Are there are still tax heavens in Delaware, Wyoming and Nevada or all entities share same federal tax burden?
At the federal level, it doesn’t matter what state you are in. But states have different state taxes, regulations, and state laws. Some are more “business friendly” than others. Delaware and Nevada get a lot of corprarte activity. I didn’t know about Wyoming, but it doesn’t surprise me that they would want into the game…
One of our big tax issues around employee compensation is whether a worker is an employee or a contractor. Employers must pay taxes on the “employees” but not the contractors. So there are frequent classification disputes.
Here is completely tax accounting and tax liability under labor service purchasing firm, no matter if contractor is independent. The key difference for independent contractors is if they earn their income from many firms, they are also obligated to fulfill tax return so they also have to arrange accountants. The optimal solution for them is to establish their own limited liability companies because in this manner corp. taxing is more favorable than personal. There are also tax non decuctilbles as well as double taxed items by CIT but there are also “arbitrage” opportunities for legal tax evasion. Recently under the preassure of EU and international creditors those opportunities are getting narrower. Tax on dividends in the past have been implemented few times into system and few times cancelled. Capital gain tax has been just implemented a year ago. Ownership of real estate is still not taxable, so there are people (mostly lawyers) with about 30 REs under personal ownership. Anyway there are some charges and we call it parafiscals, and there are plenty of them. Those have some but not all features of taxes (utility charges, mandatory membership to some chambers, etc).
Interesting, thanks for posting.
I don’t see any mention in the 2016 cirriculum of capital leases with salvage value. You have been at this game longer than me, so maybe it has changed over the years. If so, this seems like a good change. I think what the CFAI is getting at in this area is that the classification of Operating vs. Capital leases produces financial statement differences that require adjustments for comparison purposes. They can effectively test this without introducing baloon payments or other distractions.