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Floyd “Money” Mayweather’s Tax Troubles

Flody Mayweather Weighing InThe IRS is currently demanding boxer Floyd Mayweather Jr. pay his outstanding 2015 federal income taxes, amounting to about $22.2 million. In response, the boxer, who goes by the nickname “Money,” has filed a Tax Court petition requesting the IRS to grant him more time to settle his outstanding tax liability. However, tax lien documents from the IRS indicate that the boxer has been either unable or unwilling to pay his taxes on time over the past decade or so. In fact, the IRS has filed over two dozen liens and releases from those liens in Clark County, Nev., in Floyd Mayweather’s name since 2004. The lien documents reveal Floyd Mayweather has owed the IRS $3.1 million, $7.1 million and $6.1 million in outstanding taxes at various points. Despite earning hundreds of millions of dollars from fights and establishing his own boxing promotional firm, the boxer regularly accumulates huge tax debts, some of which have gone unpaid, according to public tax records, and this could have far-reaching consequences for the boxer.

Mayweather’s “Money” Persona

Floyd’s brand portrays him as being ridiculously wealthy to the point that he doesn’t give much thought to spending enormous amounts of money on expensive things, such as limited edition supercars. For instance, at one point in an interview with Stephen A. Smith, the boxer says his Bugatti is a “cheap” Bugatti because, according to the boxer, it is not the most expensive Buggatti money can buy. The Mayweather persona is about wealth and unlimited amount of money as much as it is about boxing. In fact, Mayweather calls his company, crew and lifestyle gear “The Money Team.” However, whether Floyd Mayweather is actually obscenely wealthy or just pretends to be, the reality is the boxer has failed to settle his tax obligations on several occasions since 2004. Public records from Clark County, Nev., show that the IRS filed tax liens against Floyd Mayweather in 2007, 2008, 2011 and 2012. The records also show the corresponding releases for these liens. However, the IRS has filed another lien this year (2017) against the boxer, claiming the boxer has not settled his 2015 tax obligations in full. In total, the IRS is demanding about $22.2 million from Floyd Mayweather.

Large Investments

It is important to note that the existence of these liens does not necessarily prove Floyd “Money” Mayweather is broke. Put another way, a person can be cash-poor but own high value assets such as valuable art collections, property and stocks. It is an open secret that Floyd Mayweather has plenty of high value assets that the IRS can put a lien on, such as his collection of expensive supercars. Still, someone who claims to be rich beyond imagination and whose brand revolves around money should be willing and able to pay his taxes on time. The boxer’s PR team has found a way to put a positive spin on the issue, with Mayweather’s tax attorney, Jeffrey Morse, recently telling Fight Hype, an online news resource, that

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Who Will Benefit From The Tax Breaks Under The GOP’s Newly Proposed Healthcare Bill?

The U.S. Capitol BuildingIf the GOP’s newly proposed healthcare bill, the American Health Care Act (AHCA), becomes law in its current state, it would change or repeal more than a dozen taxes that help fund Medicare and Medicaid subsidies under the Affordable Care Act, commonly known as Obamacare. The taxes targeted for repeal include taxes on corporations, as well as taxes related to individual income. According to estimates from the Congressional Budget Office (CBO), the federal government’s revenue would decrease by $700 billion over the next decade due to these tax cuts. The winners of the tax breaks under the GOP’s newly proposed healthcare bill include:

High-income Earners

The Senate bill will give high-income earners (individuals who earn at least $200,000 annually or couples that earn $250,000) a tax break by eliminating two Medicare taxes on such individuals. Specifically, it would eliminate the 0.9% Medicare payroll tax and the 3.8% tax on net investment income, including bonds, stocks, capital gains and interest, levied by the Obamacare to help fund Medicare subsidies. However, by repealing these two taxes, the federal government stands to lose about $231 billion in revenue over a 10-year period, says the CBO.

