Angela LaGamba: Welcome to Northeastern University’s online Master of Science in Taxation. Our webinar today is entitled Tax Trends in 2014. My name is Angela and I will be your moderator and host for today. Before we begin, I’d like to go over some of the logistics for the presentation. And also give you some commonly asked questions, I’ll give you some of those responses.
Again, you are in listen only mode so you can hear our two panelists today. If you have any questions throughout the session, feel free to use the chat box on the lower right-hand side of the screen and we’ll be taking questions throughout the session and we also have a dedicated Q&A where we will be addressing the bulk of your questions. The session today is being recorded, so you can view it in the future.
Your two panelists are Professor Timothy Gagnon and Michelle Yan. Professor Gagnon is the faculty director of the online Master of Science and taxation program at Northeastern University and he’s also a former partner at Coleman & Gagnon. Michelle is an enrollment advisor on Northeastern University’s online Master of Science in taxation and her role is to help perspective students through the application and admissions process. And again, I’ll be your host and moderator for today’s session. I’m gonna hand it over to Michelle now to talk a little about the school of business and the MST program. Go ahead Michelle.
Michelle Yan: Our MS in taxation program is part of the D’Amore-McKim School of Business. It was established in about 1922 and has a rich history, a strong reputation for scholarly research and teaching excellence.
We are accredited by the AACSB International, one of the highest business accreditations worldwide. The main campus is located in Boston, Massachusetts and we do have satellite campuses in Charlotte, North Carolina and Seattle, Washington.
Building on great academic achievement, wide ranging work and consulting experience, rich diversity and our extensive corporate ties, D’Amore-McKim School of Business faculty members are leaders in their field and regularly receive worldwide recognition and awards for their contributions to theory and practice of management. We do have a global network of over 200,000 Northeastern alumni, spanning more than 50 countries, like China, Canada, India, England, Russia and Australia to name a few. Almost 90% of our students pursuing graduate business degrees have work experience, so our programs are very accommodating and flexible.
The online MS in tax program was designed with the working tax professional in mind. They’ll help you to increase your technical tax knowledge, sharpen your research skills, help you keep up-to-date with tax laws – we all know it’s constantly changing – analyze complex regulations, related cases and rulings. We will also give you the opportunity to interact with faculty members who are not only educators but practitioners in the field. So, they do bring in a lot of real life case studies to help you with your learning.
Now, there are a variety of tax professionals coming into this program as well. I mean we do have many students coming from a lot of public accounting firms, which I know many of you are probably going through tax seasons right now. A lot coming from private industry, the IRS and of course the big four firms as well. So, it is a fantastic opportunity to collaborate on cases, trade ideas, learn from each other, a develop a strong networking opportunity. Now, I would like to turn it over to Professor Tim Gagnon who is our faculty director for the online MS in taxation program. Professor?
Timothy Gagnon: Welcome. As you can probably see from the screen, I am getting older and wiser, or at least my hair is going away, I don’t know which. But I spent over 30 years in practice before going into full-time teaching, but still have a practice on the side because trying to keep ahead of the tax laws really requires a lot of practical experience, but I’ve dealt with everything personal law and corporate tax and individual and really have a forte or a strong understanding or my area of concentration is really in stiffs and gifts, which is the estate planning, administration, probate are those type areas dealing with taxes when you’re alive and when you’re dead and then how do we take and tax the trust to go with them?
I’ve been on the full-time faculty here for six years, but spent 20 years before that on the adjunct faculty at Northeastern, so it’s become a home away from home, I guess I would say. Or as my wife tells me many times, I seem to live at this school more than I do at home. But that’s all right, I enjoy it.
We’re very focused on trying to take the practical and apply it to the theoretical. I know that sound strange, but as all of you probably found in tax practice, the theory is one thing and now how do you apply it, how do you get it through, how do you find where the practical comes into play and that’s what we try to bring to each one of the classes. I know on my own courses, we deal a lot of with the theory, but then we bring in a lot of the real life examples and say, okay, this is what it says, now this is how it interacts, this is how it comes into interaction. And this is where it’s really going to go in the future or this is where the trend seems to be, because we’re always, as tax professionals, trying to get a feel for where it’s going down the road so that we can do better planning for our clients. Because if you just do compliance, you’re always looking backwards. If you’re doing planning, you’re always looking forward and trying to guess where forward is.
