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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.

The Senate and House Passes CARES Act of 2020

Richard A. Huffman, CPA, MST

Wright Ford Young & Co, CPAs

On March 27th, 2020, the House passed an amended version of the Senate’s Coronavirus Aid, Relief, and Economic Security (CARES) Act sending to the President to sign into law.

The Act provides a wide sweeping infusion of cash into the economy helping individuals and businesses during these extraordinary times.  Below is a summarized version of the Act explaining all the key details for individuals and businesses including the various loan programs.

Direct financial help to individuals:

  • Rebates of up to $1,200 for individuals and $2,400 for married couples.  People with children can receive $500 per child.  Amounts start to phase out for individuals with more than $75,000 adjusted gross income (AGI) and $150,000 for joint filers based on the taxpayer’s 2019 tax returns or 2018 if 2019 not yet filed.  The amount is completely phased-out for single taxpayers with AGI exceeding $99,000 and $198,000 for joint filers.
  • Waive the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for Coronavirus-related purposes.  In addition, income attributable to such distributions would be subject to tax over three years, and the taxpayer may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.  Further, the provision provides flexibility for loans from certain retirement plans for Coronavirus-related relief.
  • Waive the required minimum distribution rules for certain defined contribution plans and individual retirement accounts in calendar year 2020.
  • Encourages Americans to contribute to churches and charitable organizations in 2020 by permitting them to deduct up to $300 of cash contributions, whether they itemize their deductions or not.
  • Increases the limitations on deductions for charitable contributions by individuals who itemize, as well as corporations.  For individuals, the 50-percent of adjusted gross income limitation is suspended for 2020.  For corporations, the 10-percent limitation is increased to 25 percent of taxable income.
  • Permit employers in 2020 to provide a student loan repayment benefit to employees on a tax-free basis.  An employer may contribute up to $5,250 annually toward an employee’s student loans and the payment would be excluded from the employee’s income.  The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (for example, tuition, fees, books) provided by the employer under current law.
  • Separately with the IRS announced postponement of April 15, 2020 tax payments now being owed July 15, 2020 individual 2019 IRA contribution deadlines are now extended until July 15, 2020 as well.

Business provisions:

  • Refundable employee retention credit to encourage employers to maintain headcounts computed on a calendar-quarter basis against the 6.2% employer-side social security payroll tax applicable to employers carrying on a trade or business in 2020 which either fully or partially suspend operations due to a government order or which sustain a significant decline in gross receipts (defined as the first calendar quarter after December 31, 2019, for which gross receipts are less than 50% of the amount in the corresponding prior-year quarter and ending with the next quarter in which gross receipts exceed 80% of the corresponding prior year quarter).  The refundable credit is only applicable for wages paid after March 12, 2020, and before January 1, 2021 up to $10,000 in qualifying wages per employee.  The credit is available to certain tax-exempt organizations as well.  If an employer takes out a payroll protection loan under Section 7(a) of the Small Business Act (detailed below) no employee retention credit will be available.
  • Allows employers and self-employed individuals to defer payment of the employer share of the 6.2% Social Security tax on employee wages to be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
  • Allows net operating losses incurred in 2018, 2019 or 2020 to be carried back five years without limitation.
  • Excess business loss rules that originally suspended non-corporate taxpayer losses to $250,000 ($500,000 in the case of joint filers) has been suspended through December 31, 2020.
  • Temporarily increases the amount of interest expense businesses are allowed to deduct on their returns, by increasing the 30-percent limitation to 50-percent of taxable income for 2019 and 2020 and allow businesses to use their adjusted taxable income from 2019 in tax year 2020 for the taxable income limitation.
  • Qualified improvement property (facility improvements) tax life will be corrected to 15-year and be eligible for 100% bonus depreciation retroactively starting 9/28/17 allowing for amended returns.

Relief for small businesses:

  • Extends the qualifications for borrowers and the size of loans that are available through the U.S. Small Business Administration (SBA):
    • During the covered period from February 15, 2020 through June 30, 2020 payroll protection loans fully guaranteed by the federal government through December 31, 2020 [SBA 7(a) loans] are available to any business, private nonprofit, or public nonprofit organization with under 500 employees.  Borrowers can receive loans equal to 2.5 times their U.S. monthly payroll (excluding annual compensation greater than $100,000 per employee), mortgage, rent, and debt payment expense, up to $10 million.  Borrowers can use these loans for a broad range of business expenses including payroll, paid sick leave, mortgage, rent, utilities, and payments on existing debts.  No collateral or personal guarantee is required for a loan and the standard fee is waived.  The loans will have a maximum maturity of 10 years and an interest rate not to exceed four percent.  An additional provision in the CARES Act provides for possible deferment of repayment of the loans for a period of at least six months, but not to exceed a year.
    • The requirements to obtain a loan are as follows:
      • The loan is needed to continue operations during the COVID-19 emergency.
      • Funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.
    • There is a special eligibility rule for businesses in the hospitality and dining industries that have more than one physical location, employ 500 or fewer employees per location and are assigned to the accommodation and food services sector 72 under the North American Industry Classification System.
    • Business that were operating on February 15, 2020 and that have a pending or approved loan application under this program are presumed to qualify for complete payment deferment relief (for principal, interest, and fees) for six months to one year.  Lenders are required to provide such relief during the covered period (if secondary market investors decline to approve a lender’s deferral request, the Administration must purchase the loan).
    • Indebtedness is forgiven (and excluded from gross income) in an amount (not to exceed the principal amount of the loan) equal to the following costs incurred and payments made during the eight week period beginning on the date of the loan:
      • U.S. Payroll costs (excluding annual compensation greater than $100,000 per employee)
      • Interest payments on mortgages
      • Rent
      • Utility payments
    • Forgiveness amounts will be reduced for any employee cuts or reductions in wages below the average number of full-time equivalent employees as of February 15, 2019 to June 30, 2019 or January 1, 2020 until February 29, 2020 (at election of borrower) calculated on a monthly basis.
    • There is relief from these forgiveness reduction penalties for employers who rehire employees or make up for wage reductions by June 30, 2020 and will not apply to an employer between February 15, 2020 and 30 days following enactment of the CARES Act.
  • Expands the SBA’s Disaster Loan Program through 2020 for businesses with 500 or fewer employees as follows:
    • Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
    • Waives the requirement that an applicant be unable to find credit elsewhere
    • Allows lenders to approve applicants based solely on credit scores
    • Applicants can request an emergency advance from the Administrator of up to $10,000, which does not have to be repaid, even if the loan application is later denied.
    • Advances may be used for purposes already authorized under the SBA Disaster Loan Program including:
      • Providing sick leave to employees unable to work due to direct effect of COVID-19
      • Maintaining payroll during business disruptions during slow-downs
      • Meeting increased supply chain costs
      • Making rent or mortgage payments
      • Repaying debts that cannot be paid due to lost revenue
  • The CARES Act also provides benefits to those with loans under Section 7(a) of the Small Business Act OTHER THAN the new paycheck protection loans, in the form of a government subsidy whereby the SBA will pay six months of principal, interest and fees on qualifying loans.

If you have any questions about how you or your business can obtain the many benefits of the CARES Act, contact your WFY tax specialist or email us at info@cpa-wfy.com.

© 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.

lawyers for warriors

WFY Title Sponsors Veterans Legal Institute’s Lawyers for Warriors Event

Wright Ford Young & Co. had the privilege of serving as the title sponsor to the Veterans Legal Institute’s annual Lawyers for Warriors event on Monday, September 23rd.  Senior audit partner Jeff Myers spoke on Wright Ford Young’s behalf to honor our ongoing partnership with the Veterans Legal Institute.

Lawyers for Warriors is an event that started four years ago where over 250 business leaders who represent legal, medical, financial, military, and other professional industries can network, enjoy wine and appetizers, and recognize those legal community leaders who have graciously offered their services to our veteran heroes.  All the proceeds of this event go to Veterans Legal Institute to continue their mission to ensure veterans can receive free legal services.

We want to congratulate the following people for their awards at this event: Stephens Friedland, LLP for Law Firm of the Year, Volunteers of America Los Angeles for Community Partner of the Year, Judge Lon F. Hurwitz for Veteran Advocate of the Year, and David Price, Esq. for Attorney of the Year.

If you’d like to learn more about Veterans Legal Institute or the Lawyers for Warriors event, please go to https://www.cpa-wfy.com/www.vetslegal.com/

 

meet the firms

WFY Attends Meet the Firms at CSUF and NAU

On Thursday, September 26th, a group of our Wright Ford Young & Co. employees attended California State University, Fullerton’s Meet the Firms event as well as Northern Arizona University’s Career & Graduate School Expo.

These type of meet and greet events are a way for students and professionals in the accounting community to network with a wide range of firms from boutique to the Big Four.  We attend these events to educate students about WFY and what we do, and encourage them to get a hands-on learning experience with our firm.

Wright Ford Young & Co. thanks California State University, Fullerton and Northern Arizona University for another great Meet the Firms recruiting event on Thursday, September 26th.  We are very fortunate to have a long standing relationship with the accounting schools and hardworking students in which many of our employees are alumni.

 

angels game

WFY Attends Anaheim Angels Game

On Saturday, August 17th, Wright Ford Young & Co. attended the Anaheim Angels vs. Chicago White Sox game at the Angel Stadium in Anaheim.

Our audit, tax, and all other departments came together to celebrate one of our core values: we have fun!  About 150 friends, family, and employees of WFY attended the exciting game during a perfect day for baseball. Everyone enjoyed the game with popcorn, hot dogs, nachos, and other delicious baseball game treats.

The game started off slow with a tied game by the end of the 2nd inning, but the White Sox took a 4-1 lead by the end of the 3rd inning. The 7th inning came and the Angels scored three runs to get them to a 6-5 lead.  At the top of the 9th inning, the White Sox couldn’t lock down any more runs which ended with an Anaheim Angels victory.

A special thanks to our Partners Kahni Bizub and Jeff Myers for putting this special event together for WFY.

If you’d like to check out upcoming Anaheim Angels games, you can check them out here.