Tax Stuff Archives

Tax Update: How Do I Write Off Baseball Season Tickets to My Business?

GrinnanMikeCPA

 

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

 
Tax Update: How Do I Write Off Baseball Season Tickets to My Business?

Code Sec. 162 permits a business to deduct its ordinary and necessary expenses for carrying on the business. However, Code Sec. 274 restricts the deduction of entertainment expenses incurred for business by disallowing expenses of entertainment activities and entertainment facilities. Many expenses are totally disallowed; other amounts, if allowed under Code Sec. 274, are limited to 50 percent of the expense.

The income tax regulations define entertainment as any activity of a type generally considered to be entertainment, amusement, or recreation, such as entertaining at night clubs, lounges, theaters, country clubs, golf and athletic clubs, and sports events, as well as hunting, fishing, vacation and similar trips. There are special rules for the costs of…
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Tax Update: Business Meals and Entertainment – How to Maximize Tax Deductions

GrinnanMikeCPA

 

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

 
Tax Update: Business Meals and Entertainment – How to Maximize Tax Deductions

Many businesses consider the occasional wining and dining of customers and clients just to stay in touch with them to be a necessary cost of doing business. The same goes for taking business associates or even employees out to lunch once in a while after an especially tough assignment has been completed successfully. It’s easy to think of these entertainment costs as deductible business expenses, but they may not be. As a general rule, meals and entertainment are deductible as a business expense only if …
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Tax Update: Debate Over Health Care and Taxes Moves to Senate

GrinnanMikeCPA

 

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

 
Tax Update: Debate Over Health Care and Taxes Moves to Senate

The future of the Affordable Care Act and its associated taxes has moved to the Senate following passage of the American Health Care Act (AHCA) in the House in April. Traditionally, legislation moves more slowly in the Senate than in the House, which means that any ACA repeal and replacement bill may be weeks if not months away. 

Note. At the time this article was prepared, few details have emerged about discussions in the Senate on the ACA’s taxes. Some senators have predicted that the Senate will write its own ACA repeal and replacement bill. A Congressional Budget Office (CBO) report, issued in late May, scored the House-passed AHCA as eventually causing 23 million…
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Trump’s Fiscal Year 2018 Budget Outlines Tax Reform Proposals

GrinnanMikeCPA

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

 
 
Trump’s Fiscal Year 2018 Budget Outlines Tax Reform Proposals

Since taking office in January, President Trump has called for comprehensive tax reform. The President’s recently released fiscal year (FY) 2018 outlines some of his key tax reform principles. At the same time, White House officials said that more tax reform details will be released in coming weeks. These details are expected to describe rate cuts for individuals and businesses, new incentives for child and elder care, elimination of certain deductions and credits, and more. 

Note. The President’s budget is a blueprint for Congressional action. “This is the message from the President to the Congress and says, look, here are my priorities in terms of where I want to spend more; here’s what I think should be spent; here’s where the big-ticket items are,” White House Budget Director Mick Mulvaney told reporters in Washington, D.C. at a news conference unveiling the FY 2018 budget proposals.

Tax Measures

The President’s FY 2018 budget highlights a number of tax reform proposals,…
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Major Tax Changes Expected Under Trump Administration

Major tax changes expected under Trump Administration

One month after the presidential election, taxpayers are learning more about President-elect Donald Trump’s tax proposals for his administration. Although exact details, including legislative language, are likely months away, taxpayers have a snapshot of the president-elect’s tax proposals for individuals and businesses.

Note. At the time this article was prepared, the primary descriptions of President-elect Trump’s tax proposals are on his campaign and transition websites. The materials on these websites are not the same as legislation, which would amend the Tax Code. Rather, they discuss the President-elect’s tax proposals in very general and broad language.

Tax reform

Tax reform has been a regular topic in recent years. Click Here for Full Video/Article (Members Only)

Congress Returns for Year-End Tax Legislation Push

Congress Returns for Year-End Tax Legislation Push

Year-end 2016 is expected to bring a rush of tax-related legislation in Congress. Lawmakers will be up against a December 31 deadline to renew some expiring tax incentives and possibly pass new tax breaks for individuals and businesses. The year may end with what is often called a “Christmas Tree bill,” a bill that includes a variety of tax and other provisions.