Healthy, Mid-income Earners

While Obamacare gives tax credits to low-income earners to enable them purchase health insurance through the Health Insurance Market, it caters only to individuals who earn less than $48,000. The AHCA, on the other hand, extends these tax credits to Americans who earn upward to $100,000. Moreover, the AHCA makes it easier for insurers to charge lower rates to young people. Obamacare allows insurers to charge the oldest enrollees up to three times as much as the youngest enrollees. Under the AHCA, insurers would be able to raise premiums for the elderly and at the same time, lower premiums for young Americans. In fact, according to estimates from the RAND Corporation, this policy would lower the annual health insurance premiums for the average 24-year-old American from $2,800 to about $2,100.

Individuals with Pre-existing Conditions

The Senate bill ensures insurers do not deny individuals with preexisting conditions coverage. Moreover, its “continuous coverage” protections prohibit insurers from charging such individuals more than the applicable standard rates. The bill also creates funds to assist states take care of individuals with preexisting conditions. These funds include the $100 billion Patient and State Stability Funds intended to assist states stabilize their individual markets by lowering costs and improving access for patients. The Invisible Risk Sharing Program will provide an additional $15 billion to help insurers cover high-cost enrollees.

Large Employers

Unlike Obamacare, the Senate bill would not require employers to provide their employees with affordable coverage. Consequently, companies will enjoy several benefits. Firstly, companies that fail to provide cover for their employees will not get in legal trouble. Secondly, large companies will have less work to do in regards to complying with reporting requirements. Thirdly, the federal government is likely to take longer to implement the tax on high-cost employer health plans.

Conclusion

If the AHCA, becomes

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The Tax Liability of Crowd Funding Campaigns

A woman browsing a crowd funding websiteDid you know that supporting a crowdfunding campaign by generously donating money, could have an impact on your tax burden?

The IRS’s reporting requirements for crowdfunding donations cover everything from personal donations to creating campaigns on crowdfunding platforms such as GoFundMe. This means that you should understand the potential consequences of donating money to a good cause to avoid getting into trouble with the IRS.

Tax Consequences to the Donor

As a donor, you may be unable to claim a charitable deduction from the IRS if the recipient of your contribution does not fall under section 501(c)(3). In such a case, your charitable contribution would not lower your taxable income, which means it would not lower your taxable burden. The IRS does not treat donations from one individual to another as charitable donations. Instead, it treats them as nondeductible gifts to the recipient of the funds. This means that such donations may or may not attract a gift tax depending on the total amount. Specifically, if your donations exceed the annual exclusion amount, which is $14,000 in 2017, you would have to fulfill the necessary reporting requirements and pay the relevant gift tax. On the other hand, if they fall below this amount, they would have no tax consequences, so you would have no reporting requirement.

Tax Consequences to the Recipient

If you are the recipient of funds donated by donors out of their own generosity, there is no tax consequence to you. This means no exclusion amount, no tax on the receipt of such gifts and the IRS would not treat your gifts as taxable income. However, the IRS requires third-party payment settlement entity (PSE) entities to file Form 1099-K if a payee’s receipts exceed $20,000 or when the payee receives 200 donations or more. That means that if you use a crowdfunding platform, such as GoFundMe, to collect and distribute contributions to you and your account attains one of these thresholds, the organization will use Form 1099-K to report your recipients to the IRS.

Additionally, the organization will send you a copy of the form as well. While receiving Form 1099-K can be disconcerting, it does not necessary mean that your tax burden has increased. However, you may have to explain to the IRS the nature of your crowdfuning campaign. In essence, you would have no tax consequence if the gifts to you were out of generosity. At this point, it is important to note that, if you offer contributors a service or product in exchange for funds, then the IRS would treat the receipts as taxable income, meaning they would have a tax consequence. More specifically, you would have to pay income taxes.

Mistakes to Avoid

When creating a crowdfunding for someone else, either a friend or a loved one, you should avoid listing yourself as the payee. If you do so, it would report under your Social Security number and this could cause several problems for you. Firstly, while the receipts may not attract income

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Jersey Shore Star in Tax Trouble

the Jersey shore boardwalkMike “The Situation” Sorrentino is facing serious legal issues together with his brother Marc Sorrentino. The duo have been indicted by the Department of Justice on various charges, including tax evasion and structuring and falsifying records. These fresh charges add to the Sorrentino brothers’ woes since they both currently have pending cases.