Many of us spent the last couple years trying to guess where the tax code was going to occur and what was going to occur and I’d like to say we were all 100% exact and right, but a few things slipped through that we didn’t really see. I’m not sure we all saw the 3.8 or the .09 that came about with the Affordable Care Act, but now they’re there, now how do to deal with them and now how do you plan around them is one of the bigger questions that we have going forward.
Next slide, Angela. There we go. So, let’s talk about some of trends. I sort of reference that we’re always trying to find them. So, let’s look at four different areas of what some of the trends that are going on. On the international side, we’re seeing a lot more companies in states and countries trying to get more competitive. They’re trying to find ways to be more competitive from their tax system to entice business and individuals to come there. Not totally now with just straight incentives. You know, as many towns used to do, we’ll forgive your real estate taxes for five years if you’ll come build a plant.
On the other side, they’re now saying, hey how can we become more competitive with better rates, but also how can we make our rules more favorable to businesses that wanna come in? And if they’re here, how do we increase our take on the business? Now, maybe that’s by having the value added tax. Maybe that’s by stepping up the use tax and collecting on it or collecting on the sales tax.
And all of those require, on the international side, a lot more audits, a lot more understanding from their standpoint. So, we’re seeing a lot more experience and knowledgeable auditors or tax professionals on the government side, so that they’re now starting to understand better the book and tax differences. If many of you were in tax of realize the ASC740, FASBI 109, 1048, all of those things dealing with deferred taxes, the international community is starting to look at them and starting to understand what they mean and then also starting to understand that we have to keep an eye also on transfer pricing. But they’re trying to say, hey wait a minute, we see what your book income is, why doesn’t your tax income match that? Where is that difference? Where is that variance? We’re seeing a lot more focus on the international side and a lot more dedication to looking at returns, looking at books and saying hey we think you’re missing something here. They’re also coordinating with each other which is an even bigger challenge for us.
But, they really said hey, there’s a lot more money that can be made out of our current tax regime and out of our current people. But on the other side of that, we have to be somewhat competitive so we don’t lose all of our international business, because international business and international trade is becoming a bigger mainstay from a worldwide approach. When if you think about it, there’s more and more international work, there’s more and more companies with international touches that cause totally different tax responsibilities.
And we, within the MST online we have two different international tax classes. We have an inbound and an outbound, because there’s a very big difference between how the taxes are handled. But it’s become such a large area that it’s just an area that we, unfortunately, have to become more knowledgeable about, have to become more involved with because many of us, for many years tried to ignore international. You can’t anymore because even your small businesses are going out on the international side and many of your states are making large inroads trying to get their businesses to the international.
So, we have to be very aware from our tax side of what the impact is, how the international taxes will affect and what are they looking at, how do we best advise the client to structure their deals in order to maybe get taxable income closer to book or at least have a better analysis of the differences. And to be better able to represent our clients in the audits with the auditors because we are seeing more of them even willing to come to the U.S. and do the audit to look at things. So, it’s not like they’re handling the audit only in Belgium. They’re now starting to come more to the U.S. and say, hey we’re coming over, we wanna review the books, we wanna see it there, we wanna know what’s going on because we think there’s more opportunity for us to collect more taxes.
Next slide. So, we get to my favorite place and that’s the estate and gift. As you’re all probably aware or seen out there, we now have a federal unified credit of $5.25 million for each of us if we die tomorrow. We can pass that without any estate tax. So, on the federal side, we are starting to see some very large exemptions. So, everybody’s saying wow I don’t have to worry about estate taxes anymore. I get a married couple ten and a half million dollars before I have to pay taxes and it seems wonderful. Hey, that’s probably gonna be a dying area everybody told me.