Note: At the time this article was posted, the results of the November 8 presidential election was not yet known. That outcome will shape tax legislation in 2017 and beyond. 

Tax breaks for individuals

In December 2015, many popular but temporary tax incentives for individuals were scheduled to expire at year-end. Congress renewed or made permanent most of these tax breaks in the Protecting Americans from Tax Hikes Act (PATH Act). However, some incentives were not included in the PATH Act and these are up for renewal, or possibly being made permanent, this December. They include the Code Sec. 25C residential energy credit (for energy-efficient improvements to homes) and the popular above-the-line deduction for higher education tuition and fees.

Tax breaks for businesses

The PATH Act also extended, and in some cases made permanent, many tax incentives for businesses. Some incentives, however, were not included in the PATH Act and are expected to come up for renewal this December. They include targeted incentives for film and television productions, Native American employment, the mining industry, railroads, and motorsports complexes. Along with these, some special tax breaks for alternative fuels are scheduled to expire at year-end. 

More proposals

Along with the incentives already described, some stand-alone tax bills are expected to come to votes in Congress before year-end. The bills, if passed, impact individuals, small businesses, farmers, and tax administration. They include:

  • The Support Small Business R&D Bill, which would expand knowledge resources available to startups and small businesses in connection with their using the research and development (R&D) tax credit.
  • The Restraining Excessive Seizure of Property through Exploitation of Civil Asset Forfeiture Tools (RESPECT) Bill, which would limit the IRS’s civil asset forfeiture authority (a companion bill has already passed the House).
  • The Middle-Income Housing Tax Credit (MIHTC) Bill of 2016, which would provide tax credits to encourage development of affordable housing
  • The Retirement Enhancement and Savings Bill of 2016, which expands tax incentives for small employers to create retirement savings plans and repeals the maximum age for contributions to traditional IRAs.
  • The Louisiana Flood and Storm Victims Devastation Act, which provides emergency tax relief for persons affected by severe storms and flooding in Louisiana.
  • The Farm Risk Abatement and Mitigation Election (FRAME) Act, which authorizes agricultural producers to establish and contribute to tax-exempt farm risk management accounts.

Any or all of these bills, and others, could be part of a year-end tax package. Our office will keep you posted of developments.

 

GrinnanMikeCPA

 

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

 

Real Estate Investor Tax Update from my CPA, J. Michael Grinnnan

Federal PATH ACT Provides Planning Opportunities with Permanent Extensions of Many Tax Incentives
 
After years of routine temporary extensions, Congress has made permanent a number of previously temporary tax breaks for individuals and businesses as well as extending others. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), signed into law by President Obama in December, opens the door to new planning opportunities.

 

Permanent Extensions for Individuals

Incentives for individuals extended permanently, and in some cases modified, by the PATH Act include:

  • American Opportunity Tax Credit
  • Deduction for certain expenses of elementary and secondary school teachers
  • Parity for exclusion from income for employer-provided mass transit and parking benefits
  • Deduction for state and local sales taxes
  • Reduced earnings threshold for additional child tax credit
  • Modification of the earned income tax credit
  • Tax-free distributions from individual retirement plans for charitable purposes for individuals age 70 ½ and older
  • Special rule for qualified conservation contributions

For some of the incentives, the modifications are significant. For example, the deduction for qualified expenses of elementary and secondary school teachers has been modified to include professional development expenses. Please contact our office for more details.

 

Permanent Extensions for Businesses

The PATH Act makes permanent, and in some cases modifies, many popular tax incentives for businesses, including:

  • Research tax credit
  • Enhanced expensing under Code Sec. 179
  • Charitable deduction for contributions of food inventory
  • Tax treatment of certain payments to controlling exempt organizations
  • Extension of basis adjustment to stock of S corporations making charitable contributions of property
  • Employer wage credit for employees who are active duty members of the uniformed services
  • Extension of 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Treatment of certain dividends of regulated investment companies
  • Exclusion of 100 percent of gain on certain small business stock
  • Reduction in S corporation recognition period for built-in gains tax
  • Subpart F exception for active financing income
  • Temporary minimum low-income housing tax credit rate for non-federally subsidized buildings
  • Military housing allowance exclusion for determining whether a tenant in certain counties is low-income
  • Extension of RIC qualified investment entity treatment under FIRPTA

As with the individual incentives, some of the modifications to the business incentives are significant. The research tax credit is not only made permanent, it is enhanced for small businesses. Expensing under Code Sec. 179 is made permanent at generous dollar and investment limitations. Previous limitations for the employer credit for activated reservists are relaxed. For more details, please contact our office.

