and taxes from imported raw materials as in many Middle Eastern countries and Thailand. The government implicitly accepts the adverse effects of the improper taxes on our industrial growth and has tried partially to alleviate some of these impediments by creating Export Processing Zones and Bonded Ware Houses; this paper explores the benefits doing away with these high import duties altogether. It also looks at the paybacks to the economy from industrial growth. Finally, the expansion of the income tax umbrella is considered and in particular its effects on growing a greater sense of national civic duty and its impact on the voting patterns of the electorate. [1] to this, the average per-capita income of developed countries range...
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...California Pizza Kitchen (CPK) was co-founded in 1985 in Beverly Hills, California by Rick Rosenfield and Larry Flax. Rosenfield and Flax both hold the title of Co-President, Co-CEO, and Co-Chairman of the Board of Directors for California Pizza Kitchen. Susan Collyns, Chief Financial Officer, currently leads the financial team at California Pizza Kitchen which is faced with reducing the corporate income-tax liability while balancing the goal of the management team to grow the business. California Pizza Kitchen is in the food industry business. California Pizza Kitchen is a casual dining restaurant chain that specializes in innovative and non-traditional pizzas. California Pizza Kitchen also provides various soups, salads, pasta, sandwiches, and desserts at higher quality for lower prices. California Pizza Kitchen is in 213 locations in 28 states (41% located in California). California Pizza Kitchen’s core patrons tend to have an average household income of $75,000 (survey results from 2005); creating less of an impact on patron’s dining habits during times of inflated gas and food prices. California Pizza Kitchen’s inventive menu was not the only draw-in for patrons, their below average check (usually around $13.30) was much lower than their competitors such as, The Cheesecake Factory, Olive Garden, P.F. Chang’s, Chili’s, Red Lobster, and Panera Bread to name a few. The California Pizza Kitchen chain was labeled by RBC Capital Markets as the “Price-Value-Experience” leader...
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...getting things done or not. I then decided to do some research on you and found that your approval rating was very low at the time. A study was also just conducted a couple months ago with ratings of 41 percent of Michigan residents approving of you and 53 percent disapproved. There has also been another petition to recall you as governor of Michigan done by an organization called Michigan Rising. During my research I found that many people are upset that you are taking away from the middle-class and giving to the wealthy, also there are problems with Education, Unemployment, Housing and Taxes. But, last month a $49 billion dollar budget was signed into law. This budget will increase funding for education and public safety which has a small tax break for individuals. This budget was done well before the October 1st deadline and some worry that this causes cuts in education where it should be the focus. I agree with this because funding for education is limited and it’s causing tuition prices to go up, which there should be something done about it, but a more helpful solution to Michigan’s economy. Then there is also the New International Trade Crossing Bridge. Many Michigan residents are also upset about this and feel it is unnecessary while others support this decision because of the possibility of this bridge boosting Michigan’s economy and creating new jobs. My advice for this would be to make sure you also have a plan to fix some of the Michigan roads and bridges too because...
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...than employee) status is when the individual performing the services is paid based on tasks performed (rather than time spent). *a. True b. False 1029. In some cases it may be appropriate for a taxpayer to report work-related expenses by using both Form 2106 and Schedule C. *a. True b. False 1030. The IRS will issue advanced rulings as to whether a worker’s status is that of an employee or an independent contractor. *a. True b. False 1031. Jake performs services for Maude. If Maude provides Jake with a helper and tools, this is indicative of independent contractor (rather than employee) status. a. True *b. False 1032. A statutory employee is not a common law employee but is subject to income tax withholdings. a. True *b. False 1033. For tax purposes, a statutory employee is not treated the same as a common law employee. *a. True b. False 1034. If an individual is subject to the direction or control of another only to the extent of the end result but not as to the means of accomplishment, an employer-employee relationship does not exist. *a. True b. False 1035. The work-related expenses of an independent contractor will be subject to the 2%-of-AGI floor. a. True *b. False 1036. After she finishes working at her main job, Ann returns home, has dinner, then drives to her second job. Ann may deduct the mileage between her home and second job. a. True *b. False 1037. After the automatic mileage rate has been set by the IRS...
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...coffee. ii. Measuring the impact of tax policies on total household spending in the economy iii. A household’s decision regarding whether or not to go on vacation iv. A worker’s decision regarding which job to accept v. Designing government policies to address issues with the social security program 2. Determine whether each of the following is a positive or normative economic statement. i. A 40-cent-per-pack tax on cigarettes will reduce teenage smoking by 10 percent. ii. The federal government should spend more on diabetes research. iii. Rising paper prices will increase book prices. iv. The price of bagels at Bruegger’s is too high. 3. Determine whether each of the following would cause the United State’s PPF to shift inward, outward, or not at all: i. A decrease in the average length of annual vacations ii. An increase in immigration of foreign workers to the U.S. iii. An increase in the average retirement age iv. The migration of skilled workers to Europe 4. Determine whether each of the following would increase or decrease the opportunity costs for stay-at-home moms or dads (those who choose not to accept work outside the home). Briefly explain your answers. a. Higher unemployment rates. b. Lower average wages. c. Higher demand for labor. d. Lower income tax rates on wages earned. Directions...
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...Security, and IL state withholding. I work hard for my money as im sure most of you do and thought of our government sticking their dirty hands into our pockets and taking anywhere from 30-40% of our hard earned money really rubs me the wrong way. There is a very common sense solution to this serious problem that is being very seriously discussed and considered in our Congress. It is a plan called the Fair Tax. Legislative Status: The FairTax has been reintroduced for the 111th Congress. It is H.R. 25 in the House and S. 296 in the Senate. Benefits of the FairTax: The FairTax plan brings fairness, transparency, and efficiency to our unfair, complex, and confusing Tax Code. The FairTax rewards job creation, hard work, and individual responsibility. By doing away with payroll taxes, companies can afford to hire more employees and outsourcing looks less attractive. By taxing consumption instead of income, individuals are provided with a strong incentive to work hard because they keep more of what they earn. By taxing spending, the FairTax allows us to control how much tax we pay depending on our individual lifestyle choices. The FairTax ensures that all Americans pay their...
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...TAX Expanding your horizons? A guide to setting up business across the Middle East and North Africa region KPMG E x p a n d i n g y o u r h o r i z o n s ? A guide to setting up business across the Middle East and North Africa region E x p a n d i n g y o u r h o r i z o n s ? A guide to setting up business across the Middle East and North Africa region Contents Pages Introduction 1 Algeria 3 Bahrain 8 Egypt 12 Iran 17 Jordan 20 Kuwait 23 Lebanon 26 Morocco 30 Sultanate Of Oman 36 Qatar 41 Kingdom Of Saudi Arabia 47 Sudan 51 Syria 55 Tunisia 58 United Arab Emirates 62 Yemen 66 E x p a n d i n g y o u r h o r i z o n s ? A guide to setting up business across the Middle East and North Africa region Introduction The Middle East / North Africa (“MENA”) region is one exemplified by inherent diversity. Such variation is widely demonstrated in the array of culture, language, geography and economics. Stretching from Morocco to Iran, each country has its own distinct makeup of natural resources and global outlook. As an inevitable result, political and economic events of recent decades have affected the representative nations in dramatically different ways. Certain countries have enjoyed the benefits of significant natural resources (e.g., substantial oil reserves) while others have undergone political changes that have seen their respective...
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