Larry's Tax Law

For the second year in a row, the due date for the filing of income tax returns and the payment of taxes was extended. For most taxpayers, the extended deadline brought glee. For the tax return preparation community, however, while the extended time period was undoubtedly necessary, it offered little relief. Instead, it served to prolong the busiest and most stressful time of year.

2020 has been a rough year for all of us.  We have experienced personal loss, social unrest, economic challenges and significant limitations on personal interaction.  While the impacts of these conditions may manifest themselves differently in each of us, we have all been faced with some of the loftiest challenges we had ever likely encountered.  It is my sincere hope that with the COVID-19 vaccines recently approved by the Federal Drug Administration, we will return to some sort of normalcy in 2021.

It is a good time for us all to focus on the blessings in our lives.  One of the many blessings in my life was the opportunity of education.  It was not exactly given to me.  I had to work to pay for my education – many times working multiple jobs simultaneously – but the fact that a fine, quality education was available to me is a huge blessing.  Along the way, during college, law school and post-law school studies in taxation, I had the fortune of having terrific mentors.  One of my mentors, Professor David Richardson (now a retired professor and Chair of the Graduate Tax Program at the University of Florida College of Law), advised me that once I entered the practice of law, I had a duty to the profession to share the wealth of knowledge that I had been so fortunate enough to attain from my studies and that I would attain in my law practice.  That statement from Professor Richardson resonated strongly with me and has continuously been at the forefront of my career goals.

It was one year ago today that two esteemed law firms based out of the Pacific Northwest merged to form Foster Garvey PC.  After going at it alone for a combined era that spanned more than 170 years, Garvey Schubert Barer, PC and Foster Pepper PLLC joined forces.  As a result, a full-service law firm of more than 150 attorneys with offices in Seattle, Portland, Washington, D.C., New York, Spokane and Beijing, China, emerged.

Shortly after the merger, the COVID-19 pandemic hit all people across the globe.  Then, social unrest throughout the United States joined the center stage, with continuing protests and riots occurring in almost every major city.  Most recently, wildfires of historic magnitude hit the Pacific Northwest.  On top of all of these life challenges, the attorneys and staff of Foster Garvey PC worked hard to maintain a focus on serving clients and our communities, as well as integrating the people and systems of two organizations.

It is hard to believe it, but 2019 is coming to an end. We have had a truly interesting year in the world of tax law, the primary impetus of which was the aftermath of the Tax Cuts and Jobs Act (“TCJA”).  During the past 12 months, we have explored several aspects of the TCJA as well as other interesting developments in tax law, including:

• • Opportunity Zone Funds – Part I—Overview of the Law
  • Opportunity Zone Funds – Part II—Due Diligence Required
  • Opportunity Zone Funds – Part III—Lots of Questions But Few Answers
  • Opportunity Zone Funds – Part IV—The Second Round of Proposed Regulations
  • Oregon’s New Corporate Activity Tax
  • Now You See It – Now You Don’t. Like Magic, the City of Portland Disallows Depreciation Deductions Otherwise Allowable as a Result of Code Section 754
  • Referendum to Repeal Oregon Corporate Activity Tax Has Wind Taken Out of Its Sails – The New Tax May Be Here to Stay
  • The Oregon Department of Revenue Plans to Publish Much Needed Guidance on the Newly Enacted Corporate Activity Tax
  • IRS Cleaning House at the Office of Professional Responsibility
  • Be Aware – The CAT Is on the Prowl – the Oregon Department of Revenue’s Town Hall Meetings Begin Tonight
  • School is Back in Session and the CAT is Among the Most Popular Courses
  • The CAT Continues to Be on the Prowl – the Oregon Department of Revenue’s Town Hall Meetings Roadshow Made It to Portland
  • The CAT Has Gone Telephonic
  • Hold the Phone, but Not Your Questions – Recent Oregon CAT Updates
  • The IRS Continues Taking Measures to Enhance Security – the EIN Application Process Changed Earlier This Year
  • Continue to Keep Your Eyes Peeled and Your Ears Tuned-In for CAT Developments—They Are Rolling In

The NYU 78th Institute on Federal Taxation (IFT) takes place in New York City on October 20-25, 2019, and in San Francisco on November 10-15, 2019.  This year, I will be presenting a new White Paper entitled “The Road Between Subchapter C and Subchapter S – It May Be a Well-Traveled Two-Way Thoroughfare, but It Isn’t Free of Potholes and Obstacles.”  We will explore the obstacles and complexities that may impede travel on this two-way road, including the built-in-gains tax, LIFO recapture, excessive passive income, unreasonable compensation, personal holding company status, excessive accumulated earnings, and re-election hindrances and restrictions.