 

More Incentives Extended

The PATH Act did not leave out the rest of the traditional extenders. However, lawmakers did not make these remaining tax breaks permanent. Extended for several years (in some cases through 2019, in other cases through 2016) are:

  • bonus depreciation,
  • the Work Opportunity Tax Credit (WOTC),
  • the higher education tuition and fees deduction,
  • energy incentives, the Indian employment credit,
  • special expensing rules for television and film productions,
  • and more.

Because the extensions are not uniform, as mentioned, some tax breaks are extended through 2019 and others are extended through 2016, careful planning is vital.

GrinnanMikeCPA

 

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
Office 502-657-6333

Email Mike@JMGCPA.com

Website www.JMGCPA.com

TAX PLANNING – First look at year-end tax planning J. Michael Grinnan CPA

from J. Michael Grinnan CPA

Your First Look at Year-End Tax Planning

The approach of year-end 2015 makes it tax planning season. Tax law developments in 2015 can affect, for example, the deduction of costs and expenses, the treatment of contributions to tax-favored accounts, and the inclusion of certain benefits in income. Traditional year-end planning techniques for investments and retirement are also important. Small businesses also have some tools for year-end tax planning. Although it may seem early to contemplate year-end planning, the remaining weeks of 2015 will pass quickly and taxpayers need to be proactive.

Investments

Taking inventory of gains and losses at this time to map out a year-end buy, sell or hold strategy later makes particular sense. Investors should note that immediate losses in the stock markets do not necessarily translate into tax losses. The fact that assets purchased several years ago may still yield taxable gains because of low basis, and the existence of the wash sale rule if a stock is purchased within 30 days before or after a sale, should be considered in assessing current tax positions.

Taxpayers should also remember the higher tax rate environment that is now in its third year. Not only has the top rate jumped to 39.6 percent for ordinary income (and short-term capital gains) but the rate for long-term capital gains and qualified dividends has increased from 15 to 20 percent. Furthermore, a 3.8 percent net investment tax applies to taxpayers with income above a non-inflation-adjusted threshold ($250,000 for married taxpayers filing jointly; $125,000 for married taxpayers filing separately; and $200,000 for all other taxpayers).

Saving for retirement

Although most IRA contributions for a particular year may be made until the filing date for that year, other deadlines are at year end, such as contributions to 401(k) plans and Roth conversions and re-conversions. Required minimum distributions for retirees and those over age 70 ½ also generally carry a year-end distribution date beyond which a penalty applies. One exception allows an individual turning age 70 ½ to delay starting distributions until April 1 of the year following the year in which the individual turns 70 ½.

Small businesses

Many small businesses have relied on the generous Section 179 deduction, which is now up for renewal as part of the extenders legislation, to gain an immediate write-off for equipment, rather than follow depreciation schedules. One alternative now available to many businesses is the de minimis safe harbor threshold amount under the final so-called “repair regs.” Currently, a de minimis safe harbor under the repair regulations allows taxpayers to deduct certain items cost $5,000 or less (per item or invoice) and that are deductible in accordance with the company’s accounting policy reflected on their applicable financial statement (AFS). IRS regulations also provide a $500 de minimis safe harbor threshold for taxpayers without an applicable financial statement.

New tax laws

So far this year, Congress has passed and President Obama has signed several tax bills. Two new laws impact tax planning for public safety officers. The Don’t Tax Our Fallen Public Safety Heroes Act clarifies that both federal and state benefits for public safety officers fallen or injured in the line of duty are treated the same in the tax code and are not taxable. The Defending Public Safety Employees’ Retirement Act affects retirement planning. Generally, taxpayers who receive an early distribution from a qualified retirement plan are subject to a 10 percent penalty, unless an exemption exists. The Defending Public Safety Employees’ Retirement Act expands the exemption to include certain federal law enforcement officers, federal firefighters, customs and border protection officers, and air traffic controllers.

