Business Tax Strategies

Update on Opportunity Zone Tax Incentives – IRS Proposes Regulations for TCJA Changes

The Tax Cuts and Jobs Act (TCJA) includes a provision that Secretary of the Treasury Steven Mnuchin said should lead to $100 billion in capital investments in distressed areas. The provision allows taxpayers to defer tax on capital gains by investing in such Opportunity Zones. And now the IRS has released proposed regulations for this tax incentive.

HSA + HDHP Can Be a Winning Health Benefits Formula

If you’ve done any research into employee benefits for your business recently, you may have come across a bit of alphabet soup in the form of “HSA + HDHP.” Although perhaps initially confusing, this formula represents an increasingly popular model for health care benefits — that is, offering a Health Savings Account (HSA) coupled with, as required by law, a high-deductible health plan (HDHP).

Claiming the New Employer Tax Credit for Family and Medical Leave

The Tax Cuts and Jobs Act (TCJA) establishes a new federal income tax credit for employers that provide qualifying paid family and medical leave benefits to their employees. This credit is only available for two employer tax years — those beginning between January 1, 2018 and December 31, 2019 — unless Congress extends the deal. Here are some FAQs about this tax break.

IRS Clarifies Business Meals and Entertainment Deduction – Here’s How to Deduct Expenses in 2018

On October 3rd, 2018, the IRS issued additional guidance to the Tax Cuts and Jobs Act (TCJA). The previous omission in the TCJA related to food and beverage deduction (50%) for expenses created a lot of confusion in the business community. This article is a summary to help you better understand the latest IRS guidance on Sec. 274, and how it could be applied when planning your business activities that involve meals and entertainment.

Supreme Court Opens Door to Taxation of Online Sales

In a much-anticipated ruling that confounded the expectations of many court watchers, the U.S. Supreme Court has given state and local governments the green light to impose sales taxes on out-of-state online sales. The 5-4 decision in South Dakota v. Wayfair, Inc. was met by cheers from brick-and-mortar retailers, who have long believed that the high court’s previous rulings on the issue disadvantaged them, as well as state governments that are eager to replenish their coffers.

How “Aggregating” Businesses Can Boost a Business Owner’s QBI Deduction

Recently proposed IRS regulations provide aggregation rules that allow eligible individuals to "aggregate" their businesses in order to maximize the new qualified business income (QBI) deduction. Specifically, they may be able to combine income, W-2 wages and the unadjusted basis immediately after acquisition (UBIA) of qualified assets from qualified businesses conducted as pass-through entities.

How Tax Reform Affects Tax Planning for C Corporations

One of the biggest changes under the Tax Cuts and Jobs Act (TCJA) is the permanent installation of a flat 21% federal income tax rate for C corporations for tax years beginning after 2017. The new 21% rate applies equally to personal service corporations (PSCs). (Under prior law, PSCs were taxed more heavily than other C corporations.)

IRS Sheds Light on New Limit on Business Interest Expense Deductions

The Tax Cuts and Jobs Act (TCJA) imposes a limit on deductions for business interest for taxable years beginning in 2018. The limit, like other aspects of the law, has raised some questions for taxpayers. In response, the IRS has issued temporary guidance in Notice 2018-28 that taxpayers can rely on until it releases regulations. While the guidance provides some valuable information, it also leaves some questions unanswered.

3 Bills Form Tax Reform 2.0

On September 13, the House Ways and Means Committee passed three separate bills that will be the cornerstone of what is being referred to as Tax Reform 2.0.

Business Tips for Back-To-School Time

Late summer and early fall, when so many families have members returning to educational facilities of all shapes and sizes, is also a good time for businesses to creatively step up their business development efforts, whether it’s launching new marketing initiatives, developing future employees or simply generating goodwill in the community. Here are a few examples that might inspire you.

IRS Issues Guidance on New Bonus Depreciation Rules

The IRS recently released highly anticipated regulations addressing the deduction for up to 20% of qualified business income (QBI) from pass-through entities. The deduction was a major component of the Tax Cuts and Jobs Act, which became law late last year. It has also been referred to as the pass-through deduction, the QBI deduction or the Section 199A deduction.

Did Tax Reform Leave Franchises Out in the Cold?

With generous corporate tax write-offs and rates, the Tax Cuts and Jobs Act has been well received by nearly every industry. Unfortunately, a simple error has prevented franchisees from reaping many of its benefits.

