Mikey Rooney speaks out against Elder Abuse

“Elderly abuse has to be stopped, and it’s going to be a law and a crime,” said ninety year old Mickey Rooney after a fundraiser at the San Diego Air and Space Museum. In March, Mickey Rooney testified in front of the Senate Special Committee on Aging after he was allegedly the victim of elder abuse himself. From my experience, his testimony sums up elder abuse succinctly:

Elder abuse comes in many different forms – physical abuse, emotional abuse, or financial abuse. Each one is devastating in its own right. Many times, sadly, as with my situation, the elder abuse involves a family member. When that happens, you feel scared, disappointed, angry, and you can’t believe this is happening to you. You feel overwhelmed. The strength you need to fight it is complicated. You’re afraid, but you’re also thinking about your other family members. You’re thinking about the potential criticism of your family and friends. They may not want to accept the dysfunction that you need to share. Because you love your family and for other reasons, you might feel hesitant to come forward. You might not be able to make rational decisions. What other people see as generosity may, in reality, be the exploitation, manipulation,and sadly, emotional blackmail of older, more vulnerable members of the American public.

Often times, the abuser is not a stranger but is rather someone known to the victim, usually by blood. In Mr. Rooney’s case, the alleged perpetrator was Mr. Rooney’s own stepson. Mr. Rooney eventually took out a restraining order against him after verbal and physical abuse, which included taking his identification cards and denying him food and medicine. Only one in seven elders abuse cases are reported, although the numbers of the abused are likely to grow as the population ages.

Raxter Law is a local law firm located in Menifee, California that practices Elder Abuse, Estates, Probate, and other related areas of the law.

BASIC ADVANTAGES AND DISADVANTAGES OF BUSINESS ENTITIES

1. Sole Proprietorship

a. Advantages:

(1) No organizational formalities.

(2) Decision making is informal and owner has sole authority, subject to any delegation to agents.

(3) No qualification requirements for doing business in other states.

(4) Minimal reporting to governmental entities.

(5) Business profits are subject to only one tax, at the individual level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.

(6) Losses are available on the owner’s personal income tax return and can offset other income (subject to the passive loss rules).

b. Disadvantages:

(1) Owner has unlimited liability for obligations and liabilities of the business.

(2) Death or disability of owner terminates business.

(3) Sale or other transfer of business requires transfer of individual assets.

(4) No opportunity to utilize equity capital contributed by persons other than the owner.

(5) Business profits are taxed as income to the owner and, as a result, are subject to self-employment tax as well as income tax.

2. General Partnership

a. Advantages:

(1) Multiple owners can provide a combination of individual resources and talents.

(2) Minimal formalities are required for organization.

(3) Decision-making may be informal, although partnership agreement is generally used to establish procedures for making decisions.

(4) No qualification requirements for doing business in other states.

(5) Minimal reporting to governmental entities.

(6) Business profits are subject to only one tax, at the individual partner level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.

(7) Losses are available on the partners’ personal income tax returns and can offset other income (subject to the passive loss rules).

(8) Special allocations may be made for income tax purposes.

(9) Disproportionate distributions may be made to partners.

b. Disadvantages:

(1) Partners have unlimited liability for obligations and liabilities of the business.

(2) Death, disability, or withdrawal of a partner may terminate partnership, although this can usually be handled by appropriate provisions in partnership agreement.

(3) All partners have the right to participate in management.

(4) All partners have broad authority to act on behalf of, and incur debts and liabilities for, the partnership.

(5) Business profits are taxed as income to the individual partners and, as a result, may be subject to self-employment tax as well as income tax.

3. Limited Partnership

a. Advantages:

(1) Limited partners enjoy limited liability.

(2) Only general partners participate in management so that limited partners can be equity owners without the general partners giving up control.

(3) There are no limitations on the number or types of partners.

(4) Existence is unaffected by the death or transfer of interest by a limited partner.

(5) Business profits are subject to only one tax, at the individual partner level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.

(6) Losses are available on the partners’ personal income tax returns and can offset other income (subject to the “at risk” and passive loss rules).

(7) Special allocations may be made for income tax purposes.

