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Wednesday
Jan172018

Employment Defense: It’s Raining Complaints 

Lawyer for EmployersEmployment Defense

 

by Tal Burnovski Yeyni

818-907-3224

 

If you missed recent news regarding the #MeToo movement – welcome back from outer space! The Me Too movement has been sweeping the U.S. and the world since October 2017, encouraging women and men to speak up about sexual harassment incidents.   

The phenomenon was not missed by California legislators, who introduced the following two new bills:  

AB 1867 would require employers with 50 or more employees to maintain records of employee complaints of sexual harassment for 10 years from the date of filing.  

AB 1870 would extend the period to file a complaint of unlawful employment practice with the Department of Fair Employment and Housing for one to three years from the date of the alleged unlawful practice.

Though too soon to tell whether these bills will find their way into California’s Government Code, they demonstrate the legislature’s intent to crack down on harassment in the workplace.

Meanwhile, be sure you have a written, compliant, anti-harassment policy as well as an open door policy in place. Procedures for reporting harassment should be outlined in an employee handbook or distributed to all employees in some written format.

Those with 50 or more employees should also provide training to supervisors regarding harassment, discrimination, and bullying prevention every two years, as mandated by state law.

Now, more than ever, eradicating harassment in the workplace should be a priority.

Tal Burnovski Yeyni is an Employment Defense Attorney.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Wednesday
Dec202017

Divorce Planning: How Tax Reform Could Affect Your Decisions

Encino Tarzana Divorce LawyerCertified Family Law Specialist

 

by Vanessa Soto Nellis

818.907.3274

  

 

 

Under the current tax law, individuals making spousal support payments may deduct the payments on their tax returns. Conversely, the individual receiving alimony must count those payments in his or her gross income.

These rules provide a financial benefit for both parties during an otherwise difficult time. Spousal support payors could agree to higher alimony payments knowing the deductions help reduce taxable income. Recipients therefore, generally receive more spousal support, and are generally taxed on the income at a lower rate.

These benefits go away as of January 1, 2019 under the latest version of H.R.1 Tax Cuts and Jobs Act (H.R.1).

So what does tax reform mean for couples who are already divorced, expect to finalize a dissolution next year, or may separate and divorce later? If the President signs the current version of H.R.1:

  1. Individuals paying spousal support pursuant to a court order executed before December 31, 2018 will continue to deduct those payments; individuals receiving spousal support will continue to count the alimony as income – so long as there are no changes.  

  2. Couples who finalize divorces or separation agreements in 2018 will follow the above-rules. 

  3. Divorced couples seeking modifications to their dissolution or separation agreements should consider doing so in 2018 if the alimony payment deduction is of importance. 

  4. Couples with a pending divorce should consider settling the alimony question in 2018 to take advantage of the deduction. 

  5. Tax reform will also impact child support, as family law courts base the amounts paid here on combined income of both parents – changes to the tax rates, and standard or itemized deductions will impact the calculations.

For more information, see Section 11051. Repeal of the Deduction for Alimony Payments.

Vanessa Soto Nellis is the Chair of our Family Law Practice Group.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Dec202017

Full Speed Ahead: SBA Directory May Hasten Franchisee Lending Process

Franchise & Distribution Practice Group Chair

 

by Barry Kurtz

818-907-3006

 

As of January 1, 2018, the U.S. Small Business Administration (SBA) will begin implementing new rules that will affect franchisors, entrepreneurs wishing to join a franchise system, and lenders or CDCs (Certified Development Companies). Lenders who want to make SBA-backed loans will be responsible for certifying that a franchisee-borrower is eligible for an SBA loan.

The new rules call for the SBA to create and maintain a directory of approved franchisors eligible for government-backed loans for their franchisees. Franchisors whose franchisees apply for the government-backed business loans– specifically 7(a) and 504 loans to open franchises – will want to ensure their franchise system is registered with the SBA.  