But you gotta take a step back because although the federal may be at 5.25, each of the individual states has its own system. And the state may have a $600,000 exemption or a million or a 575, so we’re seeing on the estate and gift tax side a move way from planning and having to worry about a federal tax on your death. But now we’re seeing a lot more focus on knowing the different state estate taxes to know what happens in each of the states that you have property in. And just as an aside, any state that you have real property in has access to your estate on your death and charges an estate tax. They prorate between them.
So, everybody always tells me, we’re in Massachusetts and everyone says, well I have a house in Florida so that won’t matter. Yes, it does because Florida, although they’ve gotten rid of their estate case, Mass says, well if it’s in Florida, we don’t get to charge for it. So, now you’ve got to do your planning as to what you can do. Or maybe you need to take real property for the state’s purposes and turn it into personal property by putting it in some form of entity.
So, estate and gift is an area that’s getting a lot more attention because as the federal has gone up and the federal was the easier one, because it crossed all the jurisdictions. It was the one that hey we all deal with it and that’s the big bad one. Well, now federal’s getting large enough that it’s not the big bad one. But on the other side, every one of the states is having to look at saying, hey wait a minute, there’s a bigger tax sitting there than I wanna pay in the federal. Yeah, I’m not gonna pay the 40% to the fed, but the state’s gonna charge me 16% of every asset over $1 million. And you’re all going, I don’t have a $1 million estate.
Keep in mind an estate includes the face value of any life insurance you own, your 401(k) plan, the equity in your house, your savings, your investing, all that thrown in. More and more for crossing the threshold. That million dollar exemption for the state or that 600 in other states is not that hard to cross. So, we’re seeing a lot more tax planning on the estate and gift, on the individual state side as opposed to the federal side. So, it’s not an area that’s going away, but it’s an area seeing a lot of different changes.
And many of you probably heard when the last round went through that we got portability, which is the ability to use your spouse’s unused credit on the federal side only though, not on the states. So, you’re having to try to plan from two different tax statutes, two different tax areas. So, the planning has become a lot more integrated and a lot more specific client by client. So, that’s where the really good excitement occurs from my standpoint. But we all know stiffs and gifts attorneys are always kind of strange.
Next slide. Ah, the individual income tax. One that affects all of us, unfortunately. We’ve all seen with the Affordable Care Act, we’ve now got the 3.8% on the net invested income once you pass the 200 individual, 250 married couple, it’s out there. Doesn’t seem too bad, but maybe you can find ways to plan around it so that you don’t get something. Maybe you’re looking at different compensation plans so that you don’t trigger into them. We’re seeing a lot more companies and individuals talking to their companies saying hey, I’d like to defer more of my income to later years so that I don’t exceed that limit. So, I can hold it off, I’ll pay on it later, but I wanna have a deferral plan in place, which of course has its own issues and income supporting it.
So, it’s getting to know how defer tax works, how defer plans work, what’s the tax impact going through, will they be included into tax or not, will it be subject to Social Security taxes or not. All that having to be looked at because you need to know how the deferred is going to go. So, we’re seeing a lot more planning from that side. And all of you realize that the over 200 on wages yet, the .09 that was tacked on. But how many of your clients don’t realize these numbers. And when they go to file their returns, they’re gonna get a great surprise because they exceeded the .09 because they were married and neither one of them passed 200 on their own, but together their wages passed 250. And .09 is owed and everything above 250.
So, we’re seeing a lot more awareness of that, so that’s a lot more planning has to be done with clients. But it’s also a lot more sensitivity we, as practitioners, have to have in the tax planning standpoint. And in the tax projections that we’re doing for clients, we need to be aware of those and how they’re coming into play. And then of course, we’re all aware, unfortunately, that the Ps exemptions have come back. So, now itemized deductions are back on the phase out and the personal exemptions are back on the phase out, which makes a large difference to our hiring income tax payers to get back to that. That you liked their 100% deductions. Now, they’re phasing out which means you’ve gotta be a lot more aware of those and how those phase outs work and we’ll give better advise on to what the tax can be owed or wage around.