U.S. Supreme Court Sales Tax Ruling Affects More Than Just E-Commerce Businesses

On June 21, the U.S. Supreme Court issued a ruling overturning a 1992 precedent that had barred states from requiring online retailers without a "physical presence" there to collect sales taxes. Going forward, this decision will present numerous challenges to businesses of all sizes that have out-of-state sales, not solely those that sell products online. Talk with your tax advisor, there may be more you need to know - even if you aren't an e-commerce business.

Business Owners: Understand the Trust Fund Recovery Penalty

The IRS is strict about collecting payroll taxes and tough on "responsible persons" who don't pay them. A recent court case shows that a person may not be able to escape the penalty even if someone else is primarily responsible for handling payroll taxes.

Let’s Take a Closer Look at New Business Tax Reforms

The Tax Cuts and Jobs Act (TCJA) provides businesses with more than just lower income tax rates and other provisions you may have heard about. Here's an overview of some lesser-known, business-friendly changes under the new law, along with a few changes that could affect some businesses adversely.

Tax Reform: New Deduction for Pass-Through Business Income

For tax years beginning in 2018, the TCJA establishes a new deduction based on a noncorporate owner’s qualified business income (QBI). This new tax break is available to individuals, estates and trusts that own interests in pass-through business entities. This article includes an analysis of how the new law may impact business owners.

New Partnership Audit Rules: Should You Stay In or Elect Out?

The present law partnership audit rules, also known as TEFRA, have been replaced with new procedures that may require adjustment of all items of income, gain, loss, deduction or credit at the partnership level rather than at the partner level. This puts the partnership liable for any resulting underpayment of tax. It's time to explore your options.

Planning to Remodel? Don’t Miss These Tax Savings

Thinking of remodeling or improving the interior of non-residential property this year? A recent change in the PATH Act lifts many restrictions to "qualified improvement property" and could provide your business with a significant tax-savings opportunity.

Tax Reform Likely in 2017? Strategies You Should Consider for Year-end Tax Planning

Tax reform will likely be a priority for President-elect Donald Trump and the Republican-controlled Congress in 2017 by consolidating the individual tax rates into three brackets, eliminating the 3.8% surtax on upper-earners, and potentially reducing the tax-savings impact of current deductions. With all this in mind, here are some important strategies for taxpayers to consider this year.

Five Tax-Reducing Tips Every Small Business Owner Should Know

One minute you’re making a sale. The next, you’re making a personnel decision. Later in the day, you’re on to payroll. If you’re an entrepreneur or have a growing small business, your to-do list never ends. And to top it off, you’ve got to keep your business in the black. Running a profitable business can … Continued

R&D Credit More Likely to Reduce Taxes for Small and Midsized Businesses in 2016

Tax legislation at the end of 2015 (The PATH Act) made significant changes to the Research and Development (R&D) tax credit. This new legislation makes the R&D credit available to many small and midsized companies that had previously believed the credit out of reach to them. The credit was made permanent back to January 1, 2015 so U.S. companies can budget with confidence that the credit will be there in future years rather than periodically expiring as in the past.

2016 R&D Tax Credit Can Now Benefit Start-up Businesses, Too.

Beginning in 2016, qualified small business startups can allocate up to $250,000 of R&D tax credits generated after January 1, 2016 to offset the employer OASDI portion of their payroll taxes. For small startup companies, a payroll tax offset may also result in a significant cash savings.

Construction Business Owners – How to Overcome Tax Return Obstacles

Small construction firm owners and contractors can find it especially difficult to comply with the strict letter of the law when it comes to filing their income tax returns. The IRS recognizes the potential problems and wants to lend a helping hand. The tax agency periodically updates several publications geared to contractors, most notably Publication 3780, … Continued

Congress Enhances and Makes Research & Development Tax Credit Permanent

The Protecting Americans from Tax Hikes (PATH) Act of 2015 makes the Research and Development Tax Credit (R&D) permanent for costs related to qualified activity incurred after December 31, 2014.  No more waiting at year-end to see if the credit will be extended! Hooray!   For small and medium sized businesses, the new rules significantly … Continued

New PATH for Extended and Permanent Tax Breaks Is Open for Businesses

At the end of last year, the Protecting Americans from Tax Hikes Act of 2015 was signed into law. Known as the PATH Act, it does more than just extend expired and expiring tax provisions for another year. The new law makes many temporary tax breaks permanent. This provides some stability in planning. When it comes … Continued

2015 Individual and Business Tax Extenders in the PATH Act

In December, the House and Senate approved the “Protecting Americans from Tax Hikes” (PATH) Act of 2015. The President signed this legislation referred to by tax professionals as “The Tax Extenders Provision”, which extends or modifies many extensions/changes that tax payers should discuss with their CPA.

