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WFY Grows Tax Department Before 2018 Tax Season

Wright Ford Young increases their firm with eight new hires: Michael Montgomery, Jennifer Nguyen, Karla Young, Alice Wang, Jeff Hwang, Linh Trinh, Hoornaz Mostofizadeh, and Farheen Kolsy.  All these new hires are joining WFY’s tax department as tax staff or tax interns.  WFY is pleased to welcome these new hires to the WFY team.

Michael Montgomery

Joining the WFY tax staff is Michael Montgomery. Michael graduated from CSU Fullerton in 2015 and has a Bachelor’s degree in Business Administration, with a concentration on Accounting.  With his experience in accounting, he has mainly worked in offices that specialize in small businesses and individuals.  During the off season, Michael and his wife, Katie, enjoy traveling and attending Anaheim Ducks and Anaheim Angels games.

Jennifer Nguyen

Jennifer Nguyen graduated from CSU Fullerton last fall after interning with WFY last year. We welcomed Jennifer back to WFY as an addition to our tax staff. Jennifer plans to start studying for her CPA exams this year, and continues to foster kittens from WAGS Animal Shelter and Animal Services in Westminster.

Karla Young

Our third tax staff addition to WFY is Karla Young. She graduated from University of the Philippines with a degree in Development Studies. Karla is well versed in IT and Marketing, but switched to developing her career in accounting once she moved to Orange County. Other than developing her skills in accounting, she also likes to send out typewritten letters to friends and family.

Alice Wang

Alice Wang joins the WFY team as one of our newest tax staff.  She received her Master’s degree in Accounting from CSU Fullerton, and has worked in accounting for four years.  Outside of the office, Alice loves to read and travel.

Jeff Hwang

For the 2018 tax season, Jeff Hwang joins the WFY team as a tax intern. Jeff is currently attending CSU Fullerton and working on his Master’s degree in Taxation.  Other than practicing taxation, Jeff enjoys watching sports games and attending comedy shows.

Linh Trinh

Linh Trinh is starting with WFY as a tax intern in our tax department.  She’s currently attending CSU Fullerton and plans to graduate in the Spring of 2020 with her Bachelor’s degree in Accounting.  Other than working towards her degree, Linh is also an active member of Accounting Society at CSU Fullerton.

Hoornaz Mostofizadeh

Hoornaz Mostofizadeh is another addition to the WFY tax department as a tax intern.  She graduated from CSU Fullerton in Fall of 2018 and majored in Business Administration with a concentration on Accounting.  Hoornaz’s main hobbies include practicing King Fu and drawing portraits.

Farheen Kolsy

Our fourth tax intern to join our WFY tax department is Farheen Kolsy. She’s a senior on the road to graduating from CSU Fullerton in May of 2019 with a degree in Business Administration concentrating in Accounting. On her down time, Farheen likes to hang out with friends and hike.

New IRS Partnership Audit Rules Prompt New Look at Operating Agreement

The IRS introduced a new set of partnership auditing rules which take effect in the financial year 2018 and are meant to make it easier for the agency to uncover and collect underpaid taxes from partnership entities.  The previous audit system was challenging for the IRS because it was difficult to pin down who owed the tax under a complex partnership structure.

Small partnerships with less than 100 members can opt out if no partner is a pass-through entity.

The IRS will begin reviewing tax filings in line with the new procedure in 2019, so audits could start as soon as 2020.

When a partnership underpays its taxes, the leftover bill has to be dealt with by a designated individual. If a partnership fails to make that designation, the IRS will select one on its behalf. Designating a representative to deal with the IRS if and when an audit arises could benefit partnerships from having the IRS select one for them.  The IRS promised that it won’t designate its own employees, agents, or contractors.

A partnership without a designated representative may end up relying on outside legal counsel to contact what could be hundreds of partners to determine the needed tax adjustments. Re-evaluating a partnership agreement that has been working all this time is hard to sort out, but it comes down to the potential cost in legal fees in sorting the issue that could possibly come up down the road.

To discuss your situation under the new audit regime, please contact Wright Ford Young & Co. at (949) 910-2727 or info@cpa-wfy.com

© Copyright 2019. All rights reserved.

Making Large Gifts Now Won’t Harm Estates After 2025

On November 20th, the IRS announced individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to levels before 2018.

The Treasury Department and the IRS issued proposed regulations which implement changes made by the 2017 Tax Cuts and Jobs Act (TCJA).  As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

In general, gift and estate taxes are calculated, using a unified rate schedule, on taxable transfers of money, property and other assets. Any tax due is determined after applying a credit – formerly known as the unified credit – based on an applicable exclusion amount.

The applicable exclusion amount is the sum of the basic exclusion amount (BEA) established in the statute, and other elements (if applicable) described in the proposed regulations. The credit is first used during life to offset gift tax and any remaining credit is available to reduce or eliminate estate tax.

The TCJA temporarily increased the BEA from $5 million to $10 million for tax years 2018 through 2025, with both dollar amounts adjusted for inflation. For 2018, the inflation-adjusted BEA is $11.18 million. In 2026, the BEA will revert to the 2017 level of $5 million as adjusted for inflation.

To address concerns that an estate tax could apply to gifts exempt from gift tax by the increased BEA, the proposed regulations provide a special rule that allows the estate to compute its estate tax credit using the higher of the BEA applicable to gifts made during life or the BEA applicable on the date of death.

