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Income Tax Planning 2009

Question: How would the economy react if Income Taxes were 0% for 2008, Interest Rates 0.5% ….?

But then in 2009 interest rates will go back to where they are now, and the taxrate will jump up to 1990s-taxrates.

The government would plan on eventually recovering from the taxless 2008 year with 40% rates every year on after, excluding 2008.

Would the short-term relief boost the economy, or would the tax increases for 2009 and after affect the current stock market already?
My prediction:

Immediate short-term: rapid increases in consumer spending, borrowing, investing

A few weeks later: Inflation on the increase, rising prices. Artificially overvalued stock prices. No safe investment.

Eventually: Stock market peaks and plateaus. Fear of market turnaround forces investors to withdraw from market, sharp decline.

Nowhere to go, problem out of Government control, high inflation, no bond market, no stock market, no savings.

Answer: Considering there would be a mad rush to cash out of our treasuries because we'd be printing money to pay all of our bills, and it would scare the crap out of everybody, hyperinflation and economic devastation.

Income Planning - Spotlight November 2009

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Tax Planning Strategies

Question: what is meant by transfer pricing tax strategy?

its an accounting related matter. I guess the question would be what sort of tax planning and tax strategies can be utilized with regards to transfer pricing. or vice versa.

Answer: This is an international tax issue. It comes into play when a factory in one country produces a product that will then be used in producing a final product made in another country. (i.e. The product is a Yo-Yo. The string is produced by 123 Corp, a subsidiary of XYZ International in Japan. It is then shipped to ABC Inc, another subsidiary, in the US where it is added to the yo-yo. Since the product is crossing borders, and each subsidiary has different tax issues, Japan and US, the "price" 123 charges ABC must have "economic effect". The transfer price calculation is very complex. Many accountants have made careers out of this section of the revenue code.
The main strategy is to price the product so that the tax will be minimized in both countries. Unfortunately, to answer this question here would require too much space and too much time.

2008 Tax Planning Strategy Seminar

Tax Planning In India

Question: I have a 401K that is vested. I plan to go to India and cash it. How to do without paying much penalty and tax

I have a 401K that is vested for around 100000 US$ and I am allowed to take it after I leave the employer. I do plan to go back to India. Is it possible to take 15,000 $ per year and avoid paying federal and state taxes ( Since Iam out of country and not a resident + it falls with less income per annum). Is there a penalty that I have to pay while taking money out. I will have closed all my bank accounts except this IRA/401K account and so how would I pay the penalty and any taxes that might occur. Please advice.

Answer: The others hit it right on the 59 1/2 age thing but also since you will be out of the country the mandatory withholding goes up to 30%. Yes, by minimizing the distribution amount you can lower your tax but you'll still need to file US returns to get that extra money back. If you don't live in the states you won't have any state tax.

TAX GURU TELECAST

Income Tax Planning India

Question: Do I have to declare or pay tax on my foreign business income in India ?

I plan to open my business in Hong Kong or London and will be paying business tax in respective country. i may not bring this income to India.
Do i need to declare income/details of my business in India or pay Tax in India.

Do I need to obtain any special permission form Indian government before starting business abroad.

Answer: No you do not. If Indians paid taxes to the indian government for global income, then the indian government could be therichest in the world.
However, you have to declare global employment income in India unless you are employed in a country that has double taxation agreements with India. You can ask me more questions for if you need to I am an expert in this area.

How to fill Income Tax Return Form 1 (ITR1) - Part 2