And again, is there planning opportunities so we can avoid the phase outs. Is there ways that we can adjust to them? Is there ways we can use different vehicles? Can we use accumulation vehicles as opposed to current income? Can I overfund a life insurance in order to build up a humungous balance which I can then take out as a loan and not pay income tax on it and not have to worry about putting it on my tax return because it’s just a loan for my life insurance policy, not a distribution, not a collapsible policy and I don’t have to pay taxes on it.
So, is that something that we’re gonna have to be able to better plan from a client standpoint? But that means that we have to be much more knowledgeable about that area and we have courses within the program that talk about insurance and investments and tax ramifications and how they work and when they work and what they work. So, it’s really an attempt to try to get a lot more of the practical in, because we’ve all read the code. We’ve all seen the changes. But how do we now actually apply them? How do you do this? How do you structure it? How do you work it?
I know in my research course that I teach, we are researching right now the deductibility of the different benefit plans and how and what we can deduct and when and who can deduct it and how to plan around the thresholds and the cutoffs. Because, I mean take one for instance, you got a 10% cut off of medical on schedule A and the 1040, that’s – how do I plan around so either I get all my medical in a pre-tax basis? Can I get a higher deductible plan? What’s the tax implications? How do you analyze the high deductible plans and the costs as opposed to taking the full-blown plan that has a very low deductibility. How do you analyzes between them? How do you equate? How do you indicate or is determined the tax ramifications? Which is an interesting practice, an interesting exercise.
But it’s something that we’re seeing more and more a need for, but for a lot of us, it’s getting more and more knowledge about that to know to go look at it or to know more about it so that we know where we’re going with it. What can we do? How can we do? What will be effective from a tax standpoint. But also, if we’re doing planning and we know that’s in place today, what’s the projection going down? Where do we see Congress or the IRS talking about taking these two, or where do we see the IRS coming in and making their rulings or the court cases and how have they impacted on this? What’s held, what hasn’t held? What does the IRS acquiesce to? What are they targeting or not targeting.
We see that not just individual but on the corporate level with the identified tax positions. Is the IRS targeting or what information are we giving them? What would allow them to target which would certainly make a difference of how you plan if it seems to be a hot topic for them. And the only way you know if it’s a hot topic is if you look at where their audits, where are the cases coming up? Where are the issue and revenue roles? Where are they coming in with different private letter rulings and what are the answers?
So a lot of our time is spent from an individual standpoint and it’s trying to better understand the state of affairs today and project them going forward. And then if all of us get out our crystal ball and try to guess what the changes are gonna be from Congress and my crystal ball is about as cloudy as it can get in trying to guess where they’re going. But I’m constantly having to do that from a client standpoint because your client wants to know what do you see, what do you hear, what do you think’s gonna happen?
To do that, you have to get a good base on what the rules are today and where are the avenues, the gray areas that you can plan through. We all know that black and white you have to follow, but there’s a lot of gray in the statutes. There’s a lot of gray in the case law. So, that’s where a lot of our clients are saying hey, find me the gray area, how do I save taxes? Which is very important to the clients and I guess you can say it’s important to us too because that’s what they pay us for and that’s where our billing goes. And sorry to say that’s something we’re always worried about is billing. The next slide please.
So we got the corporate and I’m sure many of you have been around a while, have known that every time somebody sets a corporation up, they make it an S corp. And then of course the question always comes why? Why is it an S corp? And I can tell you that when we saw the 86 Act come out and at the individual tax rates were lower than the corporate tax rates, we’re certainly not higher, we said okay be an S corp, pass it through, one level of taxes, you’ll pay less tax.
But today, the individual rates are looking like they’re not gonna be lower than the corporate rates. Corporate rates being around 35, but the individual rates now, you could end up at a 39 ½, you’ve got an extra 3.8, you’ve got an extra .09. Suddenly the individual rates are starting to be into the 40s, maybe 45. And the corporate rate’s sitting down there at 35.
