Posts

Showing posts from 2020

Deducting Summer Camps and Daycare with the Child and Dependent Care Credit

Image
If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.
The child and dependent care credit provides a tax break for many parents who are responsible for the cost of childcare. Though the credit is geared toward working parents or guardians, taxpayers who were full-time students or who were unemployed for part of the year may also qualify. If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of: up to 35% of qualifying expenses of $3,000 for one child or dependent, orup to $6,000 for two or more children or dependents. Purpose of the child and dependent care credit The child and depe…

Social Distancing may exacerbate Social Inequality

Image
More companies are asking employees to do their jobs from home. Cities and states are ordering nonessential businesses to close. Microsoft, Google, and Zoom have made versions of their work from home software free. Telecommuting is becoming the new normal for many office workers.

These mandatory closures may permanently change our work patterns. Employers may find employees do not want (or need) to return to the office once closures end. But that arrangement is only realistic for white-collar workers. Management, professional, and administrative careers overwhelmingly can take their work out-of-office. For most occupations, remote is not an option.

Arts and entertainment, accommodation, and food service workers are all but barred from remote work. A stagehand cannot move scenery from their home office. A bartender cannot pour a drink over the phone. A hotel porter cannot move bags via video conference. These are some of society’s most at-risk workers. The average hourly wage for leis…

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET: BORROWERS

Image

The "Shut In" Economy

Image
In the previous section it was suggested that this is not a temporary disruption.  It may in fact be the the start of a completely different way of life.

In the short term, this will be hugely damaging to businesses that rely on people coming together in large numbers: restaurants, cafes, bars, nightclubs, gyms, hotels, theaters, cinemas, art galleries, shopping malls, craft fairs, museums, musicians and other performers, sporting venues (and sports teams), conference venues (and conference producers), cruise lines, airlines, public transportation, private schools, day-care centers. That is to say nothing of the stresses on parents thrust into home-schooling their kids, people trying to care for elderly relatives without exposing them to the virus, people trapped in abusive relationships, and anyone without a financial cushion to deal with swings in income.

There would be some adaptation, of course: gyms could start selling home equipment and online training sessions, for example. We…

first “quiet disclosure” prosecution for offshore account income

Image
https://www.justice.gov/opa/pr/lake-worth-businessman-pleads-guilty-evading-taxes-millions-income-stashing-funds-secret

Lake Worth Businessman Pleads Guilty to Evading Taxes on Millions in Income, Stashing Funds in Secret Accounts Around the WorldTapped Hidden Accounts to Buy $1.3 Million Yacht and Waterfront Property Filed False “Quiet” Disclosure A Lake Worth, Florida, businessman pleaded guilty today to tax evasion and willful failure to file a Report of Foreign Bank or Financial Account, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida.  According to court documents and statements made in court, Dusko Bruer owned and operated a company that bought U.S.-made agricultural machinery and parts and sold them throughout the world. Beginning in 2003, the company did not pay Bruer a salary. Instead, Bruer used millions of dollars from the company’s …

Potential Economic Impact of the Pandemic - Periodic Social Distancing?

Image
This section largely references Mark Blyth research.  He is a William R. Rhodes ’57 Professor of International Economics at Brown University. He is a co-author, with Eric Lonergan, of 2020 Angrynomics. I also reference Gideon Lichfield from MIT
Two competing epidemiological models currently guide and divide expert opinion on how best to respond to the novel coronavirus. 
- The first, from Imperial College London, scared the U.S. and British governments into instituting strict social-distancing measures. It predicted that if left unchecked, COVID-19, the disease caused by the virus, could kill over half a million people in the United Kingdom and 2.2 million in the United States—not counting the many additional deaths caused by the collapse of each country’s health-care system. 
- The second model, developed by researchers at Oxford University, suggested that the virus had already infected as much as 40 percent of the British population but that most had shown mild or no symptoms. Acc…

Potential Economic Impact of the Pandemic - Lessons from 2009 H1N1 / Swine Flu Pandemic

Image
Within the past one hundred years, four pandemics have resulted from the emergence of a novel influenza strain for which humans possessed little or no immunity:  - the H1N1 Spanish flu (1918),  - the H2N2 Asian flu (1957),  - the H3N2 Hong Kong flu (1968), and  - the H1N1 swine flu (2009).

Most of this section is taken from the December 2016 Journal of Pathogens. The article was titled - "Reviewing the History of Pandemic Influenza: Understanding Patterns of Emergence and Transmission" by Patrick R. Saunders-Hastings and Daniel Krewski

So on March 17, 2009, the first case of a novel H1N1 influenza virus infection, also known as swine flu, was documented in Mexico. It rapidly spread throughout Mexico and the US and was declared a full pandemic by the WHO on June 11, 2009.  Swine flu circulated around the world in two waves until August 10, 2010, when the WHO officially declared the pandemic over.

The 2009 Swine flu (H1 N1) virus was the last pandemic declared by the WHO before…

Potential Economic Impact of the Pandemic - Lessons from 2002 SARS

Image
Lessons from 2002 SARS

In 2004, the Institute of Medicine hosted a Forum on Microbial Threats.  Out of this workshop came a paper on the economic impact of the 2002 coronavirus outbreak.   Their report summarized three mechanisms by which SARS influences the global economy.

First, fear of SARS infection led to a substantial decline in consumer demand, especially for travel and retail sales service. The fast speed of contagion made people avoid social interactions in affected regions. The adverse demand shock becomes more substantial in regions that have much larger service-related activities and higher population densities, such as Hong Kong or Beijing, China. The psychological shock also rippled around the world, because the world is so closely linked by international travel.
Second, the uncertain features of the disease reduced confidence in the future of the affected economies.  
Third, SARS increased the costs of disease prevention, especially in the most affected industries such as t…

Potential Economic Impact of the Pandemic - Lessons from 1918 Spanish Flu

Image
It is obviously way to early to accurately predict the economic impact.  But international entrepreneurs and expats do not have the luxury of staying still in "wait and see" mode.  So a rough sense of outcomes is needed to help forward planning



Lessons from 1918 Spanish Flu
The 1918 Flu Pandemic which lasted from January 1918 to December 1920, is estimated to have infected 500 million people, or one-third of the world’s population.  This led to around 50 million deaths worldwide, with 550,000-675,000 occurring in the United States.  The pandemic thus killed about 0.66 percent of the U.S. population.  But a key difference from the present pandemic is that Spanish Flu was fatal for young (18-44), healthy adults.

NPIs or Non-pharmaceutical interventions implemented in 1918 mirror many of the policies used today.  They included closure of schools, theaters, churches, bans on public gatherings and funerals, quarantines of suspected cases, and restrictions on business hours.
Research …

Funding “GRATs” in a Market Decline

Image
1. Creating a grantor retained annuity trust (commonly referred to as a "GRAT") is a relatively simple way to transfer property to your children at virtually no gift tax cost. 
2. The recent decrease in the market poses an opportunity to transfer wealth with minimal gift tax cost by creating a GRAT. 
3. Any security or other asset that has been significantly affected by the decrease may be a strategic asset to fund a GRAT because if the value rebounds, most of the appreciation over the current depressed value will benefit your children with little gift tax consequences. 
4. In addition, because of the low interest rate environment and down markets, the advantages of creating a GRAT are magnified. 
5. When properly structured, a GRAT can pass to your children all of the future appreciation of the transferred property and reduce the value of the gift to virtually zero.




Basic Operation of a GRAT

In a typical GRAT, you contribute assets to a trust which provides that you are to r…