(8) Disproportionate distributions may be made to partners.

b. Disadvantages:

(1) Formalities are required for organization.

(2) Qualification is required for doing business in other states.

(3) Regular reporting to governmental entities is required.

(4) General partners have unlimited liability for obligations and liabilities of the business.

(5) Death, disability, or withdrawal of a general partner may terminate partnership.

(6) Limited partners have limited ability to participate in management or decision making.

(7) Business profits are taxed as income to the individual partners and, as a result, may be subject to self-employment tax as well as income tax to the extent they are allocated to general partners.

(8) Transfer of interests may be subject to securities law regulation.

4. Limited Liability Company

a. Advantages:

(1) All members enjoy limited liability.

(2) No limitation on the number or types of members.

(3) Centralized management is available if an LLC is manager managed.

(4) Assuming LLC is taxed as a partnership (see above), business profits are subject to only one tax, at the individual member level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.

(5) Losses are available on the members’ personal income tax returns and can offset other income (subject to the “at risk” and passive loss rules).

(6) Special allocations may be made for income tax purposes.

(7) Disproportionate distributions may be made to members.

b. Disadvantages:

(1) Formalities are required for organization and operation.

(2) Qualification is required for doing business in other states.

(3) Regular reporting to governmental entities is required.

(4) Termination results from the death, disability, or withdrawal of a member under the laws of some states.

(5) Interests are not freely transferable.

(6) Business profits are taxed as income to the individual members and, as a result, may be subject to self-employment tax as well as income tax.

(7) Transfer of interests may be subject to securities law regulation.

5. C Corporation

a. Advantages:

(1) All shareholders enjoy limited liability.

(2) Ownership interests are freely transferable.

(3) Perpetual existence unaffected by the death of shareholders or transfer of shares.

(4) Centralized management.

(5) No limitation on the number or types of shareholders.

(6) Flexibility of financing is available through the sale of various types of securities to many investors.

(7) Tax-favored fringe benefits are available to employee-shareholders.

(8) Income is taxable at corporate rates, which are for the most part for the most part lower than individual rates.

b. Disadvantages:

(1) Formalities are required for organization and operation.

(2) Qualification is required for doing business in other states.

(3) Regular reporting to governmental entities is required.

(4) Income is subject to double taxation.

(5) Losses of business may not be deducted by individual shareholders.

(6) The distribution of property by a C corporation to its shareholders is generally a taxable event for income tax purposes as to both the corporation and the shareholders. Thus, withdrawing property from a corporation can be extremely expensive from a tax standpoint.

6. S Corporation

a. Advantages:

(1) All shareholders enjoy limited liability.

(2) Ownership interests are freely transferable (subject to restrictions imposed by contract to preserve S corporation status).

(3) Perpetual existence unaffected by the death of shareholders or transfer of shares.

(4) Centralized management.

(5) Business profits are subject to only one tax, at the individual shareholder level, and are not subject to double tax as would be the case if the profits were realized by a C corporation.

(6) Losses are available on the shareholders’ personal income tax returns and can offset other income (subject to the “at risk” and passive loss rules).

b. Disadvantages:

(1) Formalities are required for organization and operation.

(2) Qualification is required for doing business in other states.

(3) Regular reporting to governmental entities is required.

(4) Strict qualification rules must be met on a continuing basis, which among other things limit the number and types of shareholders.

(5) The distribution of property by an S corporation to its shareholders is generally a taxable event for income tax purposes.

FOR MORE INFORMATION OR TO CONTACT A SMALL BUSINESS LAWYER CALL RAXTER LAW

 at (951) 226-5294

Local Small Business Lawyer

Menifee Bankruptcy Lawyer launches new website

We have launched a new website dedicated to Bankruptcy. Check it out at:

www.menifeebankruptcylawyer.com

Why banks would rather foreclose

This article is reprinted/reposted from a recent AOL News article, but I think it is very fitting and on point.

'Mortgage Prof': 5 Reasons Banks Would Rather Foreclose

| By Ann Brenoff | Posted Oct 18th 2011 2:00PM

  "Why won't the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?" It's a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here's the professor's take on why homeowners can't catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages -- the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client -- that's your lender, not you. If they depart from customary practice -- and writing down loan balances is a departure from customary practice -- the buck stops with them, Guttentag says. In other words, who's going to take the risk of reducing Joe Homeowner's loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn't listening to a fairy tale been a surefire way to fall asleep?

