August 2017 – Page 2 – Choi Hong Lee & Kang

Cafeteria Plan

A cafeteria plan is a type of employee benefit plan offered in the United States pursuant to Section 125 of the Internal Revenue Code. Its name come from the earliest such plans that allowed employees to choose between different types of benefits, similar to a cafeteria. Employers who are offered such plan may obtain following…

State Enterprise Zone (EZ) and Tax Incentive

The California Technology, Trade and Commerce Agency have designated economically depressed areas in California as Enterprise Zone to encourage and stimulate growth, development, and investment in the area. Taxpayers who invest, operate, or locate a trade or business within an Enterprise Zone may be eligible for special tax incentives, known as EZ credit. For example,…

Government Audit Representation

U.S. tax system is based on self-reporting tax measures. When starting a business, you need to apply for various tax identification numbers and licenses to City, County, State and Federal governments. Due dates for tax returns are all varied by the type of taxes. Although you keep all due dates and report and pay full…

Audit, Review and Compilation

1. Audit The term ‘audit’ has a specific meaning in accounting terms. An audit of financial statements is an examination designed to provide the highest, but not absolute, level of assurance resulting in the publication of an independent opinion on whether or not those financial statements are relevant, accurate, complete, and fairly presented and that the…

Real Estate Taxation

Hereon this article, you will find information regarding taxation of income and gain from real estate investments, such as house, condo, apartment, commercial property and land at individual level. A. U.S. Citizens and Resident Aliens 1. Rental Income (Reported on Form 1040, Schedule E) You generally must include in your gross income all amounts you…

Capital Gain VS Ordinary Income VS Worldwide Income

Capital Gain A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price. Capital gains may refer to “investment…

Bring money from Korea to U.S. or vice versa

The federal income tax is levied on the worldwide income of U.S. citizens and resident aliens and on certain U.S. income of non-residents. Once the income was taxed, it is not conflicted against the Foreign Exchange Control Law, thus, the funds can be freely transferred between countries in general. However, you must report to I.R.S. in…

Setting up credit facility such as L/C, B/A, T/R, C/A & Term Loan, etc.

L/C-Letter of Credit includes the following: B/A-Banker’s Acceptance T/R-Trust Receipts C/A-Cash Advance D/A-Document Acceptance D/P-Document Against Payment Running a business may involve the use of trade facilities and credit facilities. To utilize these facilities, many documents must be prepared and submitted to lenders for various screenings. As stated in the article titled in Adequate Bookkeeping…

Personal Financial Statement

Personal Financial Statement (PFS) is composed of the following: Statements of Financial Condition Statement of Changes in Net Worth Financial institutions, insurance companies and landlords/property management companies often ask to submit PFS to consider financial conditions of applicants. There is no standard form for PFS. Thus, in many cases PFS is prepared by entering the information…

Adequate bookkeeping and tax returns

Adequate bookkeeping is done by the following: Hard copies (paper documents) of unordinary transactions as well as on-going and routine transactions of a company should be kept Documents are to be divided into similar transactions or categories and kept together Correct information from documents must be recorded in accounting books periodically Firstly, adequately recorded books…