To obtain approval, franchisors will need to submit their Franchise Disclosure Documents, franchise agreements and other paperwork franchisors may require franchisees to sign.

Once a franchise system appears on the registry, lenders will know that franchisees of the franchisor will be eligible for SBA loans. In addition, franchisors may be eligible for automatic renewal in the directory each year, if the franchise documents have not substantially changed.).

Before January 2017, a private company called FRANdata maintained a similar registry, but the SBA banned use of that in favor of a more cumbersome process:

Franchisors had to provide blanket approvals for all franchise agreements they were going to sign with SBA funded franchisees, or negotiate and get approvals for individual franchisee agreements and use an SBA approved addendum every time an SBA borrower wanted to buy a franchise.

Those choices were either time-consuming or ill-fitting of circumstances.

SBA Approved Franchisors

The 2018 process seems to be more hybridized, incorporating the documents review system and the above-referenced SBA addendum, with a new registry system.

As mentioned, the approvals process to gain initial entry on the registry means submitting the FDD, agreements and other documentation provided to potential franchise buyers. The SBA reviews these to pre-approve for SBA financing – which doesn’t serve to endorse a system in any way, it just makes financing easier for qualified loan seekers.

The Franchise Directory will include those companies that have met all SBA criteria, some that meet the Federal Trade Commission’s definition of a franchise, and certain brands that do not meet the FTC definition but are otherwise eligible.

Franchisors that want to apply for a listing on the SBA Franchise Directory should email franchise@sba.gov.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Nov302017

The Tax Cuts and Jobs Act: Trust & Estate Planning Considerations

Gift Tax, Trusts & Estate Planning Attorney

 

by Kira S. Masteller
818.907.3244

 

 

This week was supposed to be the week Republicans passed a tax bill. It’s unclear what exactly will happen in the immediate future, or if we’ll have to wait for the New Year to see any type of tax reform. If or when we do get tax reform, the new law under the current Administration will be called the Tax Cuts and Jobs Act.

Income Tax Reform 2017So how will this affect estate planning?

If either the U.S. Senate or House manage to pass their respective bills (both branches of Congress will need to sign off on one, cohesive plan), we could see big changes in the future.

Here’s a look at how potential tax reforms could affect individuals and married couples under each Congressional proposal.

 

Regarding Income Taxes

 

a.) Tax Brackets

HOUSE: Raises individual tax rates, but cuts tax brackets from seven to four. The new brackets would be changed to 12, 25, 35 and 39.6 percent.

SENATE: Keeps the current seven individual tax brackets, but lowers the rates for some of these. The revised rates will be 10 (same as current), 12, 22, 24, 32, 35 (same as current) and 38.5 percent.

b.) Standard Deductions

HOUSE & SENATE: The House and the Senate envision raising the standard deduction from the current $6,350 (single)/$12,700 (married) to $12,000/$24,000. One difference between the proposals is for the Head of Household deduction, currently capped at $9,500. The House plan raises this amount to $18,300, while the Senate plan raises it to $18,000.

c.) AMT

HOUSE & SENATE: Each chamber decided to repeal the Alternative Minimum Tax, which basically ensures the wealthier filers pay a minimum amount of tax no matter how many deductions they take.

d.) SALT

HOUSE: House Representatives plan to repeal the State and Local Tax Deduction (specifically income and sales tax deductions), and sets a cap on property tax deductions at $10,000.

SENATE: The Senate’s plan aims for a full repeal of this deduction.

e.) Pass-through Income

HOUSE: Income “passing through” sole proprietorships, partnerships, S-Corporations, etc., and currently taxed at individual income tax rates, will be taxed at 9 percent on the first $75,000 earned, and capped at 25 percent maximum. The current maximum rate is 39.6 percent. Certain personal service providers (law, accounting, brokerages, performing arts, etc.) would not be eligible for the lowered rates under this plan.

