Yearly Archives 2012

Dear Clients and Friends: Meals can only be deducted as a business expense if they are directly related or associated with the active conduct of a trade or business. There must be valid business purpose to the meal for it to be a deductible expense. Once this test is established, the expense falls into two categories:  50% deductible or 100% deductible. Meals with employees or business partners are only deductible if there is a direct or indirect business purpose. Meal expense that are 100% deductible: Recreational expenses primarily for employees who are not highly compensated, such as the business holiday
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Dear Clients and Friends: Each U.S. person (individuals and business entities) who has a financial interest in or signature or other authority over foreign bank accounts, securities accounts or other financial accounts must file a Form TDF 90-22.1 (Report of Foreign Bank and Financial Accounts or FBAR) if the aggregate value of the accounts exceeds $10,000 at any time during the calendar year.  A foreign financial account is a financial account located outside the U.S.  An account maintained with a branch of a U.S. bank that is physically located outside of the U.S. is a foreign financial account. A financial
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Dear Clients and Friends: Does it make sense to pay taxes on money you haven’t collected?  Probably not!  Under current tax laws businesses generally have two methods by which they must report income and expenses, cash and accrual. There are certain drawbacks to filing under the accrual method of accounting such as: You might find it is more difficult to manage the timing of taxable income and deductions. You must report income in the tax year your right to income has occurred and the amount can be determined. You must also report deductions when the liability and amount has been established. Example
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Dear Clients and Friends: If you own a building that is rented to your business (self rental) you should consider grouping the two activities together to potentially deduct the self rental losses. If you own 100% of a business as a proprietorship, S corporation, or single-member LLC and you own 100% of the building that is rented to your business as an individual, S corporation, or single-member LLC the “self rental” income is active and losses are considered passive.  This means that the rental income cannot offset losses from other passive activities (other rental activities) and the rental losses cannot
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Dear Clients and Friends: The California Limited Liability Company (LLC) fee based on gross California receipts could be costing your company thousands of extra dollars each year.  A California LLC paid the following fees based on California gross receipts (this fee is in addition to the $800 yearly minimum tax):   Gross Receipts: Equal to or over – But not over – The fee is: $   250,000 $   499,999 $     900 500,000 999,999 2,500 1,000,000 4,999,999 6,000 5,000,000 And over 11,790   In many cases choosing an LLC as a form of doing business is a great choice, LLC’s grant
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