From the lender's standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater -- that's deep in negative equity territory -- are more likely to default than those who aren't. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn't allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

By Ann Brenoff | Posted Oct 18th 2011 2:00PM

Does your company need employee manuals?

Most companies have employee handbooks, but are they necessary? There are definite advantages to having a handbook, such as promoting equal and standardized treatment of all employees. Once rules and procedures are written down, it makes training new employees a breeze. Below are some suggestions for handbooks that can greatly assist an employer in maintaining a safe, legally compliant and enjoyable business.
In California every business is required to provide their employees with certain written policies, such as an at-will policy, sexual harassment policy, anti-harassment policy, safety policy, paid family leave policy, as well as the required information that must be provided with respect to the Earned Income Tax Credit Information Act, state disability insurance, workers compensation benefits, and unemployment compensation. The "At Will" Policy Despite that California law presumes that all employment is at will, there are exceptions. The employee handbook should address the "implied contract" exception. Under a implied contract theory, if an employee has been with the company for a long time and continues to excel and is promised a future at the company, they could claim, upon termination, that the employer breached an implied contract that the employee would be terminated only for "cause." It basically becomes a "he said/she said" situation. However, if the employee has signed an acknowledgment of the employee handbook that clearly states the employment is at will, the acknowledgment supersedes any argument to the contrary. In the handbooks that are drafted by RAXTER LAW, the "at will" employment clause is placed in numerous places within the manual. Harassment Laws The employee handbook should include a detailed section incorporating the legal definition of harassment, the remedies for the victim and the consequences for the perpetrator. California employers are required to provide this information in writing. Privacy Issues It is crucial to discuss whether the company considers voice mails, emails and other electronic communications (that uses company property/equipment) to be private. By law, employees are entitled to a reasonable expectation of privacy. Safety Laws Many employers have become lax in including the required statements regarding workplace safety. All California employers must have a separate Injury and Illness Prevention Program manual. Leaves of Absences As you know, or will soon find out, the interaction of numerous laws concerning medical and other leaves of absences is daunting. Having these policies written in "plain language" is helpful for everyone. Moreover, California law requires employers to provide information on the relatively new Paid Family Leave Act, and information about pregnancy leave rights.
By having a complete but straightforward employee handbook, an employer can promote fairness and
consistency in the workplace and minimize the risk of the kind of arbitrary conduct that can easily lead to lawsuits.

For more information and a printable flyer you can click below:
http://www.raxterlaw.com/Does%20your%20business%20need%20an%20employee%20handbook.pdfRAXTER LAW 27186 Newport Rd, Suite 2
Menifee, Ca 92584 www.raxterlaw.com/smallbusiness (951) 226-5294
www.raxterlaw.com

Landlords must install carbon monoxide detectors

Numerous deaths have occurred because of carbon monoxide poisoning.  In response, California requires every dwelling unit to have and maintain a carbon monoxide detector. But, what if you are a landlord?  California legislators have thought about that (you didn’t think they would forget landlords did you?).  California places the responsibility for installing and maintaining a CO2 detector on landlords.

In 2010, the California legislature enacted the Carbon Monoxide Poisoning Prevention Act of 2010 with the intent to prevent death and illness resulting from carbon monoxide poisoning.

In addition to the act, further legislation was added requiring that the owners of all rental units with a fossil fuel burning heater or appliance, a fireplace, or an attached garage, install and maintain carbon monoxide detection devices in the unit. This mandate is effective on July 1, 2011 for existing single-family dwelling units, and on January 1, 2013, for all other existing dwelling units.

The new law further requires that the carbon monoxide detector be operable when the tenant takes possession of the unit. Tenants are responsible for notifying the landlord of any problem with the detector, and the landlord has the responsibility to correct any reported problems.

Landlords may enter the units to install, repair, test, and maintain carbon monoxide detection devices.