In 2014, they were charged on multiple tax-related cases. Mike faced one count for failure to file a 2011 tax return and one count for conspiracy. In addition, he was also charged with two counts of misrepresenting the facts in his tax returns between 2010 and 2012. When it comes to the latest charge, he is accused of structuring funds in an attempt to dodge currency transaction reports.

On the other hand, Marc is accused of falsifying documents with the aim to obstruct an ongoing grand jury investigation. The Feds initially alleged that while working as his brother’s manager, Marc evaded tax using two companies under their control. The entities in question are MPS Entertainment and Situation Nation.

The companies were registered as S-Corporations, thus making them pass-through entities. This means all expenses and income linked to the firms pass through to the shareholders (the Sorrentino brothers). The Department of Justice alleges that the duo purposefully collected funds from the entities to cover a wide variety of personal expenses.

It has been reported that the brothers used the money to buy expensive clothing, and flashy vehicles. The transactions were recorded as legitimate business expenses. They also are accused of understating income received by both Situation Nation and MPS Entertainment.

In 2011, Mike was accused of failure to file a tax return after netting an annual income of almost $2 million. The Feds state that he committed the offense by concealing his income, falsifying documents relating to the corporate return for Situation Nation. Additionally, he also failed to file personal return.

These charges are very serious, and I hope that the Sorrentino brothers have hired themselves a top notch tax attorney!

Floyd “Money” Mayweather’s Tax Troubles

The IRS is currently demanding boxer Floyd Mayweather Jr. pay his outstanding 2015 federal income taxes, amounting to about $22.2 million. In response, the boxer, who goes by the nickname "Money," has filed a Tax Court petition requesting the IRS to grant him more...

read more

The Tax Liability of Crowd Funding Campaigns

Did you know that supporting a crowdfunding campaign by generously donating money, could have an impact on your tax burden? The IRS's reporting requirements for crowdfunding donations cover everything from personal donations to creating campaigns on crowdfunding...

read more
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Cristiano Ronaldo Accused of Tax Evasion in Spain

Cristiano Ronaldo kicking a soccer ballThere is a very thin line between tax avoidance and tax evasion. Tax avoidance serves to reduce the tax bill of a taxpayer by using existing laws to their advantage. Tax evasion, on the other hand, is refusal to pay taxes or using fraudulent means to lower your tax bill. It is important to note that tax evasion is illegal and comes with not only stiff penalties, but also some jail time. Consider the case of Christiano Ronaldo, the FIFA world player of the year for several years. The Portuguese player is the star player for Real Madrid in Spain. Having helped his team win the UEFA Champions League twice in three years as well as the La Liga, Ronaldo is considered a hero by soccer fans around the world. Recently, Ronaldo was accused of tax fraud in Spain and the case is forcing foreign players in Spain to consider moving to other jurisdictions because Spanish laws seem to land players in trouble.

Beckham’s Tax Law in Spain

Ronaldo is charged with failing to pay €14.7m in taxes to Spanish authorities between 2011-2014. Spanish prosecutors claim that Ronaldo diverted €150 in advertising revenue to the Virgin Islands, a known tax haven, through a shell company. They claim that Ronaldo is supposed to pay a 24.75% tax rate on that income, which is the tax rate for foreign soccer players. This is commonly referred to as the “Beckham’s Law.” Players who are Spanish citizens are required to pay a whooping 48% tax rate on their income.

The main reason why Ronaldo has found himself in this legal problem is perhaps lack of proper tax advice. Ideally, he should have hired a Spanish tax attorney to advise him accordingly. The ideal attorney must have had a lot of experience offering tax advise to foreign soccer players in Spain, and none of them should have experienced any sort of tax-related legal problem.

Tax Laws in the United States

If you thought that tax laws in Spain were a pain, you might have trouble believing what sportsmen and women in the United States go through. This is because there are special state taxes on top of the state and federal income taxes. One type of special tax imposed by many states is the Jock Tax. There are also many other states that levy a special income tax, which is calculated daily. To ensure you are tax-compliant regardless of the state you visit or reside in, it is crucial you work with a competent tax attorney in San Francisco.

