Month: March 2023

Preface: For the Lord your God will bless you, as he promised you, and you shall lend to many nations, but you shall not borrow, and you shall rule over many nations, but they shall not rule over you. — Deuteronomy 15:6

Credit History: The Evolution of Consumer Credit in America

History of Credit in America

………It’s all quite impersonal and very different from the way things were in
1800, or even 1900. Just try to imagine how old-time storekeepers and
bankers would react to the idea of granting you a $10,000 line of credit
without ever shaking your handing, looking you in the eye, or knowing
anything about your family. Then try to imagine their reaction if you
asked to borrow money for a vacation: Let’s see. You want to use this money
for a pleasure trip to Florida, where your children will visit a kingdom ruled by  Mickey Mouse? You won’t be doing any trading while you’re there, nor will this journey have any other productive purpose. . . . I think not.

History of Credit in America

Preface: Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all. -Dale Carnegie

Starting a Business | Pros and Cons of S Corporations

For those interested in starting a new business as an S corporation, here is a checklist highlighting advantages and disadvantages of the S corporation form. Especially popular among small businesses, the number of S corporations has increased over the last few years and, hands down, is the most common form of doing business except for the unincorporated sole proprietorship.

While its popularity indicates that consideration of operating your business as an S corporation is certainly wise, “going with the crowd” is not always the best choice. What is right for your business and your unique circumstances should control.

 Some of the advantages of operating a business as an S corporation are:         

• • • • Your personal assets will not be at risk because of the activities or liabilities of the S corporation (unless, of course, you pledge assets or personally guarantee the corporation’s debt).
      • Your S corporation generally will not have to pay corporate level income tax. Instead, the corporation’s gains, losses, deductions, and credits are passed through to you and any other shareholders, and are claimed on your individual returns. The fact that losses can be claimed on the shareholders’ individual returns (subject to what are known as the passive loss limits — S corps pay tax at the highest corporate rate on their excess passive income) can be a big advantage over regular corporations. Liquidating distributions generally also are subject to only one level.
      • FICA tax is not owed on the regular business earnings of the corporation, only on salaries paid to employees. This is a potential advantage over sole proprietorships, partnerships, and limited liability companies.
      • The S corporation is not subject to the so-called accumulated earnings tax that applies to regular corporations that do not distribute their earnings and have no plan for their use by the corporation. Nor because of their pass-through nature do they risk being characterized as a personal holding company.
      • Your income from the corporation may qualify for the 20% deduction for qualified business income.

 Some of the disadvantages are:

• • • • S corporations cannot have more than 100 shareholders (but with a married couple treated as only one shareholder). Further, no shareholder may be a nonresident alien.
      • Corporations, nonresident aliens, and most estates and trusts cannot be S corporation shareholders. Electing small business trusts, however, can be shareholders, a distinct estate planning advantage.
      • An S corporations may not own another S corporation, which can make expansion difficult, unless the subsidiary is a Qualified Subchapter S Subsidiary (a 100% owned S corporation or QSub); and termination of the QSub’s status can be treated as a sale of assets.
      • S corporations can have only one class of stock (although differences in voting rights are permitted, and bank director stock is not treated as a separate class of stock). This severely limits how income and losses of the corporation can be allocated among shareholders. It also can impair the corporation’s ability to raise capital.
      • A shareholder’s basis in the corporation does not include any of the corporation’s debt, even if the shareholder has personally guaranteed it. This has the effect of limiting the amount of losses that can be passed through. It is a disadvantage compared to partnerships and limited liability companies, and is one of the main reasons that those forms are usually used for real estate ventures and other highly-leveraged enterprises.
      • S corporation shareholder-employees with more than a 2-percent ownership interest are not entitled to most tax-favored fringe benefits that are available to employees or regular corporations.
      • S corporations generally must operate on a calendar year.
      • An S corporation may be liable for a tax on its built-in gains, if, among other things, it was a C corporation prior to making its S corporation election.
      • Your income from the corporation is taxed at your individual income tax rate. It does not qualify for the 21% corporate tax rate.

 Some of these factors will be more important than others, depending upon the particular circumstances. If you would like to discuss this matter further, and have us fully evaluate your situation, please do not hesitate to call.

Preface: Allen believes the most important thing to deal with is whatever is most on your mind. – Getting Things Done: The Art of Stress-Free Productivity Book Summary

Getting Things Done: The Art of Stress-Free Productivity Book Summary

Author: David Allen

The Five Big Ideas

1. Getting things done requires defining what “done” means and what “doing” looks like.
2. Mastering your workflow involves capturing what has your attention, clarifying what it means, putting it where it belongs, reviewing it frequently, and engaging with it.
3. If an action will take less than two minutes, it should be done at the moment it is defined.
4. Anxiety and guilt don’t come from having too much to do; it comes from breaking agreements with yourself.
5. Your mind is for having ideas, not for holding them.

The Threefold Model for Identifying Daily Work

When you’re getting things done, or “working” in the universal sense, there are three different kinds of activities you can be engaged in:

1. Doing predefined work. When you’re doing predefined work, you’re working from your Next Actions lists and calendar—completing tasks that you have previously determined need to be done, or managing your workflow.
2. Doing work as it shows up. Every day brings surprises and you’ll need to expend some time and energy on many of them. However, when you follow these leads, you’re deciding by default that these things are more important than anything else you have to do at those times.
3. Defining your work. Defining your work entails clearing up your in-tray, your digital messages, and your meeting notes, and breaking down new projects into actionable steps.

Getting Things Done: The Art of Stress-Free Productivity Book Summary

Preface: “The whole object of travel is not to set foot on foreign land; it is at last to set foot on one’s own country as a foreign land.” – G. K. Chesterton

Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties

Kelly Phillips Erb  Forbes Staff

Alexandru Bittner, a Romanian–American dual citizen, made a mistake when he failed to report his foreign accounts. That much is clear. Neither he nor the IRS has ever suggested that his failure to report funds held in foreign bank accounts was willful. What has been disputed is how much he should pay for that mistake. The answer to that question is $50,000 or $2.72 million—depending on who you ask.

Today, the Supreme Court offered its response: $50,000.

In the 1980s, Bittner moved to the United States, and he eventually became a U.S. citizen. In the 1990s, Bittner returned to Romania, where he became quite successful, generating over $70 million in income through businesses and investment ventures. As he earned income, he stashed it in a number of institutions, including foreign banks.

As part of the Bank Secrecy Act (31 USC §5314), every U.S. person with a financial interest in, or signature or other authority over, one or more foreign financial accounts with an aggregate value of more than $10,000 must annually report the account to the Treasury Department. You do this by filing a Report of Foreign Bank and Financial Accounts—more commonly known as an FBAR. Failure to report can result in a penalty, depending on whether the failure was willful or non-willful. The penalties can be draconian, but typically, the penalty for a non-willful violation is $10,000.

Supreme Court Rules In Taxpayer’s Favor On FBAR Penalties: Forbes