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gifting

Why Gifting During an Economic Downturn May Be Right for You

Janelle Tokunaga, CPA, MST

Wright Ford Young & Co., CPAs

 

While it may seem like there has been a shortage of good news lately, we wanted to bring your attention to a few bright spots that have come about during our current economic downturn.  With the extra time you have at  sheltering in place, it may be a good time to revisit your current estate and gift plan.

To recap: the 2020 Federal lifetime exemption is $11.58 million per person, including inflation, and the 2020 annual Federal gift exclusion is $15,000 per donee and donor.  The current economic market is showing decreased values in the public securities arena and lower overall real estate values in light of the COVID-19 environment.

The current lifetime exemption gives you the opportunity to make larger gifts of assets. But when combined with lower current asset values you can gift now with less exemption utilization, it leaves more exemption available for future gifts.  So, now, may be a good time to think about gifting those depressed value assets that are expected to increase considerably in the future. Then, when the markets eventually recovers and your gifted asset values increase, they will already be outside of your taxable estate.

If you aren’t ready to gift assets directly, setting up and transferring ownership of real estate and marketable securities into closely held entities (such as FLPs and LLCs) may be a good option as well.

We encourage you to use this unique time to reflect on your current estate plan. Considering whether gifting is something for you may benefit you and your loved ones now and in the future.  WFY advisors are available to discuss the tax benefits of gifting during our economic downturn and look forward to hearing from you. If you’d like to contact us, click here.

© Copyright 2020. All rights reserved.

six new hires

Six New Hires Join WFY Team

Wright Ford Young & Co. is proud to announce we are adding six new hires to our team. We have Cheryl Shelton joining our estates & trusts department, and Brody Alcanter, Marzeh Khanjari, Rajbir Singh, Linh Trinh and Diane Waxler-Milne joining our tax department. WFY is pleased to welcome these new hires to our team.

Cheryl Shelton

In January, Cheryl Shelton started with WFY as an Estates & Trusts Supervisor in our estates & trusts department. She graduated from Cal State Fullerton and continued her education at Western State Law School. Cheryl has worked in accounting for over 15 years. In her spare time, she volunteers with a local dog resue doing adoption events and fostering dogs.

Brody Alcanter

Brody Alcanter joined WFY in January as a Tax Senior. He graduated from Northwood University with a Bachelor’s degree for Business Administration, Accounting, and moved to Orange County shortly after graduating. In his spare time, he enjoys playing golf.

Marzeh Khanjari

In January, Marzeh Khanjari started with WFY as a Tax Senior.  She received her degree in Business Administration with emphasis in Accounting, and has been working as a tax professional for almost 15 years. While she’s away from the office, she likes to travel, watch movies, and play ping pong.

Rajbir Singh

Rajbir Singh joined WFY as a Tax Staff in January.  He graduated from University of California, Riverside, with a degree in Business Administration and Psychology. Rajbir’s hobbies are working out and traveling with his family.

Linh Trinh

Joining us again at WFY as a tax intern is Linh Trin.  She is graduating from Cal State Fullerton this Spring and will become a full-time Tax Staff at WFY after she graduates.  During her free time, she likes to play the piano.

Diane Waxler-Milne

Diane Waxler-Milne joins WFY for this upcoming tax season as a tax intern.  She is currently attending Cal State Fullerton as a senior and will graduate with a Bachelor’s degree in Accounting and Finance. When she’s out of the office and away from school, Diane enjoys time with her husband and three daughters.

 

Interested in joining WFY in one of our departments? f you are interested and qualified for the position above, please email your resumes careers@cpa-wfy.com or go to our Careers page.

 

savings

Year-End Tax Saving Moves for Individuals

Since 2019 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.
  2. Apply a bunching strategy to deductible contributions and/or payments of medical expenses. The increased standard deduction and limited itemized deduction of state and local taxes to $10,000 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 2019 and usually contributes a total of $10,000 to charities each year, should consider prefunding 2020 and 2021 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 2019 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 2019 can delay the first required distribution to 2020, however, this can result in taking a double distribution in 2020 (the required amount for 2019 and 2020).
  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 2019 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.
  6. Reinvest capital gains in Opportunity Zones.  Capital gains reinvested within 180 days into an qualified opportunity fund allows for federal tax deferral and partial tax exemption and tax free appreciation if held for the required ten year period.

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 2019. All rights reserved.

ante up for autism

WFY Sponsors TACA’s 13th Annual Ante Up for Autism Benefit Gala

WFY was proud to be a Full House Sponsor of TACA’s 13th Annual “Ante Up for Autism” benefit gala.

The Autism Community in Action’s (TACA) Orange County chapter held its 13th annual “Ante Up for Autism” fundraising gala on Saturday October 26, 2019 at the Waterfront Beach Resort in Huntington Beach. Wright Ford Young & Co. was proud to continue its long standing support of TACA through a program sponsorship of the very successful event. TACA is a national nonprofit 501(c)(3) organization founded in 2000 by Glen and Lisa Ackerman with the mission to provide education, support and hope to families living with autism. TACA is headquartered in Irvine, CA with staff and volunteers working across the country.

To learn more about TACA, visit www.tacanow.org

business owner summit

WFY Partner Kahni Bizub as Panelist at 2019 Business Owner Summit

On November 8th, WFY Senior Tax Partner, Kahni Bizub, will be one of the panelists for WealthWise Financial Services’s 2019 Business Owner Summit.

The 2019 Business Owner Summit is a day-long event which includes discussing topics such as scaling your business, income tax strategies, retirement plans strategies, and more. The keynote speakers are Jacob M. Gerber, an equity & multi-asset investment director, and E. Luke Farrell, a fixed income investment director.

Kahni Bizub’s specialty is tax planning and compliance services for closely-held and family-owned businesses and their key executives in the service, manufacturing, and distribution industries. She has served some of the same clients for her entire career and believes in building strong CPA-client relationships. Such a rapport allows her to best understand her clients’ needs and tailor services specific to each client. Kahni is also involved in multiple business organizations including Vistage, AICPA, and CalCPA.

If you’d like to learn more about the 2019 Business Owner Summit, click here.

law

CA Governor Signed Law to Conform to Federal Tax Law Changes

The California governor signed law AB 91, also known as the “Loophole Closure and Small Business and Working Families Tax Relief Act of 2019” which partially conforms to certain provisions of the Federal Tax Cuts and Jobs Act, some of the significant items are as follows:

  • Small business accounting method reform and simplification
    • Allow businesses with average gross receipts less than $25 million to adopt the cash method of accounting
  • Net operating losses
    • Only allow net operating loss carryforwards

The new California law does not conform to:

  • Opportunity zone gain deferrals and capital gain exclusions
  • Fringe benefit federal deduction limitations
    • Convenience of employer meals
    • Entertainment
    • Parking and transportation

Although the law goes into effect for many of the provisions starting in 2019, certain provisions can be elected to apply to 2018.

To discuss how best to apply these changes to your situation, please contact a WFY tax expert at (949) 910-2727 or info@cpa-wfy.com.

© Copyright 2019. All rights reserved.

wfy grows

WFY Grows Tax Department Before 2018 Tax Season

WFY grows their firm with eight new hires: Michael Montgomery, Jennifer Nguyen, Karla Young, Alice Wang, Jeff Hwang, Linh Trinh, 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.

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.

We are always looking to grow our firm. If you would like to see our open positions in audit, tax, and estates and trusts, please head to our Careers page.

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.