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Tax Strategies – 2011 Year End Tax Planning for Businesses & Individuals

Trusts & Estate Planning Attorney

by Kira S. Masteller

What tax strategies do you have in place for yourself, your family or your business for this year and for the years to come?

Whether you need business tax planning, or individual estate tax planning, we have some tips for protecting your financial future.

Of course, you’ll need to put some of these plans in place now, since many of the recommendations below involve year end tax strategies to help your economic outlook in 2012, 2013, and beyond.


Business Tax Planning – Windows of Opportunity


We hate to impose deadlines on you, but the IRS has no such qualms. If you’re a business owner, you should be aware of these limited windows for tax savings which may end on December 31st, unless Congress decides to extend the following benefits:

Bonus Depreciation – Qualified property acquired between September 8, 2010 and December 31, 2011 may be eligible for 100 percent bonus depreciation, if it is placed in service by the end of the year. Certain other property may be placed in service before 2013 and still qualify. These tend to be longer-lived and transportation properties.

Differential Wage Payments – Employers making differential wage payments to employees called to active military duty may be eligible for tax credits until the end of the year.

Energy Credits – Tax credits for energy-efficient homes, energy-efficient appliance production, and the use of certain alcohol or biodiesel fuels will all expire at the end of the year. 

Expensing for Real Property – If you put certain, qualified, real property into service in 2010 or 2011, you might be able to file expenses under Code Sec. 179 of up to $250K of the cost of the property, until January 1, 2012.

Expensing Under Code Section 179 – The dollar limit for Code Sec. 179 is $500K, and the investment limit is $2M, for tax years 2010 and 2011. However, these limits drop dramatically (by 75 percent) in 2012.

FUTA Surtax – As of July 1, 2011, the Federal Unemployment Tax (FUTA) tax rate fell to 6 percent, when the FUTA surtax of 0.2 percent expired. Employers will need to document FUTA paid before July 1, 2011 (or after June 30, 2011) separately. There may be a retroactive reinstatement of the surtax.

 If you increased spending on research or development of new technologies, you may be eligible for credits, set to expire at the end of the year.

Work Opportunity Tax Credits – If you hired individuals from one of the nine groups listed below, you may be eligible for tax credits (dependent on certain circumstances). The groups targeted by the WOTC are:

▪    Long-term Temporary Assistance for Needy Families (TANF) Recipients

▪    Other TANF Recipients

▪    Veteran, or a Supplemental Nutrition Assistance Program (SNAP) Recipient

▪    18-39 year old SNAP Recipient

▪    18-39 year old Designated Community Resident living in an Empowerment Zone, more commonly called an EZ.

▪    16-17 year old EZ resident employed for the summer

▪    Vocational Rehabilitation Referrals

▪    Ex-felon

▪    Supplemental Security Income benefits recipient

Tax Strategies for Individuals


Even if you don’t own your own business, you can still take advantage of certain incentives which end in a couple of weeks:

Alternative Minimum Tax (AMT) – What are the pros and cons of filing AMT vs. filing for the regular federal tax liability? You’ll have to decide which of your deductions will qualify for AMT and which of your deductions should be applied to 2012 or 2011.

Capital Gains Taxes & Dividends – Decide now whether income from qualified capital gains and dividends should be filed in 2011 or 2012, since reduced tax rates on these will expire after December 2012.

Energy Efficient Incentives – Under Code Section 25C, you could capitalize on some tax benefits by going green by the end of the year. If you’re thinking about making energy efficient improvements to your primary residence, call us to find out if your planned improvements qualify for the incentives.

Gifting – Consider making gifts as a year end tax strategy. Currently, you can gift up to $13,000 per recipient without gift tax, or $26,000 as a married couple. You should also consider a Lifetime Gift Tax Exclusion for larger gifts.

Major Purchases – If saving to buy a big ticket item in 2012, consider making the purchase this year instead, to save on state and local sales taxes. The deductions for state and local sales taxes expire this month.

Shifting Deductions & Income – If you’re used to shifting deductions or income to the following year, you might want to rethink this particular tax strategy. Individual income tax rates will rise in 2012, so it may be worth it to keep your 2011 income in your 2011 filings.

