The United States Senate and House have passed the 2013 American Tax Payer Relief Act; extending the Mortgage Forgiveness Debt Relief Act (MFDRA) until January 1, 2014.

The Long and the Short of the Tax Impact of Short Sales

Recently, end of year tax planning for businesses has been complicated by uncertainty over the future availability of many tax incentives. The 2012 year end is no different. In 2010, Congress extended many business incentives for one or two years. These incentives are about to expire. In addition, many of the “Bush-era” tax cuts are scheduled to sunset at the end of 2012. It is unclear if Congress will provide further extensions as they debate across-the-board spending cuts scheduled to take effect in 2013. In addition, businesses must prepare to comply with healthcare reform. This combination of events provides tax planning considerations unique to 2012 that requires a multi-year strategy taking into account a variety of scenarios and outcomes.

On November 29, 2012, the Internal Revenue Service (IRS) announced final revised application procedures and requirements for Individual Taxpayer Identification Numbers (ITINs). ITINs are issued to foreign individuals who are not eligible to obtain a social security number, but have filing and/or payment obligations under the Internal Revenue Code.

The revised application procedures (Revised Procedures) build on the interim procedures implemented earlier this year, with the goal of which is protecting the integrity of the ITIN application and refund process.

Re-election of President Obama for a second term now sets in motion negotiations between Democrats and Republicans over Bush-era tax cuts and expiring tax extenders.

DEADLINES

At this point effective January 1, 2013:

- Bush-era tax cuts, extended by the Tax Relief and Job Creation Act of 2010, expire

- Across-the-board spending cuts take effect under the Budget Control Act of 2011

- The employee-side payroll tax holiday ends

- More individual and business tax extenders expire

Operating agreements, which are akin to corporate bylaws, dictate the management and operation of a limited liability company (“LLC”). An operating agreement serves to reinforce the limited liability status a company has elected, may prevent misunderstandings between owners, and plays an important role in determining the requisite authority for conducting LLC business and transactions.

An LLC with multiple members should utilize an operating agreement to specify the profit and loss sharing, management structure of the company, and procedures for the removal and addition of members. In the absence of an operating agreement, a Florida LLC is subject to Florida’s Statutes which may or may not be appropriate for the goals and structure particular company.

The Internal Revenue Service recently announced cost of living and inflation adjustments for pension plans, retirement related items, and numerous tax provisions for tax year 2013.

Highlights include:

Starting a business? Unsure what legal and regulatory steps you should follow?

Did you know when operating as a sole-proprietorship, you are entirely and personally responsible for the actions of the company? The best way to really protect your personal assets is to form a corporation or limited liability company (“LLC”).

Although each situation is unique, yet these 10 fundamental steps can help you plan, prepare and manage your business, while addressing business start-up issues and tax implications.

In today’s economy buyers often require additional time to qualify for necessary financing, due to impaired credit, and sellers often require additional time to complete negotiations with their lender in the context of a short sale. Lease Option or Lease Purchase Agreements, commonly referred to as “Lease-to-Own” Agreements and mistakenly used interchangeably, are agreements which allow a potential buyer to occupy the seller’s property for a period of time before completing the sale. This arrangement can assist either or both parties in meeting their goals and needs with respect to the transaction and their specific circumstances. In some instances, these agreements may even allow a buyer the opportunity to build a bit of equity in the home as well.

It is important to understand the distinction between a Lease Option Agreement (“Lease Option”) and a Lease Purchase Agreement (“Lease Purchase”), however. A Lease Purchase consists of two separate contracts: 1) the residential lease which provides for the tenant-buyer’s lease of the property for a specified term; and 2) the contract for sale which obligates each party to the typical terms of a residential purchase agreement upon the expiration of the specified lease term. Typically this kind of agreement provides what are referred to as cross-default provisions to ensure that a breach of one of the agreements will result in an automatic breach of the other. As the tenant-buyer has contracted to purchase the property in the context of a Lease Purchase, oftentimes the lease will provide that the tenant-buyer is responsible for maintenance and repairs which are typically the duty of the landlord.

It is the dream of every American to own a home someday; for many this dream becomes a complete nightmare. In today's economic climate, homeowners continue to lose their property to foreclosure. As if this weren’t painful and embarrassing enough, the lender can still come after them for the deficiency balance after they foreclose on the home.

A deficiency balance in a mortgage foreclosure is the difference between the outstanding balance due on the loan and the fair market value of the property on the date of the foreclosure sale. For example, if the balance of the mortgage is $200,000 and the fair market value is $130,000, the resulting deficiency would be $70,000. Note that the deficiency is based on the fair market value, not on the ultimate sales price of the home. If the lender sells the same foreclosed home for $100,000, and the fair market is $130,000, the deficiency is $70,000, not $100,000.