Jan
2023

Can Taxes Be Discharged When Filing Bankruptcy?

The answer is maybe or it depends upon the circumstances. The discharge of taxes when filing for bankruptcy under Chapter 7 or Chapter 13 is possible depending upon the type of taxes and a number of factors as discussed below.

If you have outstanding taxes owed to the Internal Revenue Service or Franchise Tax Board, seek the counsel of an experienced San Francisco bankruptcy attorney at West Coast Bankruptcy Attorneys for assistance. The following is a complex explanation of the requirements that must be met to allow taxes to be completely discharged when filing for bankruptcy protection.

What Requirements Must be Met to Discharge Taxes?

If taxes are owed, they are usually owed to the Internal Revenue Service or the Franchise Tax Board in California. There are many different types of taxes. This article is limited to income taxes that are owed. Generally though, taxes are dischargeable or partially dischargeable in bankruptcy depending upon the circumstances.

Which chapter of the Bankruptcy Code will also effect if all or some of your tax obligation will be discharged. In a Chapter 13 usually a portion of non-priority general unsecured debts are paid back to creditors in the Chapter 13 Plan over three to five years. In a Chapter 7 bankruptcy all of the tax obligation may be dischargeable.

The Bankruptcy Code mandates that all priority debts must be paid back in full when filing for bankruptcy protection. The key to discharging a tax obligation is when does the tax obligation no longer have to be classified as a priority debt? Once the tax obligation can be classified as a non-priority general unsecured debt, it can then be discharged in bankruptcy. Another key point is whether the taxing entity has already obtained a tax lien against your property? If a lien has been obtained, then the taxed owed is a secured debt, and the tax then must be paid in full.

When Does a Tax Debt Become a Non-Priority General Unsecured Debt?

Taxes owed are classified as a priority debt until:

1) the tax debt is over three years old from the date the taxes were due at the time the bankruptcy case

is filed; if your tax return was due April 15, 2007, it would now be over three years old;

2) the tax debt was accessed over 240 days prior to the filing of the bankruptcy case;

3) the tax return(s) were filed on time or at least two years before the bankruptcy case was filed;

4) there must have been no attempt to evade or defeat the tax by filing a false return.

To summarize, a tax obligation may be dischargeable in a Chapter 7 bankruptcy or Chapter 13 bankruptcy if the taxes were due at least three years prior to the filing of the bankruptcy case, accessed at least 240 days prior to the filing of the bankruptcy case, the tax return was filed on time or at least two years prior to the filing of the bankruptcy case and there was no fraud or intent to evade the taxes. If these requirements are met, then the tax obligation is not a priority debt, but a non-priority general unsecured debt that may be discharged in bankruptcy.

Dec
2022

Can Taxes Be Discharged When Filing Bankruptcy?

The answer is maybe or it depends upon the circumstances. The discharge of taxes when filing for bankruptcy under Chapter 7 or Chapter 13 is possible depending upon the type of taxes and a number of factors as discussed below.

If you have outstanding taxes owed to the Internal Revenue Service or Franchise Tax Board, seek the counsel of an experienced San Francisco bankruptcy attorney at West Coast Bankruptcy Attorneys for assistance. The following is a complex explanation of the requirements that must be met to allow taxes to be completely discharged when filing for bankruptcy protection.

What Requirements Must be Met to Discharge Taxes?

If taxes are owed, they are usually owed to the Internal Revenue Service or the Franchise Tax Board in California. There are many different types of taxes. This article is limited to income taxes that are owed. Generally though, taxes are dischargeable or partially dischargeable in bankruptcy depending upon the circumstances.

Which chapter of the Bankruptcy Code will also effect if all or some of your tax obligation will be discharged. In a Chapter 13 usually a portion of non-priority general unsecured debts are paid back to creditors in the Chapter 13 Plan over three to five years. In a Chapter 7 bankruptcy all of the tax obligation may be dischargeable.

The Bankruptcy Code mandates that all priority debts must be paid back in full when filing for bankruptcy protection. The key to discharging a tax obligation is when does the tax obligation no longer have to be classified as a priority debt? Once the tax obligation can be classified as a non-priority general unsecured debt, it can then be discharged in bankruptcy. Another key point is whether the taxing entity has already obtained a tax lien against your property? If a lien has been obtained, then the taxed owed is a secured debt, and the tax then must be paid in full.