CHOOSING A BUSINESS ENTITY

CHOOSING A BUSINESS ENTITY

Choosing a Business Entity

An important, but often misunderstood, decision in the life of a business is the entrepreneur’s or existing business owner’s choice among the different forms of legal entities under which the business can operate.  The decision is determinative regarding the tax treatment and legal liability of both the business and its owners.  This Legal Update addresses the basic characteristics, advantages, and disadvantages of the various business entity options.

The Sole Proprietorship

The Sole Proprietorship is the simplest to form of all the business entities.  It consists of one person who owns all of the assets of the business and is created by default whenever one person forms a business without selecting a different form of entity.  There is no distinction between the business owner and the business itself for legal liability, tax and other purposes.  On the plus side, a Sole Proprietorship can be formed with little formality or expense.  Owners of Sole Proprietorships do not have to file separate tax returns for their businesses; all business income and expenses are reported directly on the owner’s personal income tax return.  Thus, the Sole Proprietorship is, in some cases, an attractive option for start-up businesses and for businesses without employees.  This form, however, provides its owner with unlimited personal liability for the debts and risks of the business and less tax flexibility than any other entity.  For tax purposes, all business profits and losses are personal to the business owner.  For liability purposes, creditors of the business can collect on unpaid debts and liabilities of the business from the owner’s personal assets.  Additionally, an individual’s ownership interest in a Sole Proprietorship is non-transferable except upon liquidation of the business.  Most states require individuals who conduct or transact a business under any name other than the real names of the owners to file an “assumed name” notice with the County Clerk in the county in which the business is located.

The General Partnership

The General Partnership is conceptually similar to the Sole Proprietorship with one major distinction: a General Partnership is formed whenever two or more people co-own a business and share in its profits and losses.  Like a Sole Proprietorship, a General Partnership requires little formality to get started, and it is formed by default whenever two or more people form a business together without selecting another form of entity.  Business partners should, however, create ground rules to govern their business relationship through a partnership agreement.  Absent such an agreement, decision-making authority is shared by all partners, and the business entity will not survive beyond the lives of its owners.

A General Partnership is taxed in a manner similar to a Sole Proprietorship, with profits and losses flowing through directly to the owners.  The most significant concern in operating a General Partnership is that each co-owner is liable for the debts incurred by other co-owners acting in furtherance of the business.  A co-owner’s personal assets are at risk for the wrongful acts of all other co-owners in connection with the business, making the General Partnership potentially the riskiest of all business entities.  For this reason and a variety of others, when a General Partnership or other kind of partnership is formed, it is advisable to have a written agreement among the partners.

The Limited Partnership

Because of the potential exposure created by shared liability of co-owners in a General Partnership, the Limited Partnership is an attractive alternative. In a Limited Partnership, certain co-owners are designated as “limited partners.” Limited partners are often passive investors who do not participate in the management of the business. Limited partners are liable for business debts only to the extent of their capital investment; however, they can lose their insulation from liability by involving themselves in management or through their own improper conduct. A Limited Partnership must be owned by at least one “general” (managing) partner. The general partner(s) retains personal liability for partnership debts. Like General Partnerships and Sole Proprietorships, profits and losses of the business flow through directly to the owners for tax purposes. Limited Partnerships can only be formed through compliance with certain formalities, which vary from state-to-state.

The Limited Liability Partnership

A Limited Liability Partnership (“LLP”) requires the filing of a “statement of qualification” or similar application with a state office in the state in which it is formed.  The basic difference between an LLP and a General Partnership is the allocation of liability among co-owners.  In an LLP, all partners are liable for business debts only to the extent of their capital investment, but each partner remains liable for his or her own improper conduct.  Unlike Limited Partnerships, there is no distinction between “general” and “limited” partners in an LLP.  In most other respects, LLPs are treated similarly to Limited Partnerships and share many of the same advantages and disadvantages.

The C Corporation

The C Corporation derives its name from subchapter C of the Internal Revenue Code.  The C Corporation  (as well as the S Corporation discussed below) is a legal entity distinct from its owners.  In general, the corporation, and not its shareholders, is responsible for business debts and obligations.  Provided that, among other things, requisite corporate formalities are followed, the owners’ liability for business debts is limited to their capital contributions.  Generally, a corporation is managed by its officers and directors.  Corporate officers and directors can be held liable for business debts only in limited circumstances.  Additionally, one’s ownership interest in a C Corporation is freely transferable unless specifically precluded by agreement.