Who Should Hire a Tax Attorney?

Anyone who has multiple sources of income could potentially benefit by consulting a tax attorney in San Francisco. This could be from endorsements, advertising, salaries and wages, bonuses, commissions and special appearance fees. All these incomes are subject to different types of taxes. A tax attorney has in-depth knowledge of the IRS tax code, state-specific taxes and the applicable tax rates.

 

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Financial Advisers Must Play By New Rule

financial graph and calculatorOur tax attorneys learned this week that financial advisers will now be expected to play by a new rule that has the public’s best interest in mind.

An average citizen may not know what it means for a financial adviser to act under the fiduciary standard. The standard is defined by the Employee Retirement Income Security Act, which states that the financial adviser needs to act in the best interest of the client. Of course, this is a very basic definition, but it does get a little complex. It also states that the adviser must charge a reasonable fee to all clients to prevent unfair charges.

Of course, the advisor is expected to be an expert in the duties expected of a trained professional. All duties, skills, and attention to detail must be optimal. The financial advisor cannot have any conflicts of interests to ensure that the professional acts in the best interest of his or her client.

It should be noted that the rule only seems to require advisers to give fiduciary level advice on retirement accounts like IRAs or 401(k)s.

Consumers have probably received some information on these changes, which is likely going to change what kinds of services are offered and some of the prices they are used to. For example, fees for mutual funds and annuities will likely decrease. There are other investment options that will be likely lower.

Many financial advisers are probably going to move to a flat fee-based model rather than a commission-based model. Advisers who mostly work online might even opt for something like a subscription-based model to combat some of these price drops. There are other payment formats that some advisers might be exploring, and these are just some of them.

Just like with any shakeup of an industry, there will be several customers who are going to love the new pay structures or fees. There is also likely going to be a number of financial advisers who are not going to be too happy with some of these changes while others will love them.

Some do fear that these changes increase an advisor’s liability, and the cost of compliance might force the industry to drive prices up in the long run. This could mean customers are going to end up paying more for the same types of services.

The services provided must be compliant with this new regulation, so it should help more people trust advisers. It is also possible that some customers are not going to like the cost of advice, so it might drive some people away from the service.

There is no telling what is going to change in the industry, but it is important to start communicating these changes to customers so that they are aware. Most experts are very excited to offer this kind of promise to customers, and they believe it will ultimately prove helpful for the entire industry. Only time will tell how things will work, and hopefully, the changes help propel the

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Court Rules Turbo Tax Not Responsible for Errors

man sitting at computer screenIs Turbo Tax responsible for any errors they make on your taxes? According to a recent United States Tax Court ruling, it is the consumer who is responsible for any errors or inaccurate financial information submitted to the IRS. The ruling was reached on May 11, 2017 by Judge Holmes.

Barry Bulakites, an insurance consultant, was the petitioner in the recently closed Turbo Tax case. Mr. Bulakites believed that he had evidence to prove that he was tricked into claiming more deductions than what he would normally be allowed to claim through usage of the Turbo Tax software to file his 2011 and 2012 returns.

The taxation issue was partly due to alimony that was paid to Mr. Bulakite’s ex-wife following a divorce settlement. In the divorce decree, a sum of $2,000 was supposed to be paid in monthly installments. Mr. Bulakites offered to pay a larger sum of $5000 to “do the right thing” during the 2008 financial crisis to help his wife since both parties were unable to sell their interests in a home that they shared together.

The additional money that was paid to Mr. Bulakite’s ex-wife was written off as an alimony deduction on the 2011 and 2012 tax returns. Since the extra $3000 per month was not allowed to be written off under current IRS tax laws as an interest deduction, $79,000 could not be claimed or proven as interest or principal.

Other expenses that were originally claimed in the aforementioned tax years by Mr. Bulakite include interest from a note that was secured through owned real estate. The deducted amount of $185,673 was mistakenly inputted into the Turbo Tax software as a carry forward of net operating loss for the previous tax year.