Business and Estate Tax Planning


Whether you own a business or not, your individual tax situation is unique. Be sure to contact your accountant or attorney to address your questions and concerns regarding year end tax strategies. If you have any questions about the tax credits and deadlines listed above, please call me at the number below.

Kira S. Masteller is a Tax and Estate Planning Attorney at our Firm. You may reach her at 818.990.2120.


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.




Walmart Black Friday Gets Black Eye: An Injury Attorney’s Opinion

Injury AttorneyPremises Liability Lawyer Los Angeles 


by David B. Bobrosky
(818) 907-3254

Was it just a coincidence that most, if not all, of the reported violence by shoppers on Black Friday occurred at Walmart stores?  Absolutely not.  The incidents did not just occur AT Walmarts, they occurred BECAUSE OF Walmart.

I hate to admit it, but I was at several different stores before and after midnight on Black Friday.  What else is there to do in Surprise, Arizona?  I was there visiting family for Thanksgiving.  At the request of relatives, and because there was nothing else to do, we checked out the Black Friday scene.

We visited Best Buy, Toys R Us and Kohls all before the start of their Black Friday sales that night.  At every store, there were at least 300 people in line outside.  The people were all in orderly lines controlled by store employees and security guards.

At the start of the sales at these stores, the people were not sent running in to fight others for merchandise.  They were allowed to enter the store in groups to make sure only a certain number of people were in together.  Additionally, tickets were passed out to those in line for the most popular items.  This also helped control the situation.

All these stores were a stark contrast to Walmart.


The Walmart Black Friday Frenzy


When I arrived at the Walmart store in Arizona, I found an absolutely packed parking lot — yet no one in line outside.  When I entered the store, I found out why.  Rather than closing the store and having customers line up outside, Walmart stayed open and crammed everyone into the store at once.

Instead of forming lines or passing out tickets, Walmart employees set up pallets of items throughout the store.  The merchandise was shrink-wrapped on pallets and mobs of people surrounded each pallet waiting for the start of the sale.

A Walmart employee explained that at the start of each sale (some items went on sale at 10:00 p.m. and others at midnight), the items would be unwrapped and customers would be set loose to fight for the merchandise.  When I asked if the store ever considered the potential frenzy and injuries, I was told, “Yes, that’s why we have ‘medics’ walking around.  Just look for the Walmart employees with the red backpacks if you get hurt.”

You see, it was apparent to me that Walmart knew, or should have known, what could, and what most likely would, happen.  In fact, they appeared to be counting on it

Walmart did not want prospective customers to see long lines outside and think they had no chance at a deal. They wanted them in the store believing that anyone who fought hard enough, still had a chance to get that Walmart-priced Xbox, TV, or even the $2 waffle maker.  For those surprised that customers were fighting over $2 waffle makers – I’m sure Walmart wasn’t.  They know their customers and appealed to them with these “bargains.”

Black Friday Shopping Safety


If anyone would have been seriously hurt during these sales, Walmart – in my opinion – would have been liable.  In California, store owners are subject to a duty to exercise ordinary care to avoid exposing others to an unreasonable risk of harm.

All business owners must use reasonable care to protect their customers from being injured by dangerous conditions.  Not only did Walmart not protect customers from a dangerous condition (as we saw with the Pepper Spray Incident at a Walmart in Los Angeles), it can be argued that Walmart created the dangerous condition.

It’s easy to blame the “crazy people” shopping for Walmart Black Friday bargains.  But when you look deeper, you realize that Walmart was also responsible.  Let’s just hope next year no one is trampled in the frenzy, and that guns do not replace pepper spray.

David B. Bobrosky is a Los Angeles Injury Attorney at Lewitt Hackman. You may reach him by e-mail:


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.




Steve Jobs Estate Taxes – Which Way is “Up” for the Jobs Family and for You?


by Robert A. Hull

As the world mourns the loss of innovative tech giant Steve Jobs, we learn he may have left his wife, Laurene, and family up to $6.78 billion dollars in Disney and Apple stock.

