Author: Luis Rodriguez Jr.

Assistant Professor of Law and Taxation, Alfred University, rodriguez@alfred.edu

Equine Business and Tax Guest Speaker: Larry Rosenblum

Larry Rosenblum, President of The Equine Tax Group, spoke to Alfred University students on select topics in Equine Business and Taxation.

Larry Rosenblum

In the morning session, Larry’s presentation enabled the audience to understand the importance of having a business plan for business and tax purposes in farming or related agricultural businesses.   The presentation walked the audience through each step of the process.

In the evening session Larry focused on select equine tax and tax audit issues.

Larry’s firm partners with taxpayers, C.P.A. firms, and Attorneys to resolve disputes with the Internal Revenue Service (IRS) and State Tax Departments, with a special focus on resolving section 183 (hobby loss) and section 469 (passive loss) issues in the equine industry.

Larry’s practice also includes IRS dispute resolution and general taxation issues, and Agriculture and Excise taxes. He possesses expertise in IRS Examination, Collection and Appeals procedures, and is an experienced witness in court cases and income reconstruction cases.

Democratizing Investments in Clean Energy and Carbon Offsets: Opportunities for Small Investors

The Greentech Investors Forum (GIF) had a new format for November 11’s meeting. Alfred students heard from four companies (and one Sector Expert) that are creating similar opportunities—raising and employing capital from smaller investors to combat climate change.

The International Energy Association has calculated that investments in clean energy of at least $1 trillion a year are needed to “prevent climate catastrophes”. In 2015, only $330 billion was invested globally and $52 billion in the US. Where will that additional money come from? The big players, eg pension funds, sovereign wealth funds, wealthy family offices and corporation must lead the way. But they can’t do it alone. It is urgent to develop ways to facilitate clean investments from everyone—even small investors.

Representatives from the following companies are developing investments for “the little guy”, and spoke that day:

  • CoPower, which streamlines up-front financing for clean energy projects
  • Carbon Capital Credit, which allows people and families to offset their footprints by investing in climate friendly changes in developing countries;

Representatives from the following startup companies will speak today:

  • Carbon XPrint, which allows people to offset their carbon footprint ton-by-ton of CO2 with minimum or zero risk; and
  • Climate-IT, a new crowd-funding equity platform for clean energy companies.

Hillary McMahon, Managing Director of Hazel, will also speak.  Hillary has worked as Director of Intelligence at Richard Branson’s Carbon War Room, and previously as an expert and as a thought leader at the World Resources Institute, the UN, the European Commission and others.

The IRS Hires Private Tax Collectors!

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Get ready to pay back some money!

A new Internal Revenue Service (IRS) private debt collection program has been authorized by Congress to collect overdue federal tax debt as early as spring 2017. The mandate was to pursue these unpaid taxes that the IRS is not actively pursuing, while respecting taxpayer privacy and rights. Once again, Congress has approved using private debt collectors having tried  before with mixed results.  As a condition for being chosen, the four approved companies must follow the consumer protection provisions of the Fair Debt Collection Practices Act.

However, the new program creates an issue. “Tax collection is a basic function of government and should be carried out by government employees,” stated Chuck Marr, the Director of Federal Tax Policy at the Center on Budget and Policy Priorities. Critics/people including Chuck Marr and Senator Bob Menendez believe that the new program is a mistake and an awful idea because back in 1996-1997 and 2006-2009, when the IRS used private collectors, it was not that successful (i.e., did not generate revenue in 2006-09).  Others believe that the new program will open new doors for telephone scammers; tax scams are considered to be one of the fastest growing IRS problems. Taxpayers should know that the IRS contacts taxpayers by mail to notify them about unpaid tax debt.

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So will this idea of hiring private tax collectors be more successful during this year? Will it fail again? Should the government find another way to solve this issue of people not paying their taxes?

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Here are some key points to keep in mind:

  1. Private collectors will first contact taxpayers by mail.
  2. When the private collector identifies the correct address of the taxpayer, he/she will ask for a full payment by a telephone call. If the taxpayer cannot pay the full amount, the private collectors will offer of an installment plan.
  3. Private collectors cannot accept payment – do not pay them directly.
  4. The Fair Debt Collection Practices Act applies to these private collectors (Debt Collection Practices § 1692a- § 1692p).
  5. If you have a large federal tax debt, you will have difficulties you’re your foreign travel because under the law the IRS has the power to revoke your passport.