So, there’s a trend now to start saying, hey wait a minute, should the corporation be a C corp? Let’s pay at the lower rate and of course everybody says yeah but we’re gonna pay a second level of tax coming out. But maybe, maybe not. Maybe if we use the C corp at the lower rate, maybe we can put more benefit plans into the corporation. We can have more benefits for the owners or the high wage earners, therefore we can get a deduction with the C corp, taking its revenue or rates and that income down, taxable. And we’ll pay at a lower rate and I can get more things through from the standpoint of deductions that I couldn’t get on the personal side or even passing them through, I’d still be doing things or having to pay that extra income at 4-5% higher than we were originally at.
So, we’re seeing corporate is static as it would seem saying, well if you’re a small corporation be an S, if you’re a big corporation be a C. More of the smaller corporations are starting to say, wait a minute, maybe we should be a C because we look at the benefits we can deduct and we pay the lower rate of the corporate as opposed to the higher individual rate.
And take that and put that into analysis also when you think about the LLCs, the LLPs out there, they’re all coming through now at the personal rate. So, maybe inside of an LLC you should be thinking or the client may wanna think about his C corp because of the tax ramifications, because everything dumps through. Second part of that, as we all know, LLCs as partnerships, everything that comes through them is subject to Social Security tax.
S corps at current only have Social Security on the wages paid but not on the excess distribution on the K-1. Now there’s a discussion that will be subject to the 3.8 when you pass the certain limit, like the 200 or 250 of a married couple. Then you have the 3.8, but that’s what’s coming through there, but if you’re not above the 200, 250, then what’s coming through the S doesn’t get subject to the 3.8. So, the LLC was subject to Social Security. The S isn’t getting subject to Social Security. So, again there’s a tradeoff.
So a large part from a corporate tax standpoint, there’s a lot more analysis having to be done to compare choice of entity from a tax ramification. But also, choice of tax, which tax would we rather be subject to, the self-employment tax at the effect of 13 or do I wanna be subject to that distribution to the 3.8 under the Affordable Care Act? Which rates work best? Which rates don’t work best.
So a lot of the trends we’re seeing out there are a lot more planning trends from the accountant’s standpoint, from the CPA’s standpoint, a lot more planning that can be done to keep client’s taxes down. But also a lot more planning having to be done from a forward looking and needing a good base to get there, but from a forward looking because things we’ve put into place today are gonna have an effect going forward. So, what’s the ramification as we go along? What are the trends that are coming in? What do we need to analyze? We can’t analyze in a static of yeah, today this would happen, but what’s happening going forward and what would be the impact going forward?
And that’s what we try to spend quite a bit of time in the different courses within the degree of trying to get you the base as to what’s happening. But now, how do you get around those? Where do they go? What are they gonna be? How do you plan going forward? How do you determine the impact? How do you do the strategy?
I spend quite a bit of time in a couple of my courses just trying to say okay, what’s the future look like and how do you plan for that future? How do we do deals today or do setups today that will have the impact down the road that will maybe minimize our taxes on the long term as opposed to on the short term because I guess I’ve yet to meet a client who told me – well I did meet one client once who said they wanted to pay more taxes. Most of them say they want to pay as low as I have to and they’re really looking to us to have the knowledge and the experience to try to minimize those taxes wherever possible, totally in compliance with the rules, the regulations, the code, the regs, the case is totally compliance with that. But you have to have a sound foundation of knowledge of the area and where to bill from.
And many times people will say, well I don’t do that area, I don’t do corporate tax. We only do individuals. That’s wonderful. But you need to have an understanding of how the corporate tax system works. In order to know on the individual side what the impact is. It’s odd when many people tell me they deal only with individuals, but that means every K-1 they received came from an S corp or an LLC, which means they do some kind of business tax, and need to understand it because it’s impacting their individual returns.