When Does a Tax Debt Become a Non-Priority General Unsecured Debt?

Taxes owed are classified as a priority debt until:

1) the tax debt is over three years old from the date the taxes were due at the time the bankruptcy case

is filed; if your tax return was due April 15, 2007, it would now be over three years old;

2) the tax debt was accessed over 240 days prior to the filing of the bankruptcy case;

3) the tax return(s) were filed on time or at least two years before the bankruptcy case was filed;

4) there must have been no attempt to evade or defeat the tax by filing a false return.

To summarize, a tax obligation may be dischargeable in a Chapter 7 bankruptcy or Chapter 13 bankruptcy if the taxes were due at least three years prior to the filing of the bankruptcy case, accessed at least 240 days prior to the filing of the bankruptcy case, the tax return was filed on time or at least two years prior to the filing of the bankruptcy case and there was no fraud or intent to evade the taxes. If these requirements are met, then the tax obligation is not a priority debt, but a non-priority general unsecured debt that may be discharged in bankruptcy.

Nov
2022

Should Real Estate Investors Get Their Real Estate License?

Ask a large group of investors, there would be a split in the answers given. Personally, I think it is vital to get your real estate license. There are numerous reasons why you should obtain your license; however, I will highlight a few:

1. MLS – Having access to the MLS is extremely important to your investing career. If you do have your license, you won’t have to rely on agents, friends or colleagues for access. The MLS systems contain hundreds of fields of information about the features of a property. These fields are determined by real estate professionals who are knowledgeable and experienced in that local marketplace. The essential information found on the MLS is the address, sales term, tax information, HOA dues and loan information. In addition, you can obtain historical data from the MLS which is priceless. With proper MLS data mining, you can narrow your searches to exactly what type of properties you are looking for.

2. Networking – After obtaining your real estate license you will have the opportunity to network with other real estate professionals at your selected place of employment. In addition, you will have the opportunity to take advantage of the vendor services that your real estate brokerage office offers. For example, some real estate brokerages offer discounted advertising through local newspapers and magazines. Furthermore, networking with other agents has advantages. These advantages enable you to create some creative relationships. Offering part of your commission to other agents will entice them to close deals with you. In addition, offering part of your real estate commission to other agents over time will result in additional deals being thrown your way.

3. Additional Funds – Being involved in transactions after receiving your license will start to bring additional cash flows your way that would have been included in your expenses. Each and every time you’re involved in a transaction you will have a 3 percent (of the total sale price) commission coming your way. Those additional funds can be used toward any aspect of your business. For example, if you buy $2 million dollars worth of property in one year, that is an extra $60 thousand dollars in your pocket.

With an active real estate marketing campaign, you will come across numerous homeowners looking to sell their home. In a best case scenario, you are so busy that you aren’t really interested in listing the home yourself. Therefore, you refer the listing to another agent, for a referral fee. Keep in mind that you are still subject to commission splits and realtor dues. Using referrals as a part of your business plan could bear some fruit as well as other agents will be more likely to throw deals your way when they see a diamond in the rough or a sale that they can’t handle or do not want to handle. In today’s market, this is probably an unlikely scenario, but I can assure you that when the market is back and booming this will be something to consider. I can also assure you that the market will be back at some point, just like other industries…real estate is cyclical.

4. Controlling the Deal – From time to time you will hear about other investors losing deals because of their agent. Eventually you too will run into this problem, unless you have one of the few truly knowledgeable and dedicated real estate agents. Being a licensed agent will provide you with the ability to deal directly with lenders, appraisers, titles companies, inspectors, and closing attorneys on both sides of the deal. Moreover, you and your company will be controlling the showings to buyers, the marketing of the property, targeting for potential acquisitions and negotiating on purchases. Considering your time and money are involved in the deal you will be more motivated to sell the property than another agent would be.

I would recommend any new investor to get their license for all of the aforementioned reasons, but in addition to that, the knowledge base that the real estate courses provide are valuable as well. I truly believe that it will enhance and speed up your real estate investing career.

