Living in permanently growing debt to your own company Some countries entertain corporate income tax rates significantly lower than personal: Ireland: 12.5% vs 20–52% Estonia/Latvia: 0% vs 20% Sweden: 21.4% vs 32–57% Barbados: 5.5% vs 25–38% Say Bob lives and operates his business through a company in one of those countries. He receives no (or only some nominal) salary/income, but, being the sole shareholder and director, he lends himself money at 0% interest rate. Although he is formally required to pay that back, the company never pursues the repayments (optionally, the loan agreement sets grace periods lasting for decades, or even explicitly up to Bob's death upon which the company will be the first creditor in line to grab his estate). So, in essence, Bob receives virtually no income to pay tax on, but enjoys living in permanently growing debt to his own company (which pays its corporate income tax, if any, diligently). What are the possible legal avenues for tax authorities to stop Bob from doing that? How would they overcome the lawfulness of taking loans on whatever terms the lender and borrower agree? The question is not necessarily about the jurisdictions listed above. As as variation, let's assume Bob actually lives (and is supposed to pay personal income tax) in the US/UK/AU/NZ but still owns a business in a country above and receives loans from it.
Non-commercial loans aren’t loans A company can legitimately lend shareholders money if it does so on commercial terms - over a realistic time frame at commercial interest and receives regular repayment of at least the interest and will ultimately receive the principal. The company will need to pay tax on its interest income and that interest may or may not be tax deductible for the individual. It it does all that, the advance is a loan; if it doesn’t, it isn’t. Tax law treats loans that aren’t loans as what they are - dividends or salary and taxes you accordingly. And fines you for tax evasion.
The tax in question that is a concern is probably not an estate tax due in connection with an inheritance tax, it is probably the federal income tax that applies to the beneficiary in some way. Typically, if there is a specific devise (e.g. I hereby leave you my nephew $10,000) that is distributed more than one year after the date of death, part of the inheritance is taxable interest income to the recipient. Another circumstance in which an inheritance could generate reportable taxable income is if the inheritance is of &quot;income in respect of a decedent&quot; (e.g. retirement account distributions, or a final paycheck). More generally, if the estate had taxable income in excess of $100 as determined in IRS Form 1041 (e.g. due to the sale of capital assets that have appreciated after the date of death, rental income, dividends, or interest received), this estate income is allocated to the beneficiaries of the estate receiving distributions and flows through to them as a result of the &quot;distributable net income deduction&quot; of the estate, and has to be reported on Schedule K-1 from the estate with the beneficiary's Social Security numbers. So, there are multiple reasons why a W-9 might be required in connection with an inheritance.
If the employee has the choice - bonus and membership, or no bonus - then I expect the offer to be legal. Since it is a real bonus and part of your salary you will have to pay income tax on it. What might be illegal, but not your concern, is if your company tells investors how well the company is doing, and how well the membership scheme is doing, when in reality 80% of members are employees paying effectively nothing.
Basically, "in the course of your employment" means "while you are working, or should be working, for the employer". If you're not using company resources or time to create or acquire the works in question, and the works are unrelated to company business, they're quite unlikely to become the company's property. (Particularly since the company almost certainly doesn't have an interest in controlling the distribution of your vacation photos.) When you let your personal side projects and the company's stuff get intertwined, that's where the troubles begin. Works made on company time, or using company resources, or to do company-related things, may be claimed by the company, and this agreement basically says you'll cede ownership of the works to them, patents and all, for whatever amount of money they decide it's worth paying you.
There is a clear conflict of interest - or the potential for the appearance of a conflict of interest - here. On the one hand, you are supposed to be looking for a good deal for your employer - within reason, of course. On the other hand, you want to make as much money for yourself as you can by claiming as high a rental fee as is reasonable. Most employers have policies against this. This is like hiring your side company as a vendor. You should follow your employer's policies for making sure his is totally above board, or just stay elsewhere.
I'm pretty sure the bank could go after the owner for any difference between the unpaid loan balance and what they're able to sell it for. Incorrect. The news report states &quot;it ceased making payments toward the $725 million non-recourse CMBS loan&quot;. The term &quot;non-recourse&quot; means that the bank can't go after the owner and is limited to recovering its debt from the collateral. The term &quot;recourse&quot; means that the bank can go after the owner in a lawsuit for amounts still owed after the collateral is applied to the debt. The question is, would something like this force them to write down on their GAAP financials the value of any other loans they've extended. The bank extended the loan, so if the real property is worth less than the amount of the debt, the bank has to write off the balance of the debt on this secured loan. If the bank writes off the loan, it gets a tax deduction in the amount of the write off, however. The written off debt is also taxable income to Park Hotels &amp; Resorts Inc. to the extent that the company as a whole is not insolvent. In California, the &quot;default rule&quot; is that the owner occupied residential mortgages are non-recourse loans, but that loans secured by personal property and other mortgages are recourse loans. Unlike California and about four other states, owner occupied residential mortgages in other U.S. states are also recourse by default. A non-recourse loan on a mortgage of a hotel is not the default rule (even in California) and is contrary to usual commercial practice. Park Hotels &amp; Resorts Inc., in this case, obtained an extraordinarily favorable deal with CMBS (normally it would be a recourse loan with personal guarantees from all related companies and from multiple top executives and investors of the borrower), perhaps in exchange for a higher interest rate than it might otherwise have secured. answers relating to all jurisdictions would be fascinating, especially those of England. The way that real estate in financed in England is so profoundly different from U.S. practice that it isn't really possible to even analogize to this situation in California. For reasons related to tax laws, the structure of English mortgage laws, English insolvency laws, and the way that customary commercial real estate financial deals have evolved over time in England, the kind of deal that was struck between Park Hotels &amp; Resorts Inc. and CMBS in this case would have been structured completely differently if it had been done in England. It might be legal to do the same deal in England, but that isn't what firms trying to achieve the same objectives would actually have done. I know only enough about how real estate finance in handled in England in deals like this to know that it is completely different from how it is handled in the U.S. I am not familiar enough with real estate finance practices there to know how it would actually be done there.
Would capital gains taxes come into play given that the house is his daughters primary residence, but not his? Yes. He sold something that was his property, i.e., his [long term] asset. The fact that it was not his primary residence is irrelevant in this regard. The issue of primary vs. non-primary residence might be relevant only for purposes of computing the applicable credits and/or deductions, but that is very jurisdiction-specific.
Bill and Jane are free to enter into a contract where, among other things, each provides valuable consideration; in this case Bill provides valuable lawn mowing services and Jane provides valuable money. In week No 1 they have negotiated the terms and the contract is complete when Bill mows the lawn and Jane pays the money. If Bill turns up next week without Jane's instruction then there is no contract and Jane does not have to pay anything; I don't think this is what you are asking but I include it for completeness. If it is understood that this arrangement continue week after week then either there is an ongoing contract or, more likely, a series of independent contracts. If there is an ongoing contract, then it can be renegotiated but it cannot be changed unilaterally by Bill. That is, he cannot unilaterally increase the price to $2. If there is a series of contracts then the terms of each of those contracts will be the same based on the course of dealing. Basically, the parties have accepted over a long period of time that the rate for a mow is $1 and Bill would have to get Jane to accept the revised rate before he mows the lawn. For your example, Jane owes Bill $1 but if she wants him back next week she will have to agree to Bill's rate.