He also left his family in a quandary not of his own making, namely, how to negotiate financial pitfalls while traveling on uncertain terrain.

Unfortunately, with the recent failure of the so-called congressional Super Committee to address tax and spending reform, the “Bush tax cuts” are set to expire in 2013.

Capital Gains Tax Legislation: As it Stands Now


If there are no further changes in the law:

▪ The current 15 percent capital gains tax rate is set to rise to 20 percent,
▪ Income tax rates are due to increase,
▪ The current $5 million gift/estate tax exemption will return to a $1 million exemption.

The key takeaway is “absent further legislation”, i.e., no one knows what the law will be in 2013.

At least as far as the Jobs family is concerned, if they sell the stock before 2013, and (here’s the kicker) if indeed the Bush tax cuts lapse, the Jobs family may avoid almost hundreds of millions in capital gains tax they would have to pay at the higher 20 percent rate if they sold after 2013.

The great news is that the beneficiaries of Steve Jobs’ stock will receive an automatic step-up in basis of the stock to the value of such stock on Jobs’ date of death (including a step-up on Laurene’s ½ community property interest in such stock) – i.e., they will receive the benefit of the increase in the stock’s value since acquisition, tax free. However, any further increases (after Jobs’ death) in the value of the stock interest Jobs’ passed to his heirs will be subject to capital gains when the stock is sold.

So, there’s a capital gains tax of 15 percent or ‘possibly’ 20 percent, which prompt some questions:

1. How are individuals and businesses supposed to make certain financial decisions in the face of such uncertainty?

2. And, how are financial and estate planning professionals supposed to give sage advice and counsel when none of them know what the law will be in 14 months?

Steve Jobs’ Estate Taxes: Looking Up


The answer to both questions above is that effective planning in such uncertain times is a challenge. Obviously, if considerations other than tax consequences are paramount, then those business decisions may take care of themselves.

If the Jobs family wishes to retain Steve Jobs’ control of Apple, for example, they might hold on to the stock, risking a higher tax in the future if Congress does nothing or increases capital gains.

But, if the tax consequences are the most important consideration (hey, who really wants to give the government $876 million?) they may wish to sell the stock. But, the Jobs family will be divesting themselves of Steve Jobs’ legacy.

Tax and Estate Planning for Your Family


Many of you may be facing similar questions, though not on the scale of the Jobs family: To sell or not to sell? To gift or not to gift? For example, do you as parents and owners of a family business utilize the current $5 million gift tax exemption to gift portions of the family business to your children, even though you may prefer to do so in a few years?

If you do so before 2013, you can pass along $5 million of business value tax-free. If not, you risk having to pay gift tax on the portion of the business you pass which is worth over $1 million. . . unless Congress takes some other action, of course.

Given our government’s penchant for last minute deal-making, short-term fixes, and for striking bargains that are difficult to predict (like a “default” return to a $1 million exemption in 2013 absent further action), it may not be prudent to wait till the last minute to make these financial decisions.

Some decisions take time and fit into a family’s overall strategy (e.g., making gifts of minority interests in a family business or property, over time) and you may not have the necessary time to effectuate such a strategy or sell the stock before the new law goes into effect.

So, which way is up? And, where does this leave us all?

It leaves us in the same boat we’ve been in longer than any of us care to imagine – making life-altering financial decisions based on less information than we wish we had. However, it is nonetheless helpful to have a first mate on this trip, a professional who can help you best negotiate the rocks and reefs which may be lying just below the surface.


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.




Safe Toys - Your Holiday Guide

Personal Injury Attorney Los AngelesDefective Product Attorney 



by David B. Bobrosky
(818) 907-3254


The holiday shopping season is here, and now is the perfect time to brush up on safe toys buying guidelines.

Whether you’re a parent, relative or family friend of someone with children, you want to make sure that the toy you are giving will not pose a risk to that child – assuming of course, that all toys meet government toy safety standards.

But as we know too well, sometimes defective products slip through the cracks. That being said, you should first get up to date information on toy recalls before you go shopping. There’s a rather extensive list available here: Toy Hazard Recalls.