Oct
2022

9 Things That a New Small Business Owner Should Avoid Doing

When you are new small business owner, you are often uncertain about what to do and what not to do. Here is a list of nine things that you should avoid doing when you are first stating out: 

  1. Let Your Passion Override Your Reason – It’s good to be in love with your business but even the greatest passion and the grandest ideas have to have a firm foundation in sound business and marketing principles. Define your business and create a brand – so that everyone else can understand what you are so passionate about. Develop a business plan so you know where you are going. Develop an ongoing marketing plan so that your target market is reminded on a regular basis that you are out there ready to serve them. 
  2. Think Small – Even though you are a small business owner, you don’t have to think small. Does this mean you have to have a multi-million dollar business in order to be considered successful? No, that’s not what I mean. Allow yourself to dream big in your business. Really let yourself see just how big you can build your particular piece of the marketplace. If you want to generate a business that will support you and your family for the long haul…great! Dream about that. If you want a business that makes a lot of money, doesn’t require your constant presence and gives you the lifestyle you want…great! Dream about that. Then think big – what can you do to take these dreams and implement them? What are the steps you will have to take to have the business you want? Then play big – make efforts daily that shape your business into the one you want. 
  3. Spend Too Much Time and Money on Creating Your Website – The goal of creating a website is to create an online presence for you. It is a marketing tool and in many cases an e-commerce tool. But it is often treated like the end goal rather than as a means to a goal and far too much money is spent in the process. You do not need an expensive website to get started; you do not need lots of flash and bells and whistles. Start minimally – e.g. with a multi-page blog or a one brochure-style page site with a blog attached to it. You can always add on later.
  4. Put Your Website Up and Then Forget about It – Just putting your website out in cyberspace is not enough – you need to get the search engines to find you on an ongoing basis so that your target audience can find you. There is plenty of great free information out there on what are the basics of a search-engine friendly website. Come up with a plan and have your webmaster implement the strategies for you. If you have an e-commerce site, you may want to invest in getting a website and search engine optimization audit to find out the best way to drive traffic to your site. 
  5. Market Your Business Inconsistently or Ineffectively – Marketing is getting your message about your business out to the world. Marketing has to be a continuous process, not intermittent or sporadic. When you first start your small business, you are so busy doing the tasks of your business that you forget you have to make time to market your business. But even before you begin doing this, you have to determine which marketing strategies are right for your business – which will give you the biggest return on your investment. If you don’t hire a coach for anything else, hire a coach to help you develop a marketing plan. It will keep you from making expensive or ineffective missteps. 
  6. Look at What Others Charge and Then Decide to Charge a Lower Fee So You Can Get Business – Knowing how much to charge for your services is often a stumbling point for new business owners, especially when you provide a service rather than a physical product. Many service providers will research what others are charging, then decide to set their fee just below that price. The rationale is that people will compare and choose you because you are more affordable. Resist the temptation to under-price your services. Though price may be a determining factor, it is not the only one. Most people buy based on the benefits they will receive from buying a product or service. When you are starting out, look at industry standards. Then look at how you can increase the value of the services you offer so that clients and customers see the value, not the price. As you become more experienced in business, you will find that if the value is truly there, people will be willing to pay even more than industry standards. 
  7. Go It Alone – Just because you are in business for yourself does not mean you should be in business by yourself. As a new small business owner, you will need ongoing advice, guidance and support. Having a coach on an ongoing basis is vital to your success. No one coach can fulfill all your needs over time, so expect to change coaches as you grow. Get into a master mind group with like-minded people to keep being challenged on a regular basis. Join an organization that serves the needs of small business owners and attend their events. Network with other small business owners. 
  8. Try to Do It All Yourself – One of the problems of being a new small business owner is that you may not have the money to hire people to help you or buy services that support your business. To start, look at all the tasks in your business. See which ones help you generate income but take too much time to do. For example, good bookkeeping will help you make money and save money. But not everyone is cut out to be their own bookkeeper, so this may be a service to which you commit early one to support your business. Eventually, you will want to outsource all the work that is administrative. Even if you are good at clerical or administrative tasks, this doesn’t mean you should be doing them. The point here is to free up enough of your time to create products and services and market your business.
  9. Work to the Point You Exclude Everything Else – A small business can consume all your time if you let it. Having boundaries around how much time you spend in your business each day is important. You will have to plan this just as you do your business tasks. Make sure to allot time in every day for downtime. Make time for self-care. Plan time for recreation and even for an interest outside of your business. Exercise. Relax. Have fun.