In Memory of our Founder: Ralph Gano Miller

Our founding partner, Ralph Gano Miller, died on December 19, 2016, after complications from a sudden illness. For 90 years Ralph lived a truly remarkable life, and he will be missed by all who knew him.

Ralph was a San Diego native. His father, Ralph Gano Miller, Sr., was co-owner of United Water Taxis and later owned the local sportfishing business H&M Landing. Ralph attended Cathedral grammar school and St. Augustine High School before enrolling at Stanford University at the very young age of 16.

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Attempt to Pass Infrastructure Bill Fails

 

by DeEtte L. Loeffler, J.D., LL.M., Taxation

California’s last ditch effort to adopt legislation to pay for critical infrastructure repairs failed in late November. California needs to spend about $140 billion on road and other repairs. Democrats, who will have a supermajority in 2017, expect to be able to adopt this critical legislation. However, Governor Jerry Brown and moderate Democrats have consistently resisted tax hikes. Californians already pay the highest tax rates in the nation, and additional taxes are unlikely to be popular, even if the funds are used for essential infrastructure repairs.

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Repatriation of Overseas Profits Appears More Likely

 

by DeEtte L. Loeffler, J.D., LL.M., Taxation

In 2016, Congress appeared to be agreement over imposing a one-time tax on offshore corporate profits which are brought back to the US (i.e., “repatriated”). They could not, however, agree on how to spend the tax funds once received. In 2017, with a single party in control of Congress and the White House, agreement appears more likely. President-elect Trump has proposed a one-time 10% tax on cash and a 4% tax on other earnings. Whether this tax will take the form of a “deemed repatriation”, a transition tax (to force funding of infrastructure) or a tax holiday is currently unclear.

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Democrats Propose Extensions of Certain Expiring Tax Credits

 

by DeEtte L. Loeffler, J.D., LL.M., Taxation

On mid-November, Democrats in the House proposed extensions for some of the expiring federal tax credits, including the energy efficient commercial buildings credit, the alternate fuel refueling property credit, the biodiesel and renewable fuel credit, the fuel cell motor vehicle credit, the energy efficient new (and existing) home credits, the qualified microturbine credit, the mine rescue training credit, certain film and television credits, the qualified tuition credit, and the mortgage insurance premium credit. We anticipate more bills will be introduced in early 2017, but are unable to predict which credits may be renewed under the new legislature.

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“Cadillac Tax” on Health Care Plans Likely to Be Repealed

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by DeEtte L. Loeffler, J.D., LL.M., Taxation

When the Affordable Care Act (aka “Obamacare”) was enacted, it included a punitive 40% excise tax to be imposed on employers who provided employees with high quality health care plans. This “Cadillac Tax” would be imposed on employers for every dollar spent by them (or by employees) above a certain level and would not be deductible by the employer. The tax was originally meant to go into effect in 2018, but was postponed to 2020. President-elect Trump has indicated this tax will be repealed and, with a Republican-controlled House and Senate, this seems likely.

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Personal Revival Trusts – From Science Fiction to Reality

Usually when a Trustor creates a Trust, there is intent to leave the estate to living beneficiaries or active entities. A recent surge in media focus has put a spotlight on the cryogenic preservation process. Some individuals are creating Personal Revival Trusts (“PRT”s) which name them as both the Trustor and as the future Beneficiary. Legal challenges aresurfacing in the structure, enforcement, and termination of PRTs as the popularity and science behind cryogenics seemingly advances.

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Biodiesel Credit Set to Expire

 

by DeEtte L. Loeffler, J.D., LL.M., Taxation

The federal $1 per gallon tax credit for biodiesel is set to expire on December 31, 2016. Loss of this credit may harm California’s eight biodiesel producers, including San Diego’s New Leaf Biofuel. Democrats in the House of Representatives have introduced legislation to extend the credit for an additional 2 years. However, a simple extension of the existing tax credits may be inadequate, due to increasing competition by foreign producers. In addition, such credits may face a difficult renewal process given President-elect Trump’s public statements in support of increased oil drilling and questioning the scientific accuracy of climate change research.

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A Major Tax Policy Failure for California

States usually use tax legislation as a way to either raise revenue or to encourage (or discourage) certain behaviors in taxpayers.  Legislation adopted by California voters in 2016 fails on both counts by encouraging the smoking of marijuana over cigarettes and decreasing tax revenues from the sale of the marijuana. How did this happen?  You can blame the use of propositions to make tax policy, as these bits of legislation are not required to be coordinated.

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Partnerships: Planning for the Unexpected

 If you own a small business, whether a partnership, limited liability company, or an S corporation, you will likely chose your partners carefully and would prefer not to add new partners without your prior consent. Changes in partners can be sudden (for example, as the result of a death) or gradual (for example, due to the diminishing interest or capacity of a partner).  Whatever the reason for the change, you want to be prepared for it so that it will not unduly impact the business and its value.

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