Late last year, Congress passed the legislation creating A Better Life Experience (ABLE) accounts. States are now enacting enabling legislations, which along with federal law, will allow ABLE accounts to be set up for qualified individuals with disabilities (who became disabled before age 26) for tax years beginning after December 31, 2014. Contributions in a total amount up to the annual gift tax exclusion amount, currently $14,000, can be made to an ABLE account on an annual basis, and distributions are tax-free if used to pay qualified disability expense

One bill that has not yet passed is legislation to extend the so-called tax extenders. The Tax Increase Prevention Act of 2014 (TIPA) only extended these popular but temporary tax breaks for 2014. The expired extenders include the state and local sales tax deduction, higher education tuition deduction, transit benefits parity, research tax credit, the work opportunity tax credit, and many others. The extenders are likely to be renewed for 2015 but Congress may wait till December to pass a bill. Our office will keep you posted of developments.

If you have any questions about year-end tax planning, please contact our office. We can develop a personalized year-end tax planning strategy.

Can an S Corporation Own An Interest in Another Business Entity?

Can an S corporation own an interest in another business entity?


An S corporation may own an interest in another business entity.

An S corporation can be a member of an affiliated group by owning 80 percent or more of the stock of a C corporation. The group then can elect to file on a consolidated basis, if other affiliated group rules are met. But the S corporation itself cannot join the consolidated group.

Although in general only individuals can be shareholders in an S corporation, an S corporation can own an S corporation if the subsidiary corporation would otherwise qualify as an S corporation if the parent’s shareholders held the subsidiary’s shares directly, and the taxpayer elects qualified S corporation status for the subsidiary.

Generally, for federal tax purposes a corporation that is a qualified S corporation subsidiary is not treated as a separate corporation, and all assets, liabilities, and items of income, deduction, and credit of a qualified S corporation subsidiary are treated as assets, liabilities, and items of income, deduction, and credit of the S corporation.

An S corporation can also be a partner in a partnership or a member of an LLC.

 

J. Michael Grinnan, CPA.CITP
Certified Public Accountant
9900 Corporate Campus Drive
Suite 3000
Louisville, KY 40223
Main Number 1-502-657-6333
Email Mike@JMGCPA.com.

 

How Do I Apply For An Employer Identification Number? (EIN)

How Do I Apply For An Employer Identification Number? (EIN)

Employers and other organizations must obtain an employer identification number (EIN) to identify themselves for tax administration purposes, such as starting a new business, withholding taxes on wages, or creating a trust. Entities apply for an EIN by filing IRS Form SS-4. Page two of the form advises whether an applicant needs an EIN.

Other entities that need an EIN include corporations, partnerships, estates, trusts, state or local governments, and churches and other nonprofit organizations. Unincorporated entities (sole proprietorships) that establish a retirement plan or that file certain tax forms will also need an EIN for filing the relevant forms.

Application process

The IRS does not charge for obtaining an EIN and has sought to simplify the application process. Taxpayers may apply by mail, by fax, or online. International applicants may also apply by phone. In all cases, if the IRS determines that the applicant needs an EIN, the IRS will issue the EIN and transmit it to the taxpayer in the same manner as the application was made.

Applications by mail generally take four weeks, the IRS indicates, once the SS-4 is properly and completely filled out. Entities located in the U.S. or a U.S. territory can apply online. For online applications, the IRS validates the information and issues the EIN immediately. The IRS notes that the principal officer or other relevant party must have a valid taxpayer identification number, such as a Social Security Number, to use the online application process. The IRS will respond to a completed fax application within four business days, if the applicant provides a fax number.

Filing without EIN

The IRS states that it will only issue one EIN per day per responsible party, regardless of the means of applying. If the taxpayer needs to file a return but lacks an EIN because of this limitation, the IRS advises that the taxpayer should attach a completed Form SS-4 to the completed and signed tax return. The IRS will assign an EIN and then process the return.

 

from my CPA,
J. Michael Grinnan CPA
9900 Corporate Campus Drive
Suite 3000
Louisville, KY 40223
Main Number 1-502-657-6333
Email Mike@JMGCPA.com 

 

 

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