SENATE: In contrast, the Senate plan offers a 17.5 percent deduction rather than a lowered tax rate.

f.) Child Tax Credit

HOUSE: The Representatives’ plan raises this credit to $1,600, plus a $300 credit for each parent and dependent who is NOT a child. The child tax credit goes away for married couples making $230,000 or more per year.

SENATE: The credits are slightly higher at $2,000, plus a $500 credit for each dependent child. It is phased out for married couples earning $500,000 or more annually.

 

Regarding Estate Tax

 

HOUSE & SENATE: Currently, there is a 40 percent tax levied on assets valued at over $5.49 million, per individual. Both the branches of Congress would double the basic exclusion. However, the House of Representatives included plans to repeal the tax after 2024, while the Senate will not repeal estate taxes.

 

Regarding Charitable Gifts Tax

 

HOUSE & SENATE: Certain tax reforms such as the significant rise in standard deductions and a possible repeal of estate taxes, could have negative consequences for nonprofits. If more taxpayers choose the standard deduction rather than itemizing their returns for example, there will be less incentive to give to charity.

 

We anticipate there will be considerable “chopping” to both proposals with a compromise that leaves us with most of the proposed items for individuals intact, but potentially revised timelines for repeal rules. Stay tuned, as we will summarize the final reform tax bill when passed.

Kira S. Masteller is a Shareholder in our Trusts & Estate Planning Practice Group. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Nov272017

The Tax Reform Bills: Home Ownership, Purchases & Sales

Tax Law Certified SpecialistCalifornia Bar Certified Specialist in Tax Law

by Michael Hackman

818.907.3279

 

Congressional efforts to enact tax reform are now in the home stretch. While there is no assurance that any legislation will be enacted, or what the form of a final bill would look like, it is likely that something will pass and be signed by the President. And it is almost certain that some of the basic rules with respect to taxation of home ownership will change.

Through the years, the Government has tried to use tax policy to encourage home ownership. First time buyers would weigh the deductible costs of owning a home with the costs of non-deductible rent. That all may change.

The Administration is dead set on reducing taxes on corporations and owners of pass through entities to 20 percent or something very close to it, and among other things is financing those reductions with reduction or elimination of most itemized personal deductions.

Changes with Respect to the Home You Own

Currently, homeowners can deduct their property tax. The House bill would allow a deduction for property taxes, but only up to $10,000. The proposed legislation in the Senate would eliminate deductions for all state and local taxes, including property taxes.

There would be no new limitations on deductions for existing home mortgage interest (presently limited to interest on $1 million of mortgage indebtedness plus another $100,000 of home equity indebtedness). However, under the Senate legislation, the category of home equity indebtedness would be eliminated.

If You Want to Purchase a Home

The limitations discussed above on property taxes would be in effect. For example, if you purchase a California home for about $800,000 you would have property taxes above $10,000 and could not deduct the excess (this assumes that there is no exemption you can qualify for).

If the House bill passes, you could only deduct interest on a loan of $500,000 to assist you in purchasing the home. The present Senate discussions would maintain the $1 million limit.

If You Want to Sell Your House

Because of the limits discussed above, your pool of buyers may be substantially reduced. The number of interested buyers would be necessarily reduced by of the deduction limits.

The ability to avoid some tax on a home sale would be substantially curtailed. In addition, under present law the first $250,000 ($500,000 for most married taxpayers) of the gain on sale of a home was not taxed, so long as you had lived in and owned the home for two years (out of the last five). The House bill and the legislation in the Senate would increase that to five years (out of the last eight).

Taxes on sales of houses would remain subject to capital gains taxes. The 3.8 percent “Obamacare” tax on certain investment income would also apply. The 3.8 percent tax would have been eliminated (though not necessarily immediately) in the proposed healthcare legislation, but those proposals did not pass.

The Future

This legislation may not pass before year-end. But the Trump administration is pining for a significant legislative victory and should continue to pursue tax changes next year, and home ownership will again be a convenient target.

 

Michael Hackman is the Chair of both our Tax, and Trust & Estate Planning Practice Groups.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

 

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120