Joining me to co-present this expansive topic is my esteemed colleague Wells Hall of Nelson Mullins Riley & Scarborough LLP.

Garvey Schubert Barer, PC and Foster Pepper PLLC have combined to create a mission-driven firm and to expand reach and services. Foster Garvey PC, created by the combination of these two legacy Pacific Northwest law firms, officially launches today, October 1, 2019.

I previously announced that the owners of Garvey Schubert Barer and Foster Pepper voted overwhelmingly to combine forces. Since then, both firms have been working closely to advance the shared goal of ensuring clients have access to a greater breadth and depth of service offerings, creating a one-stop shop for clients while continuing to preserve the relationships, culture and first-rate service clients have come to expect. 

Please join me later this month in New York City for NYU’s Tax Conferences in July. I will be speaking at the program’s Advanced Subchapter S Conference on July 25-26, 2019.

I will be presenting my new White Paper entitled “The Road Between Subchapter C and Subchapter S – It May Be a Well-Traveled Two-Way Thoroughfare, but It Isn’t Free of Potholes and Obstacles.” We will explore the complexities that may impede travel on this two-way road, including the built-in-gains tax, LIFO recapture, excessive passive income, unreasonable compensation, personal holding company status, excessive accumulated earnings, and re-election hindrances and restrictions.

I want to share some exciting news with you.

Our firm, over the years, has explored mergers with other law firms, both medium and large.  We never completed a merger, however, due in most part to cultural differences.  Our firm is not and probably never will be “big law.”  Instead, as you know, we partner/collaborate with our clients in a manner to bring about the best results for clients, give back to our community in a big and meaningful way, and create an environment for our attorneys and staff that is as nonhierarchical as possible.  “Big law” is generally not consistent with that approach to practicing law and, as a consequence, we have stayed the course alone for over 50 years.

Things are changing!  For the past eight months, I have been on a GSB committee exploring a merger with another Pacific Northwest law firm.  This time, we found a great firm to partner with, a law firm with consistent values and culture, and great attorneys and staff.  The firm is Foster Pepper, PLLC.

It is hard to believe it, but 2018 is close to an end. We have had a truly interesting year in the world of tax law, the primary impetus of which was the passage of the Tax Cuts and Jobs Act (“TCJA”) late last year.  

During the past twelve months, we have explored several aspects of the TCJA as well as other interesting developments in tax law, including:

The NYU 77th Institute on Federal Taxation (IFT) is taking place in New York City on October 21-26, 2018, and in San Diego on November 11-16, 2018.  This year, I will be presenting my latest White Paper, Subchapter S After The Tax Cuts And Jobs Act – The Good, The Bad And The Ugly.  My presentation will include a discussion about the direct changes made by the TCJA to Subchapter S as well as the impact on Subchapter S by other provisions of the TCJA, including creation of a single corporate tax rate under Section 11, creation of the Section 199A deduction, elimination of personal property exchanges under Section 1031, and elimination of the corporate alternative minimum tax. I will also discuss the ongoing benefits of Subchapter S and new traps that exist for the unwary.

The IFT is one of the country's leading tax conferences, geared specifically for CPAs and attorneys who regularly are involved in federal tax matters.  The speakers on our panel, Taxation of Closely Held Businesses, include some of the most preeminent tax attorneys in the United States, including Jerry August, Terry Cuff, Wells Hall, Stephen Looney, Ronald Levitt, Stephen Kuntz, Mark Peltz, and Bobby Philpott.  I am proud to be a part of IFT.

This will be my eighth year as an IFT presenter, and I am again speaking as part of the Closely Held Business panel on October 25 (NYC) and November 15 (San Diego).  As in previous years, the IFT will cover a wide range of fascinating topics, including tax controversy, executive compensation and employee benefits, international taxation, corporate taxation, real estate taxation, partnership taxation, taxation of closely-held businesses, trusts and estates, and ethics.  The IFT is especially important this year given the recent passage of the TCJA and the many new tax provisions that were added to the Code, including Section 199A.   

I hope you will join us this year for what will be a terrific tax institute.  Looking forward to seeing you in either New York or San Diego!

View the complete agenda and register at the NYU 77th IFT website.