Because no documentation was provided by Mr. Bulakite that showed a detailed schedule of operating loss deductions, the total amount was not allowed to be deducted, meaning no entitlement of reduced taxes. Mistakes made during the input of financial information into the Turbo Tax software by Mr. Bulakite were not found to be reasonable or in good faith by the United States Tax Court.

In his final decision, Judge Holmes cited a previous ruling known as “Bunney v. Commissioner, 114 T.C. 259, 267 (2000)” that states that taxation software is only as good as the information that someone inputs into it for the preparation and filing of state and federal tax forms for electronic or hard copy delivery.

The decision will now be entered under Rule 155 which is the Computation by Parties for Entry of Decision in all US Tax Court matters. Consumers can protect themselves by inspecting 1040, 1099 or other taxation forms for numerical errors prior to using Turbo Tax.

Turbo Tax does offer a 100% Accurate Calculation Guarantee for consumers. This guarantee is subject to a number of regulations, and it provides only a 60-day error window starting with the date a penalty assessment notice is received. Consumers are still required to respond to requests by the … Read More

What To Know About Taxation Of Gambling Winnings

image of a blackjack tableOne of the biggest gambling events of the year is the Kentucky Derby. This is usually a chance for horse-racing fans to make some quick cash at the tracks. After all, the horses, riders and trainers are known, so the adds favor certain horses. However, there are also some underdogs that may pull off a surprise win. This can be a great opportunity to win big. The number of bets as well as the amount of money that will be staked during the Kentucky Derby will be quite considerable as people from around the world will also be watching the event and placing their bets. While the focus is on the races, many people have not thought about paying taxes on their winnings. In fact, some people do not even know that gambling winnings are taxable.

How Gambling Winnings are Taxed

Taxpayers are required to pay taxes on all the income they get, whether it’s from employment, dividends or gambling winnings. The federal government has singled out gambling winnings and imposed a special tax on all gambling winnings whether it’s at the tracks or casino. Some states have also imposed a special tax on gambling winnings. In addition to paying these taxes, you must also report them when filing your tax returns. There are also special forms, known as W2-G forms, that must be filled when your winnings exceed a certain amount.

The gambling tax rate imposed by the federal government is 25% of the total winnings. However, your winnings must reach or exceed the threshold set.

Below are the thresholds for different types of gambling winnings:

– $5,000 in tournament winnings at the poker table
– $1,500 in keno winnings
– $1,200 at a bingo game or slot machine
– $600 at the horse tracks (but this must be 300 times your bet)

If your winnings have reached or exceeded these thresholds, you will be required to fill IRS Form W2-G and pay a tax rate of 25% for the total gambling income. In most cases, the casino will withhold 25% of your winnings on behalf of the government before paying you.

It is important to note that taxpayers are not always required to fill the IRS Form W2-G when their gambling winnings exceed the thresholds highlighted above. For instance, you do not have fill this form if your winnings are from table games, such as roulette, craps, baccarat or blackjack, regardless of the amount. However, you still have to report these winnings when filing your tax returns and pay the gambling tax.

Paying Tax on Smaller Winnings

If your gambling winnings have not reached the thresholds noted above, does it mean your winnings are tax-exempt? No, it doesn’t. What it means is that you will not pay the 25% gambling tax. Instead, you will have to add it to your employment income and treat it like any other taxable income. The income must be declared on Form 1040. The good news is that you can avoid paying tax … Read More

How Trump’s Tax Reform Impacts High Tax States

pile of one dollar billsWith the recent announcements by the Trump administration that tax reform is on the way, one of the proposals with the newer and simplified tax plan is the elimination of various deductions in order to close some loopholes and even things out for the masses. One of these proposed eliminations is within the state and local taxes.

So who will this impact the most?  Residents of high-tax states, like California where the state income tax rate is a whopping 13.3 percent. Of course the crafty tax filers who know how to deduct their state and local income taxes will take advantage of such a high tax rate, but if this deduction is eliminated then they’ll have to look elsewhere for their tax havens. Will Republicans in California have to explain themselves to their constituents? It depends on how skilled they are at shifting the conversation toward how California is in need of an overhaul regarding the way they tax their citizens, otherwise they’ll be pinned to the new tax reform by the media.