Then, ensure you pick an age appropriate toy for the child to minimize risks like choking hazards, electric shock or burns, strangulation, falls and other dangers.

When it comes to dangerous toys, here are five key dangers that you should look for:

1. Electric Toys – When it comes to small children, these toys generally require adult supervision. You should not only note the age recommendation, but consider also how mature or responsible the child is, before buying electric toys.

2. Balls & Marbles – The smaller the ball and the younger the child, the greater the risk of choking hazards. Also be careful of giving games or toys that have balls to older children with younger siblings. Generally speaking, balls 1 ¾ inches in diameter or less are dangerous for children under three.

3. Toy or Game Pieces – Again, follow the guidelines for balls, above. If the toy or game you’re about to buy has pieces that are smaller than 1 ¾ inches, think twice before giving that toy or game to a small child.

4. Inflatable Toys or Balloons and Squeeze Toys – There’s a suffocation risk with these, either when a child attempts to inflate the toy and accidentally inhales, or with smaller children who chew on toys (squeeze toys, burst balloon pieces, or deflated toys).

5. Straps – Toys with strings or straps are particularly dangerous for children under three, as toddlers sometimes get entangled in these. Watch out for items like toy guitars, purses and guns that come with shoulder straps.


Other Toy Safety Tips


The five most common types of dangerous toys are listed above, but there are other toy safety factors that you should be aware of as well. For example: 

  • Brittle plastic toys can break, leaving jagged pieces that can cut or puncture children.

  • Helmets are required by California law for bicycle riders under 18. If you’re buying a bike for minor, make sure you buy the right sized helmet too.

  • And of course, BB Guns and cap guns pose their own, obvious risks for children. 


Lead Paint Toy Recalls


Believe it or not, lead poisoning is still a problem for children, especially the younger ones. Young children are especially prone to putting things in their mouths.

The federal government limits the amount of lead that can be used in products, but the metal has not been banned entirely. It’s used in plastics, pottery, jewelry, sporting goods and hobby materials.

To keep your child safe from lead poisoning from toys, try to avoid giving toys and jewelry made in other countries, or recycling older toys made in the U.S.


Holiday Safety First


The most important thing to remember regarding toy safety, is to buy toys that are age appropriate for the child. Read all warning labels on the packaging and consider the maturity level of the child.

Because no matter how wonderful the gift you intend to give, nothing can beat keeping your loved ones safe and happy. Let’s make sure all the memories are good ones this holiday season.

David B. Bobrosky is a Los Angeles Product Liability Attorney. Contact him via e-mail:, or by phone: 818.990.2120.


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.

Franchise Law – 23 Items of the Franchise Disclosure Document (Part 2 of 2)

Business Litigation Attorney EncinoFranchise & Business Litigation Attorney


by David Gurnick

This is the second of a two part blog on the Franchise Disclosure Document, or FDD.  Anyone who offers or sells a franchise in the United States must prepare an FDD and present it to their prospective franchisees.

A prospective franchisee must receive the FDD at least fourteen (14) days before any agreement is signed, or before the franchisor receives any consideration relating to the sale of the franchise.

The FDD contains information about the franchisor, its history, management personnel, litigation, terms and obligations of the franchise and other key aspects about the franchise that an investor should know.

The first 12 points of the FDD are explained in: Franchise Law – 23 Items of the Franchise Disclosure Document (Part 1 of 2). Items 13-23 are discussed below.

13. Trademarks.

One of the defining elements of every franchise is the existence of a trademark that the franchisor permits the franchisee to use, and that the franchisee uses to identify the business.

In this disclosure the franchisor identifies its principal trademarks, provides details as to their registration status in the United States Patent and Trademark Office and the trademark office of any state, and discloses if there have been any infringements of the trademark.

14. Patents, Copyrights and Proprietary Information

In addition to trademarks, most franchise systems also claim to own trade secrets. In a few systems, the franchisor claims to own valuable copyrights or patents that are licensed to the franchisee. Information on trade secrets, copyrights and patents is disclosed in this disclosure item.

