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FEATURED CONTENT
Don’t Forget the Cohan Rule but Try Not to Need It
We are creeping up to the centennial of the Cohan rule. Learned Hand’s opinion for the Second Circuit in Cohan v. Commissioner came out on March 3, 1930 . I love this rule so much that I've made it the Prime Directive in my own book, Reilly’s Laws of Tax Planning: “If you don’t have documentation, at least have a plausible story.” However, subsequent legislation, changes in societal expectations, and the passage of time have eroded the usefulness of the Cohan rule for taxpayers. In recent years, there have been more instances of courts refusing to apply it than allowing its use. That’s why in Reilly’s Sixteenth Law of Tax Planning, I advise people to “being right without substantiation can be as bad as being wrong.”
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CURRENT EDITION
Leaving the United States, Part III: Dual Citizenship
In Part I of this three-part series, we discussed the implications and taxes for American expatriates. In Part II we turned our attention to renouncing citizenship. Here in Part III, we will consider the halfway point of dual citizenship. And as you would expect, taxes are a serious consideration.
Reflecting On Rothing
I have been dissatisfied with most of the articles that I have read about what I call Rothing, i.e. foregoing a deduction for retirement savings with the prospect of tax-free distributions in the future or taking the tax hit on a deferred account to convert it to a tax-free account. The articles generally have a pro-Roth bias. Suze Orman, for example, swears by Roths. They also tend to not have numbers in them. What I am going to do here is to reflect on the idea of Rothing and discuss what I see as some key numbers. I’m not going to dive deep into technical issues.
Considering a Historic Building for Your Business? These Tax Credits are Good News
Historic buildings make a beautiful location for doing business. Unfortunately, many of them may seem out of the price range of small business owners. But, that’s not necessarily the case. The state and federal governments have an interest in preserving these properties, and they are willing to give you tax credits for buying and restoring a historic building. The credits reimburse a large proportion of your restoration costs. This really is a great incentive to go for a building that will give your company a unique and professional feel.
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