So along with President Trump’s tax proposal and Paul Ryan’s tax-reform blueprint, both plans would compensate what the itemized deductions would’ve cost. Because only 30 percent of federal tax filers actually itemize their deductions, they would feel the impact of this change the most.

The Tax Foundation says the deduction primarily benefits high-income taxpayers and that more than 88 percent of these tax savings seem to go to those over the $100,000 income level. Additionally this deduction favors states with high tax rates. Most states with high tax rates have high property values.   One report shows that in 2014 nearly one third of the deductions total value nationwide came from California and New York.

Devin Nunes, a member of the tax-writing Ways and Means Committee says that he supports getting rid of it. He also proposes doubling the standard deduction and also adding some additional tax breaks for children.

Tom McClintock declined to comment, but in an interview with KGO radio he mentioned that eliminating the deduction might result in double taxation. By this he means that when residents are taxed by both the federal government, and the state government, and then the local government on the same income, then it’s more like triple taxation.  He believes that part of the proposal will need to be modified over time.

Republicans who reside in wealthier districts pose the biggest targets. This list includes Ken Calvert, Dana Rohrabacher, Darrell Issa, Duncan Hunter and Steve Knight.

Republicans who represent inland areas would also come under pressure because even though their constituents as a whole deduct less tax coastal residents, they still rank higher than many other states and deduct more than many other national citizens.

Just looking at 2014, when the average California local and state tax deductions ranged from $1,330 in Imperial County to a marked different in Marin County, where it was $16,956. Compare this to Missouri, where the deduction ranged between $392 to $4,593.

A $100 increase

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Warriors To Bring Millions in Tax Revenue to San Francisco

The Chase Center AccommodationsAerial view of the Chase Center and San Francisco Bay

The Golden State Warriors will soon be shooting hoops at their new $1 billion arena, located in the Mission Bay neighborhood of San Francisco. The Chase Center will officially open for the 2019-2020 season. In fact, San Francisco Mayor Edwin M. Lee will attend the ribbon-cutting ceremony for the new sports complex, along with Coach Steve Kerr, Kevin Durant, and a number of Golden State’s stars.

While most fans are celebrating the new arena, the road to changing venues faced a myriad of legal challenges and concerns. This mainly revolved around traffic concerns in the area, which is still a topic of debate as the project moves forward. The Warriors have wanted a new arena for some time now — and the ownership group finally agreed. Led by Peter Guber and Joe Jacob, the owners opted to privately finance the area — which will replace the Oracle Arena in Oakland. Oracle arena is currently the NBA’s oldest venue in existence.

The new 18,000-seat arena will feature cutting edge and innovative technologies. With state-of-the-art amenities, the venue will also be designed to reflect the diversity and growth of the Bay Area. With 11 acres of restaurants, public plazas and offices — the arena is sure to be a center of attraction and nightlife for many locals and visitors

Tax Revenue and Economic Benefits

According to Mayor Lee, the Chase Center is slated to provide great economic benefits for San Francisco. This includes thousands of new jobs and literally millions in new tax revenues for The City. Similarly, the venue will fill the current void in San Francisco’s arts and events facility scene. More importantly — the arena will ensure that the beloved Warriors remain the Greater Bay Area. In order to secure the projected millions in new tax revenues, the team and ownership are financing the arena without any public funding.

Funding for the arena got a huge boost when JPMorgan Chase secured the naming rights a year ago. This deal is for a solid 20 years and at an estimated price of $300 million. According to industry monitors, this is the richest arena naming rights deal ever in the United States.

According to Warriors President Rick Welts, the team –and ownership — always had a vision of privately financing a state-of-the-art sports facility in San Francisco. However, they also wanted the venue to be a multi-purpose arena; one that could easily facilitate entertainment events as well. With the creation of the new Chase Center, their dreams –and that of the fans — are soon to become realities. The venue will not only be the home of the Warriors — but will also showcase concerts, family shows, conventions, charity events and so much more. The Golden State Warriors were purchased by Guber and Lacob — for $450 million — back in 2010. This is still considered one of the greatest investments in NBA and sports history. The ownership team now looks to expand their base with the

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