To discuss more about your gift and estate tax situation, contact WFY’s Estates and Trusts Partners, Marisa Alvarado and Kevin Wiest, at info@cpa-wfy.com or (949) 910-2727.

© Copyright 2018. All rights reserved.

Tax Saving Moves to Improve Your Tax Situation

Since 2018 is coming to a close now is the time to take action to proactively reduce your tax liability before the new year.  Included are a few strategies that may help with your tax situation:

  1. Harvest stock losses while substantially preserving one’s investment position. This can be accomplished by selling the shares and buying other shares in the same company or another company in the same industry to replace them, or by selling the original shares, then buying back the same securities at least 31 days later.
  2. Apply a bunching strategy to deductible contributions and/or payments of medical expenses. Beginning in 2018 the standard deduction has been increased and the itemized deduction of state and local taxes limited to $10,000 which will cause many taxpayers to lose the benefit of their itemized deductions. By bunching multiple years of charitable contributions and medical expenses into one year a taxpayer may create a taxable benefit that would not otherwise exist.  For example, a taxpayer who expects to itemize deductions in 2018 and usually contributes a total of $10,000 to charities each year, should consider refunding 2019 and 2020 charitable contributions by contributing a total of $30,000 into a donor advised charitable fund and then distribute the funds to the charities over the following two years.
  3. Take required minimum distributions (RMDs). Taxpayers who have reached age 70-½ should be sure to take their 2018 RMD from their IRAs or 401(k) plans (or other employer-sponsored retired plans). Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. Those who turned age 70-½ in 2018 can delay the first required distribution to 2019, however, this can result in taking a double distribution in 2019 (the required amount for 2018 and 2019).
  4. Use IRAs to make charitable gifts. Taxpayers who have reached age 70-½, own IRAs, and are thinking of making a charitable gift should consider arranging for the gift to be made by way of a qualified charitable contribution, or QCD—a direct transfer from the IRA trustee to the charitable organization. Such a transfer (not to exceed $100,000) will neither be included in gross income nor allowed as a deduction on the taxpayer’s return. A qualified charitable contribution before year end is a particularly good idea for retired taxpayers who don’t need all of their as-yet undistributed RMD for living expenses.
  5. Make year-end gifts. A person can give any other person up to $15,000 for 2018 without incurring any gift tax. The annual exclusion amount increases to $30,000 per donee if the donor’s spouse consents to gift-splitting. Anyone who expects eventually to have estate tax liability and who can afford to make gifts to family members should do so.

These are broad suggestions that will benefit some but not all taxpayers.  To discuss and create a personalized tax strategy be sure to contact a WFY tax specialist at info@cpa-wfy.com or (949) 910-2727.

© Copyright 2018. All rights reserved.

California Competes Tax Credit

The California Competes Tax Credit is an income tax credit for businesses wanting to stay and grow in California. The purpose is to attract and retain employers in California industries with high economic multipliers and that provide their employees good wages and benefits. Any business can apply.

The credit applies to any type of business expecting to increase headcount and/or make a capital investment in California.  Businesses compete for these tax credits by asking for a percentage return on investment.

California plans to grant $230 Million in Cal Competes tax credits to California businesses over three separate application rounds in 2018.  Typically, a business can get up to 20% ROI.

If you think your company may qualify for this tax credit and would like to learn more about how to take advantage of this cost savings opportunity, please contact us today at srobinson@cpa-wfy.com or call 949-910-2727.

© Copyright 2018. All rights reserved. 

Earn Money from California’s Training Subsidy Program

It’s Free Money, and We Can Help You Get Your Share

Do you provide formal training for your employees? Exciting news: The government wants to chip in. Yes, really. In fact, for the past 35 years the State of California has provided over $1.5 billion in training subsidies to California businesses. Smaller companies can receive up to $50,000 per year and larger companies can receive up to $375,000 per year. Never heard of this program? You’re not alone.

The funding comes from a tax that every for-profit company in the state pays, the Employment Training Tax. This tax generates over $100 million a year that is then given back to companies that successfully apply for the funds.

This is not a tax credit. It’s “free money,” given in the form of a check. The money goes to help companies cover the cost of providing training for their employees so they can more efficiently and profitably do their jobs. Almost any type of training is covered, and there are very few restrictions on who can do the training. Typically most recipient companies simply have their own in-house personnel lead the training sessions.

Examples of eligible training include:

  • Business Skills, such as Leadership, Team Building, Communication, Sales, Marketing or Customer Relations
  • Computer Skills, such as Accounting Software, ERP, MRP, CRM, Scheduling, MS Office and other software needed to run a business
  • Manufacturing Skills, which includes almost anything necessary to produce the product or service

Virtually any for-profit company with a physical location in California can take advantage of this program. And once the state cuts the check they have no hold on how the money is used.

Of course, being that this is a government program there is a lot of paperwork involved, and the learning curve for getting this paperwork figured out is fairly steep. Luckily, we’ve already cracked the code. Because of our experience we can handle over 90% of the work required to receive the funds, thus freeing you to do what you do best—run your company.

To see how this program can benefit your company please contact Jeff Myers at JMYERS@CPA-WFY.com or call 949-910-0122

© Copyright 2018. All rights reserved.