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News from Katz Baskies LLC
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Don't Forget Income tax Planning in 2010
Florida Supreme Court Rules on Asset Protection for LLCs
Florida Adopts Tax Amnesty Program
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July, 2010

If you are like most people, you don't start income tax planning until the end of the year. It isn't too early, however, to contemplate the increased tax rates for 2011 and the planning that might occur in 2010. Learn more below.

Many clients are more attuned than ever to issues of asset protection. The Florida Supreme Court recently ruled on a case involving a single member limited liability company, as described below.
But it isn't all bad news on the tax front - if you have undisclosed tax liabilities to the State of Florida, an amnesty program is underway. This could result in considerable savings for some people (but only if you come clean!).
Finally, we are very pleased to announce that not only were Tom and Jeff listed once again as Florida "Super Lawyers" (and Jeff was again listed as one of Florida's "Top 100" attorneys), but Justin Savioli of our office was included as a "Rising Star/Up and Comer." It pleases us that others now know about Justin what we've known all along.
Don't Forget Income Tax Planning in 2010
Tax Rates Scheduled to Increase 
Income tax planning 
We have written often of the uncertainty surrounding the estate tax and planning opportunities during periods of low values and low interest rates. There is no uncertainty, however, with regard to income taxes -rates are going up in 2011 for high-income taxpayers. As we enter the second half of 2010, it is important to keep this in mind when contemplating investment and business transactions.
Tax rates for the highest earning taxpayers will increase from 35% to 39.6% (both singles and married couples filing jointly in excess of $384,860). A 36% bracket applies to marrieds filing jointly with incomes from $215,500 to $384,860 and singles with incomes from $177,000 to $384,860. Lower levels of income are taxed at 31%, 28% and 15%.
Although the higher bracket will affect many clients, almost everyone (except if at the lowest bracket) will be affected by an increase in the capital gains rate from 15% to 20%. Moreover, dividends will no longer be taxed at the 15% capital gains rate. If you are in the highest bracket, the tax rate on dividend income will increase from 15% to 39.6%!
If you are contemplating the sale of a business or property, or readjusting your portfolio if there are gains to be recognized, those may be transactions that you want to close in 2010 in order to avoid paying a higher tax if closed in 2011. Many people live by the adage "defer, defer, defer" but that may not be the best plan for recognizing capital gains. In fact, investment income (including capital gains) for taxpayers earning more than $250,000 ($200,000 for a single filer) will be subject to an additional tax of 3.8% beginning in 2013. Thus, waiting to recognize gains may only make the taxes worse.
Florida Supreme Court Rules on Asset Protection for LLCs
Decision may raise more questions than intended
wealth preservationIn Shaun Olmstead, et. al., v. The Federal Trade Commission [Supreme Court of Florida. Case No. SC08-1009. (June 24, 2010)], the Florida Supreme Court ruled that a creditor of an owner of a single-member Limited Liability Company ("LLC") may take possession and control of the single-member LLC to satisfy the claim.  For many, this aspect of the ruling is not surprising, even though it is the first decision in Florida indicating that single-member LLCs offer little creditor protection. 
What's perhaps more disturbing about Olmstead is the Supreme Court's decision also threw open the question as to whether owners of interests in multi-member LLCs will have the charging order protection of the statute.
Florida Adopts Tax Amnesty Program
Penalties Waived and Interest Reduced
Florida has adopted a tax amnesty program that began on July 1, 2010 and runs through September 30, 2010.  Under this program, taxpayers may pay a discounted interest rate on outstanding tax liabilities and no penalties will be imposed on tax paid under the amnesty program.  The program applies to all taxes administered by the Department of Revenue that were due before July 1, 2010, except unemployment taxes and the Miami-Dade County Lake Belt fees.  To participate, an amnesty agreement form must be submitted to the Department of Revenue.  Tax amnesty information, including a Tax Information Publication and Tax Amnesty Agreement form, is available on Revenue's website at www.myflorida.com/dor/amnesty.
Taxpayers who participate in the program will receive a complete waiver of penalty.  Further, if the identified tax liability is unknown to the Department of Revenue, the taxpayer will only be required to pay one-half of the interest otherwise due.  Even if the identified tax liability has already been listed in a bill, jeopardy assessment, or other assessment, or is already the subject of a scheduled audit, the taxpayer is still eligible for a one-fourth reduction in interest.
The program also makes it easier for a taxpayer to get current on any delinquent obligations.  Instead of paying the full amount of tax and interest due in one lump sum, a taxpayer may request a stipulated payment agreement whereby the taxpayer makes a minimum down payment of 12.5% of the outstanding amount due and pays the remaining balance in up to seven monthly installments.
Moreover, if a taxpayer becomes current under the program for the three years immediately preceding to the filing of the return under the amnesty program, then the taxes for all years prior to that three year period are forgiven.  Examples: (1): A taxpayer who files sales tax returns monthly files a 2010 Tax Amnesty Agreement and voluntarily files amnesty Sales and Use Tax Returns on July 15, 2010. The sales and use tax returns that could be disclosed would be returns to report tax for the months of June 2007 - May 2010.  Any delinquent sales taxes for periods prior to June 2007 would also be extinguished; and (2): A corporation with a calendar year filing period files a 2010 Tax Amnesty Agreement to voluntarily disclose its corporate income tax liability on July 15, 2010.  The corporate income tax returns that could be disclosed would be its Florida corporate income tax returns for calendar year 2007 through calendar year 2009.  Any delinquent Florida corporate income tax liability of the taxpayer for all calendar years preceding calendar year 2007 would also be extinguished.
In our January update letter to clients (click here), we raised a number of issues related to the estate tax uncertainty. While we don't have any greater direction from Congress now than we did then, we continue to field questions from clients as to how the present law affects them. There are still great planning opportunities in the midst of this uncertainty. If you have any questions about these or other matters, please do not hesitate to contact us.

Thomas O. Katz and Jeffrey A. Baskies
Katz Baskies LLC
2255 Glades Road, Suite 240W
Boca Raton, Florida 33431