By Phatryna Suon, Alfred University, B.S. Accounting 2017

FutureAir Inc.: Indoor Air Reimagined

The management of FutureAir spoke to potential investors, academics, attorneys, engineers and other professionals, and telephonically to AU students today about their company and its future prospects. The company is developing the next generation of smart, clean-tech products that will bring awareness and solutions to the serious problem of indoor air pollution and the pressing need to reduce energy consumption and CO2 emissions. FutureAir’s first product is an indoor air quality (IAQ) device with an embedded sensing platform to measure and improve indoor air quality and thermal comfort.

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FutureAir’s sensing platform identifies the presence of toxins and dust causing indoor air pollution, and connects with other devices to improve the indoor air environment and reduce energy consumption. FutureAir’s second product is a revolutionary ceiling fan, designed by Ross Lovegrove, who is well known for his Biomimicry (nature-inspired) inspired designs. Embedded with the same sensing platform, FutureAir’s ceiling fan will improve indoor air quality with a custom filter and by connecting wirelessly with air conditioning and other indoor air devices to improve thermal comfort and energy efficiency.

FutureAir’s products employ low cost sensors paired with algorithms and expert smart Internet of Things (IoT) software engineering.

Features include:

  • Lovegrove-design;
  • an app to measure and monitor health, quality and comfort of indoor air;
  • machine-learning and IoT-enabled connectivity to collect data and improve energy efficiency;
  • air quality sensors: PM (particulate matter) 0.1-2.5 micrometers, VOC, CO2;
  • thermal comfort sensors: smart aggregation of temperature and humidity; and,
  • Cradle-to-Cradle assembly with healthy reusable materials.

FutureAir’s proprietary sensing platform has been actively collecting data at multiple partner pilot locations in NYC with a functioning dashboard and app.

The company is raising seed capital from impact investors, with funds to be used for manufacturing of sensing platform (printed circuit board), IAQ device and ceiling fan prototypes, fluid dynamic studies, completion of mobile app, HR, IP, legal services, operations, marketing and pre-sales.

FutureAir is also exploring early revenue through third-party sales of its sensing platform to luxury design brands such as Italian manufacturer Boffi. Design and development of a fully functional mobile app is underway. The IAQ device is prototyped and in the next stage of development for manufacturing; small-scale 3D printed version of the ceiling fan is ready to prototype full-scale.

FutureAir’s B2B market includes Architects, Interior Designers, Purchasing agents, Property developers on new and retrofit projects, homes, hotels, hospitals, offices and universities, as well as certified LEED, Well, Green, Net Zero Building and Smart cities.

 

Learning More About Taxes Through a Celebrity Divorce

There has been recent news on the divorce of Brad Pitt and Angelina Jolie. They are famous for their movie roles together and were seen as “the” power couple, but their divorce brings an extra dimension to their roles in that I now have more of an insight into how taxes work, especially from their celebrity lives.

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Angelina Jolie has filed for divorce from Brad Pitt for irreconcilable differences, which basically means neither was at fault for ending their marriage.

Now, let’s get into tax!

You need to carefully use the correct filing status when filing for your income tax return. In Jolie’s and Pitt’s case, even though they were legally married for two years, they are considered unmarried under IRC §7703 which provides:

“. . .the taxpayer is unmarried or considered unmarried for the entire year. . . if by the last day of their tax year: (1) they are legally separated under a divorce or separate maintenance decree. . .[or] (2) they are divorced.”

Filing as unmarried taxpayers may be more tax advantageous to the couple than filing separately as a married couple.

Yay for Jolie, she gets to keep her engagement ring which was worth $250,000. Why? Because under most state laws the ring belongs to the bride if there was a successful wedding, which Jolie and Pitt did have. She also takes the original cost basis of her rind under IRC §1041, so if she sells her ring the first $250,000 is tax free, with any excess taxed at a favorable Long Term Capital Gain tax rate under IRC §1(h).

Jolie does not ask for alimony (i.e., spousal support) from Pitt; alimony is taxable as ordinary income under IRC §71.  And while the former couple also have a prenuptial agreement dividing their marital property, such property divisions are generally tax free if they meet the requirements of IRC §1041 or §2516.

And finally, Jolie has asked for full custody of their six children and will probably also ask for child support. Generally, child custody will allow her to claim her children as dependents under IRC §152 (a), and child support payments received are not taxable to Jolie under IRC §71.  Moreover, having custody of their children generally makes Jolie eligible for a filing status of Head of Household under IRC §2(b).

In the end, it doesn’t matter who you are, divorce triggers important tax and legal issues that should be addressed timely. It is good to have a tax attorney to help guide and give you advice when going through a divorce. Remember that the tax code does grant tax benefits that can reduce some stress through the divorce process.

By Phatryna Suon, Alfred University, B.S. Accounting 2017