So, the trend is that we’re gonna see a lot more, or it appears to be we’re gonna be able to see a lot more small businesses, small proprietors because a lot more people are not gonna be in the large corporate entities anymore, they’re gonna be on their own, either semi-retired or having to start up and build their own businesses, because that’s the way to control their future, they say. And that occurring means that we’re gonna get a lot more involved in some of the early end planning from the CPA standpoint, the accountants. There’s a lot more of the early planning and what are we gonna do long-term and what’s the impact?
So, I mean if I look at trends going on now, that’s four trends that I see occurring that we’re seeing a lot more action on and we’re seeing a lot more integration from. We’re seeing a lot more – instead of on a rehash, we’re seeing a lot more on the international side where they’re going in and analyzing and doing audits and they’re starting to look very closely at transfer pricing and between the multiple countries putting together task forces to go look at and say wait a minute if you gave us what was the impact there, was it proper? But also, making sure that nothing falls through the cracks and doesn’t get taxed by one of countries
We’re seeing more on the state and gift because we’re seeing a lot more planning done on the individual state level. Then we’re seeing a lot more on the individual side or how do I plan because our rates are rising to a point where now people want to plan their way around that the next dollar does make a difference. And then the impact from that also is on the corporate side where we’re seeing a lot more saying, hey wait a minute. Maybe I need to cut my taxable income by using benefit plans for my owners or high wage earners as opposed to doing N&F because I want to use this lower rate and still get those benefits that I can pay from them that will then make my life or make the owner’s life a lot more enjoyable, in that sort of way. So, that’s the trends that I’ve seen out there. If you wanna go to the next slide and I’ll hand over the discussions to Michelle.
Michelle Yan: Thanks professor. So, for individuals who are looking at the application and looking to put their application for the MS in tax program, these are some of the things that you need to be aware of. In terms of the application requirements, we are looking for individuals coming in with an undergraduate degree from an accredited institution. We’re looking for an undergraduate GPA about 3.25 on a 4.0 scale. We’re also looking for an undergraduate or graduate tax course with a 3.0 GPA as well. And the program itself is catered again to working professionals. We are looking for a minimum of two years tax experience. And if you do hold the following credentials, like a JD, CPA, CFA or an enrolled agent, that’s going to be also very helpful.
The overall tuition cost of the program, you’ll see it’s about $1,385 per credit hour. There are a total of 30 credits and so total with tuition, you’re looking at about just over $41,000, closer to $42,000, including books. We do have upcoming start dates. Typically Northeastern, that online MST program we do have six start dates throughout the year. So, for some individuals who are currently in tax season right now, not to worry. We do certainly have start dates coming up after tax season. So, we went immediately after is April 21 and then we have a May 26 and then we also have two start dates for the fall.
Angela LaGamba: Thank you Michelle. The next section that we have here is our question and answer session. I wanted to thank our attendees. We have quite a few questions that have come in. Before we get started on that though, I have opened a poll on the lower right hand side of the screen, we’re looking for your input on what you thought of today’s webinar and future webinar topics. So, feel free to fill that in as you are listening to the Q&A session. And I also encourage you to continue to send in those questions. All right the first question that we have here is for Professor Gagnon. The question is what changes do you see occurring over the next five years in estate tax in your opinion?
Timothy Gagnon: First thing is it’s gonna be a lot more prevalent because a lot more people are gonna die, the older generation’s going on. We’re gonna see a lot more coming about, we’re dealing with a portability issue and how you can transfer them out and how does it work? We haven’t seen any clarity yet on regulations or any effect from court cases on the portability and moving it because right now it basically says it’s only for the last spouse you have, but what if your next to last spouse didn’t use their exemption, where will it go?
We’re also gonna see a lot more on the gifting side because with the larger estates we’re gonna see people saying, hey wait a minute, I don’t wanna die with as much, so let me gift away, and the interesting thing is the federal has gift tax many to states who do not have a gift tax system. So, gifts made don’t affect the state, therefore you’re lowering the number for the state purposes that you have on death and it may avoid tax because we’ve gifted away during your life.
