Category: IRS

  Recordkeeping is often essential to business operations and automobile dealerships are no exception. Many auto dealerships use the Last-In, First-Out (LIFO) method of inventory accounting. Although the LIFO method can provide significant tax benefits, you must be careful to meet certain tax law requirements. One such requirement that is often overlooked is the need to maintain comprehensive records. There are different LIFO methods for new and used vehicle inventories. For new vehicle inventories, dealerships electing to use the alternative… Read more ›

The IRS recently issued its 2023 cost-of-living adjustments for more than 60 tax provisions. With inflation up significantly this year, many amounts increased considerably over 2022 amounts. As you implement 2022 year-end tax planning strategies, be sure to take these 2023 adjustments into account. Also, keep in mind that, under the Tax Cuts and Jobs Act (TCJA), annual inflation adjustments are calculated using the chained consumer price index (also known as C-CPI-U). This increases tax-bracket thresholds, the standard deduction, certain… Read more ›

When President Biden signed the Inflation Reduction Act (IRA) into law in August, most of the headlines covered the law’s climate change and health care provisions. But the law also enhances an often overlooked federal tax break for qualifying small businesses. The IRA more than doubles the amount a qualified business can potentially claim as a research and development (R&D) tax credit to offset its payroll tax for tax years starting after 2022 — to a maximum of $2.5 million… Read more ›

The Inflation Reduction Act (IRA) includes a wide range of tax incentives aimed at combating the dire effects of climate change. One of the provisions receiving considerable attention from consumers is the expansion of the Qualified Plug-in Electric Drive Motor Vehicle Credit (IRC Section 30D), now known as the Clean Vehicle Credit. While the expanded credit seems promising, questions have arisen about just how immediate its impact will be. Here’s what you need to know about the credit if you’re… Read more ›

Taxpayers will soon have access to a resource to protect against tax-related identity theft and the potentially serious outcomes that come with it. Before the next tax filing, the IRS will roll out to each tax filer a six-digit PIN number, as part of its new Identity Protection (IP) PIN opt-in program individuals can use. Participation in the program is voluntary and includes the following features: ●     The IP PIN should be entered onto an electronic tax return when prompted… Read more ›

While the recently announced student loan debt relief has captured numerous headlines, it’s estimated that another federal relief program announced on the same day will provide more than $1.2 billion in tax refunds or credits. Specifically, IRS Notice 2022-36 extends penalty relief to both individuals and businesses who missed the filing deadlines for certain 2019 and/or 2020 tax and information returns. The relief covers many of the most commonly filed forms. Broad Relief for Late Taxpayers The intent behind the… Read more ›

If you’re looking for money to buy a new car or pay off some bills, your 401(k) plan may seem like a pot of untapped gold. The temptation to tap your retirement funds often comes when you switch jobs and must decide how to handle your account. But in most cases, breaking into a retirement plan early is a mistake that will just melt away your savings. Unfortunately, many people make the unfortunate decision to “cash out” their retirement accounts… Read more ›

“I’ll do your family’s dental work for free if you build a deck onto my house.” If you’re in the construction industry, you’ve probably received an offer like this or made a similar offer to someone else in a different line of business. It’s a modern variation of the age-old practice of barter. What makes it especially intriguing in this day and age is the idea that you can exchange services or products with someone without exchanging money. Keep in… Read more ›

Sooner or later, your firm will encounter the issue of buying out a partner. This may be due to the partner’s retirement, death or other reasons. The federal income tax rules for partnership payments to buy out an exiting partner’s interest are tricky, but they also open up tax planning opportunities. The Basic Tax Rules Payments made by a partnership to liquidate (or buy out) an exiting partner’s entire interest are covered by Section 736 of the Internal Revenue Code…. Read more ›

Organizations that are created to provide goods or services exclusively (or primarily) to Section 501(c)(3) organizations (or governmental entities) may think that this purpose is sufficient to also qualify them under tax law. However, providing commercial-type services exclusively to exempt organizations is not by itself an exempt purpose. Much more is required for qualification under the rules of Internal Revenue Code Section 501(c)(3) than just having a mission to assist charitable organizations. Basic Requirements An exemption under tax code Section… Read more ›