Recently, there have been several significant partnership and multi-member limited liability company (taxed as partnerships) tax developments. Here are quick summaries of what’s brewing on the partnership tax front. Accelerated Due Dates The Transportation and Veterans Health Care Choice Improvement Act of 2015 changed the due dates for filing partnership federal income tax returns (Form 1065). Partnerships must file Form 1065 one month earlier than before for tax years beginning after December 31, 2015. The new due date is March 15 for calendar-year-partnerships and two and one-half months after the close of the partnership’s tax year for fiscal entities. As before, six-month
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Posts by Richard Huffman
ACH and Wire Transfer Fraud at Epic Levels
Recently there has been a significant increase in companies making unauthorized transfers. The attackers are very, very good at tricking people – often using multiple communications in order to build trust. You absolutely must take the following steps to help protect you and your organization. Anything involving an ACH or a wire transfer request should immediately raise a huge red flag for every single user in all organizations. We recommend you review your policies and consider the following. Please also forward this information at your discretion to your customers, prospects, and everyone with whom you do business: If you receive any kind of
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Tax Paperwork and Other Records: What to Keep, What to Toss
E-filing is on the upswing. According to the Data Book released by the IRS on March 24, the agency collected almost $3.1 trillion in federal revenue and processed almost 240 million returns during fiscal year 2014. About 65 percent of all returns were filed electronically. Of the 147 million individual income tax returns filed, 84 percent were e-filed. You might think those numbers suggest we are close to becoming a paperless society, at least when it comes to the IRS. That would be a wrong assumption. Even if you recently filed your 2014 tax return electronically, you probably printed out a
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Big Tax Savings for Exporters – Do You Qualify?
In a competitive global economy many countries around the world try to strengthen their own economies by creating domestic job growth. One way to accomplish that is by providing tax breaks to certain industries who export their products or services. Here’s a brief list of the types of businesses that may qualify here in the US: Companies that export finished goods manufactured in the US. Companies that manufacture products that are components in other products and are ultimately exported. Software companies that develop their software in the US and sell them overseas. Architectural or engineering firms providing services in the
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Meals Expenses Tax Deductibility (50% vs. 100%)
To read an updated 2023 version of Meals Expenses Tax Deductibility, click here. 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
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U.S. Filing Requirement on Foreign Bank and Financial Accounts
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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Year-End Tax Planning Cash vs Accrual Method
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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Deducting Self Rental Losses
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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Converting LLCs to S-Corporations
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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Employee Stock Ownership Plans
Dear Clients and Friends: Employee stock ownership plans (ESOPs) are gaining popularity as a vehicle to motivate employees while providing tax benefits to the company and an exit strategy for its shareholders. An ESOP is a qualified defined contribution plan that invests primarily in employer securities. An ESOP gives employees the opportunity to share in productivity through appreciation of the employer stock held in their accounts, and so encourage job performance. An ESOP offers differing benefits to both S corporation and C corporation companies and their shareholders. S corporation benefits: An S corporation can transfer corporate stock to an ESOP
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