If on the federal side, if I exceed my annual $14,000, I’m using up part of my 5.25 which means I still got plenty of room because I’ve got a $3 million estate. So, federally it won’t cost me anything, but if I get it out without a gift tax on the state side, I’ve now saved 16 cents on every dollar I got out that the state won’t get. Or if it’s a $600,000 exception or whatever. So, the states are gonna probably either have to come up with a gift tax system or we’re gonna have a large practice of trying to avoid the state tax by gifting away and not having to worry about the federal side. So, I think you’re gonna see a lot more discussions about that. I think you’re gonna see the state starting to look closer at that because when they used to be intertwined, when they used to be tagged to each other, whatever have their federal worked for them because that’s what it kept in line.
Now that they’re detached, they’re having to think about it themselves. So, we’re gonna see a lot more on the state level. And the fed I expect to see sort of it’s indexed for inflation, so it may hold sort of current and that’s my best guess. I wish my crystal ball would work better, but that’s about where I would guess it’s coming in. Hopefully, that helped.
Angela LaGamba: Thanks Professor Gagnon. And to our audience member if you had a follow up question to that, feel free to send it through the chat box. Moving on, Michelle, the next question that we have is for you.
The question is around the entry requirements. One of our audience members is close to retirement and was wondering if there were any waivers available for the entry requirements. Go ahead.
Michelle Yan: In regards to individual cases, I mean a lot of times any type of waiver transfer credits, especially, we’re looking for individuals if you’ve taken some graduate level tax courses from another program and are looking to transfer those in, that’s when we would consider transfer credits. Sort of more individual cases, depending on what your background is, I mean if you have a strong tax background and depending on what your GPA maybe if it’s slightly lower, we may still consider you depending on obviously that type of tax work you’ve done. But you’re more than welcome. We do have a number on the bottom. People like to contact me directly, we can have a more in depth conversation regarding your particular situation and I’ll be more than happy to answer any questions as well.
Angela LaGamba: Thank you Michelle. The next question that we have is for Professor Gagnon and the question is for those looking to move from another area of tax into corporate tax, how can they get started in making that career shift? Go ahead professor.
Timothy Gagnon: Well, there’s a challenge. I think for a large part from my standpoint when people have tried to move into, taking it more from my area trying to come from estate and gift, if you’re trying to move over to the corporate, it really is being able to show that you have a sound foundation in the corporate area, that you understand the fundamentals, you know how they work, you know what the effect is so that you, first off, when you try to move across and teach you the basics.
The other thing is to take and look at some of the more, I don’t wanna say obtuse, but the more specialized areas and becoming a lot more knowledgeable in that area because a lot of times when the employers or the practitioners are looking, they’re looking for somebody who has specialized knowledge in certain areas to fill in where they don’t have it. So, it may be somebody that’s really good at writs and knows how writs will run from a standpoint of a partnership or how the pastor will work or whether it goes to that. That specialized knowledge helps when they go looking because they’re going looking for somebody for that kind of knowledge, that kind of understanding because they need to fill that spot in their cadre because, unfortunately the way the world is going, not many of us can be true journalists to know everything about everything.
Everybody’s becoming very specialized, very structured so that it’s being highly knowledgeable in that one area because that’s what you’re selling. That’s really what they’re buying is okay we need a person who can do this, you can show that knowledge, you can show that education, you can show that understanding. That’s what they’re looking to apply. So, that would be how I would look at trying to change over is becoming a specialist or highly knowledgeable in a certain area of the spot that I’d like to work in. And that way, I get my advanced knowledge and I’m able, at the end of year to talk about it and in some cases, I’m able, if I get sort of the knowledge, I’m able to put on some articles or make some statements so that I somewhat good reputation in that area. And it’s very easy to do articles or do little publications about that even if it’s a blog on the area and sort of start to show an expertise. And that everybody would come to or at least talk about. That’d be my best way to go about.
Angela LaGamba: Thank you professor. The next question that we have is for Michelle and the question is one of our audience members has an undergraduate degree from outside the U.S., but an MBA from a U.S. institution. And the question is would they have to get their transcripts transcribed and also right the TOEFL? Go ahead Michelle.