How Should Your Business Be Organized?

Given the constant media attention regarding tax law changes and tax reform, it’s an important question to examine. The way your business is structured generally affects the extent to which you and any other owners of the business are personally protected from liabilities of the business as well as how your business is taxed.

Retail Could Be a Winner in Corporate Tax Reform

Tax reform, especially corporate income tax reform, has been in the news significantly in recent months. In summary, the broadening of the tax base would come by elimination of tax incentives (called “tax expenditures”) that have been added to our tax system over the past half-century.

Work Opportunity Tax Credit (WOTC) Extended to April 30 2015

Recently, the IRS announced that it was extending the time for employers to file for the work opportunity tax credit (WOTC) that hired eligible workers in 2014. The WOTC is a federal tax credit that reduces the federal tax liability based on wages paid to new hires for targeted groups that are employed by privately-held businesses.

4.5 Billion Reasons Not to Delay Payment for IRS Payroll Taxes

In a cash flow crunch and thinking about delaying paying the IRS payroll taxes? There are 4.5 billion reasons not to do this. In the recently published “2013 Internal Revenue Service Data Book” it was revealed that the IRS issued 6.8 million penalties totaling $4.5 billion related to payroll taxes for the YEAR...

Buy or Defer? 2014 Status of Section 179 Expensing Amounts

Small business owners have become accustomed to the ability to deduct significant amounts of purchased business assets in the year of acquisition. But the future status of this deduction remains unclear and has an impact on decisions, such as buying equipment for the business.

Variable Interest Entity (VIE) Rules Are Changing Yet Again

Variable Interest Entity (VIE) rules are changing yet again, but for private companies it may actually reduce your reporting requirements! One of the largest impacts of Enron scandal, in 2001, on all entities, was the adoption of the Financial Accounting Standards Board (FASB) FIN 46 (now part of ASC 810).

Deferring Taxes Through an Installment Sale

All things being equal, taxpayers generally would prefer to pay taxes later rather than sooner – particularly if they are in a high tax bracket. The installment method allows taxpayers to defer taxes by recognizing profit from certain sales over several years rather than all at once.

IRS Debuts Final Repair Regs

In the past, tax preparers and business owners criticized the IRS capitalization guidelines for being ambiguous, complex, and subjective. There were few quantitative brightline rules. Instead, the appropriate tax treatment was governed by qualitative “betterment” tests and Tax Court cases.

Update on the Section 179 Deduction Tax Break

The Section 179 deduction is valuable because it allows businesses to deduct as depreciation up to 100 percent of the cost of qualifying asset additions in Year 1 instead of depreciating the cost over a number of years. The Fiscal Cliff Law included several taxpayer-friendly changes to the Section 179 rules.

Quick Write-Offs for Capital Assets Set to Expire December 31, 2013

Special “bonus depreciation” provisions have been available as incentives to help stimulate the U.S. economy since 2008. Recently, the American Taxpayer Relief Act of 2012 (ATRA) extended 50% bonus depreciation availability to new asset additions placed in service prior to January 1, 2014 (certain specialized property may have a pre-January 1, 2015 in-service date requirement).

Collecting Sales Tax on Internet Sales

If you sell over the internet you may soon have to collect sales tax. Congress is considering legislation authorizing states to require out-of-state business selling to collect sales tax. This would require remote businesses to collect and remit sales tax according to local tax law.

Built-In-Gains Recognition Period : 10, 7 or 5 Years?

Recent discussions with a local attorney reinforced my belief that there is quite a bit of confusion as it relates to the Built-In-Gain Tax recognition period. As a bit of background, when a Subchapter C Corporation is converted to a pass-through S Corporation by its shareholders...

Minnesota Tax Law Changes – Sales and Use Tax

Effective for sales or purchases made after June 30, 2013, Minnesota now adopts the “Amazon Rule,” stating that an out-of-state business making retail sales (that has no other Minnesota presence) is presumed to have a Minnesota sales tax collection requirement. As a result, after June 30, 2013 Minnesota residents and businesses who purchase online from vendors such as Amazon should expect to find sales tax imposed by the vendor on those orders.

Tax Reform – Are Capital Gains Up First?

Driving home from work recently, I happened to be flipping radio channels and ran across the CSPAN XM channel and the discussion was “tax reform”. Having just finished our April 15 tax rush as a Firm, I was interested in this but then common sense kicked in – yea right. Tax reform? Given our dysfunctional Congress, powerful special interest groups – get real!