15. Obligation To Participate In The Operation of the Franchise Business.

Often, an individual or couple buys and actively operates their franchise. It is common to see the owner behind the counter of a Subway sandwich shop, or local gas station, or in the management office of a franchised hotel. Franchisors prefer this and sometimes require that the franchisee actively participate in operation of the business.

Some franchisees acquire multiple units. When that occurs, the franchisee cannot possibly be in all locations at once. Sometimes investors buy franchises, planning to hire others to run them.  This item discloses the extent that the franchisor requires the franchisee to actively participate in operating the business or will allow the franchisee to be absent or passive with the franchise operated by others.

16. Restrictions On What The Franchisee May Sell.

All McDonalds sell hamburgers, fries and shakes. Imagine if some locations also sold tacos, burritos and enchiladas, and other locations sold spaghetti, ravioli and macaroni, and still others sold chop suey and won ton soup. Soon the public would be confused about the system’s products.

To maintain uniformity between locations, franchisors set limits on the products and services that their franchisees may sell. This disclosure item summarizes those limits.

17. Renewal, Termination, Transfer and Dispute Resolution.

At its core, a franchise is a license that permits a franchisee to do business using the system and identity and know-how of the franchisor. Because franchises involve a sizeable investment, some important considerations in buying a franchise, are the duration of the license, circumstances in which the license could be terminated early, whether it can be renewed and any restrictions on the franchisee’s ability to transfer the franchise to someone else.

This disclosure item is a table that identifies and summarizes key provisions of the franchise agreement on these and related subjects.

18. Public Figures.

In the 1970s franchisors often enlisted famous people to endorse their business and lend their names and reputation to the process of offering and selling franchises. Typically, these famous people were getting paid, but that was not disclosed to naive franchisee investors. Therefore, the FDD is required to disclose whether any famous people are involved in offering and selling franchises, and summarize their compensation for doing so.

19. Earnings Claims.

A question that many potential franchisees ask is “how much money will I earn?” By presenting selective data, or even manipulating numbers, the answer to this question could potentially be overly positive, or even misleading.

The FDD permits a franchisor to present information on the past financial results and even future projections. But they must be accurate, have a reasonable basis, and be accompanied by certain disclaimers specified in the disclosure rules. Any such earnings claims are contained in this item of the FDD.

20. List of Outlets.

The franchisor is required to attach a list of locations, with names and contact information for the owner of each franchise.  A list of ex-franchisees who recently left the system must also be attached.  This information assists a prospective franchisee who may wish to contact and interview some existing and former franchisees to hear and evaluate their satisfaction with the franchise system.

22. Financial Statements

A franchisor is required to provide its audited financial statements for the past three years. This is useful for the prospective franchisee to evaluate the franchisor’s financial performance and financial condition.

22. Contracts.

A copy of each contract to be entered into, must be attached as an exhibit to the FDD. This provides the potential franchisee an opportunity to review the actual contracts before they are entered into.

23. Receipt.

The last item of the FDD is a receipt. Two copies of the receipt are attached to the FDD. One copy is to be signed by the recipient of the FDD and returned to the franchisor. The recipient may keep the other copy.

The franchisor is required to present the FDD to the prospective franchisee at least 14 days before any agreement is entered into and any consideration is paid. The receipt, when signed and dated to acknowledge receipt of the FDD, provides the franchisor a record confirming that this requirement was satisfied.

Franchise Law in the United States

The FDD is a useful tool for prospective franchisees in evaluating a franchise being offered. Even though the categories of information are uniform, each company’s FDD differs from each other company, and a particular company’s FDD will differ from year-to-year.

This article has summarized the contents of the FDD’s 23 disclosure items, but the discussion is only a summary. The detailed regulatory instructions for preparing the FDD include various additional subjects and requirements within the above categories.

David Gurnick is a franchise law attorney and author of two books, Distribution Law of the United States and Franchise Depositions, both available through Juris Publishing, Inc.  Mr. Gurnick is certified as a specialist in Franchising and Distribution Law by the State Bar of California, Board of Legal Specialization. You may reach him at Lewitt Hackman: 818.990.2120 or



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.

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