Michelle Yan: Normally for individuals who have completed the bachelor’s degree outside the U.S., sometimes we will ask to see a credential evaluation. I mean, if you’ve done an MBA in the U.S., you’ve probably already done that. So, what we need to do is see a copy of it and take a look at the evaluation and if you have obviously a graduate level degree from the U.S. that does help. And a lot of this is conducted in English.
And if you’ve been working in the U.S. for quite some time in terms of verbal communication, in terms of written communication in English, then we should be okay without TOEFL.
Angela LaGamba: Thanks Michelle. The next question is for Professor Gagnon. The question is – what would you – one of our audience members really liked the section where you talked about your corporate tax. However, they were wondering if there was that they could go to since their area of expertise is not on the corporate side where they could see how to make a decision around the C or S corporation or the LLC? And wondering if you had any thoughts on that professor?
Timothy Gagnon: The choice of entity. A large part – if your firm or your company has CCH or RIA, which are two of the bigger tax databases, they’ve got checklists built in their system to allow you to analyze what the ramifications are. If not, I mean it’s a scary thing to say, but if you go out on the web, you’ll find different law firms and accounting firms that are starting to put things out under little articles or little blurbs or blogs as to how to do the analysis through and to look at them.
Oddly enough I’d also take the IRS publication on the corporate side and read through what it talks about from a C corp and an S corp and how they work and to look at what passes through and what doesn’t pass through. It’s an area that’s just starting to hit, so we’re gonna see more and more articles coming out about it, which means if you look at most of the trade publications, they’re gonna start to have articles about it because it’s just started to come about because of the change in rates. So, if you keep an eye on the different state societies, the different tax advisor, things like that, you’re gonna start to see articles discussing it because everybody’s now having to get their arms around the concept, how it works, where it works and if it works.
So, that might be way to try to figure it out. A true checklist, not that I haven’t seen it yet developed, but I won’t be surprised in the next three or four months they don’t start to appear, because usually they tend to show up a little after we see the changes and the people start to talk about the situation and they start to develop them.
Angela LaGamba: When was the online Masters of Science in taxation launched and are there any on campus requirements? Go ahead.
Michelle Yan: The online MST program has probably been around, I would say, coming up four years in March. And a lot of the program itself, the online program is based directly off on campus MS in tax program. I mean Professor Gagnon, he teaches both the on campus as well as the online programs. So, a lot of the faculty professors teaching the online program is very similar.
So actually there is no difference between the online as well as the on campus program. I know with the online program because I particularly advise on it, I mean the way the curriculum is it makes it very flexible for working tax professionals to be in the program because there are 10 courses, you’re only taking them one course at a time and each course is about five weeks. So, that’s sort of the structure of the curriculum.
But essentially, like I said, the coursework, the material you’re getting, the faculty members teaching the programs are exactly the same. So, there is no difference. We just have designed the online programs specifically to cater toward working tax professionals because we know you have full-time jobs and you have kids and a family and tax season. So, sometimes it might be a much more convenient to be able to learn online. Now, for example you put your kids to bed at eight in the evening, you can start doing some reading and doing some work starting at eight for a couple of hours. So, it’s more that convenience factor and providing also quite a bit of accommodation in tax season as well. Timothy Gagnon: And I’m gonna add, the second part of the question, we don’t currently have a residence requirement. We don’t have a requirement to come to campus at any point, although maybe we should. That way, we’d actually get to meet some of you. But, we don’t have that requirement, although we have seen a lot of our students when they’ve reached graduation coming in for graduation because I’ve met with many of the online students when they come for graduation and it’s sort of fun to catch up and sort of shoot pictures back and forth to actually – so we can find each other in the middle of graduation. Back to you Angela.
Angela LaGamba: This is all the time that we have for today. I wanted to thank Michelle and Professor Gagnon for taking the time to walk us through, especially the fascinating section around taxation trends. And also for our audience, thank you for spending the time today to talk to us about the online Masters of Science in Taxation and also to learn a little bit more about trends. This concludes our session and have a great day everyone.