The C Corporation is a separate U.S. taxpayer.  The shareholders/owners do not pay any income taxes on corporate profits until the profits are distributed to them.  This form of entity can be advantageous for investors in businesses that will reinvest profits rather than pay dividends because the corporate tax rate is generally lower than the personal income tax rate.  A major drawback of this form, however, is that distributed profits are subject to double taxation – once at the corporate level when the profits are earned, and again at the shareholder level, when (and to the extent that) profits are distributed.  In contrast to other forms, such as Sole Proprietorships and Partnerships, C Corporations can deduct 100% of the health insurance and other employee benefit costs paid for employees who are also shareholders of the corporation.  These advantages make a C Corporation an attractive option for some small business owners whose compensation as employees of the business may result in little or no excess profit, and therefore little or no double-taxation.  Owners of existing C Corporations should be forewarned that conversion to an S Corporation or an LLC will subject the business to limited corporate level taxation.  For this reason, it is often imprudent to convert.

The S Corporation

In order to avoid the double taxation applicable to distributed profits of C Corporations, certain corporations may elect to be taxed under Subchapter S of the Internal Revenue Code (so called “S Corporations”).  The S Corporation is taxed similarly to a partnership – profits and losses flow directly through to the owners – but the S Corporation retains the advantages of limited liability for its owners.  For start-up businesses expecting business losses during the first few years of operation, the tax characteristics of an S Corporation are quite appealing because owners can freely offset business losses against their personal incomes, so long as they are active in the business.

Because of statutory restrictions, the S Corporation form is not an option for all businesses.  For example, in order to qualify for S Corporation status in Illinois, corporate stock can be held by no more than 35 persons; generally shareholders must be individuals; and there can only be one class of stock issued.  The failure to maintain compliance with these eligibility requirements can cause termination of the entity’s status (and resulting tax complications).  Both S Corporations and C Corporations are formed through application to the Secretary of State of the state of incorporation and compliance with various statutory provisions, including various requirements and restrictions with respect to the structure, management and documentation of the entity.

The Limited Liability Company (“LLC”)

The LLC is a flexible business form designed to combine the limited liability benefits of a corporation with the flow-through tax advantages and reduced structural formalities and restrictions available through Partnership forms.  An LLC is formed through application to the appropriate office of the state of organization and compliance with various statutory provisions.  LLC owners, however, have much more flexibility than shareholders of corporations to define and control various aspects of their businesses’ structure, management and ownership rights – through an operating agreement.  Ordinarily, the LLC operating agreement will determine whether the business will be managed by specially designated managers or else the members themselves.  Like a corporation, an LLC is a distinct entity from its owners and holds property in its own name.

An LLC can be a more attractive business form than an S Corporation because it does not require as many formalities.  The most obvious advantage of the LLC over the Limited Partnership is that every member (not just limited partners) may limit his or her personal liability without sacrificing the ability to participate in management. LLC owners, however, generally do not enjoy some of the tax-favored fringe benefits available to C Corporations such as group term life insurance, disability insurance, medical expense reimbursement plans, and cafeteria plans.  These benefits are often similarly unavailable to owners of S Corporations.  Additionally, one hundred percent of LLC business income is subject to Medicare tax.  An existing LLC can usually convert to the C Corporation form without paying any taxes.

Conclusion

Determining the most appropriate form of entity for your business is an intensely individualized process, taking into account, among other things, the entrepreneur’s/owner’s specific interests and goals, the nature of the business, and the number and identities of the present and potential future investors in the business.  Because choosing among the different types of business entities is a fundamental decision with important and lasting consequences, entrepreneurs and owners need to make careful and informed choices up front with the advice of experienced legal counsel.

To ensure compliance with requirements imposed by the IRS, I must inform you that any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax-related matter[s].

For more information give the office a call at (951) 226-5294

or visit http://www.menifeelawyer.com/