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Category: Taxation-Corporate

November 20, 2020

Consider Re-Evaluating Your Tax Plans Based on the Outcome of the Presidential Election

Now that Joe Biden has been projected as the winner of the presidential election by major news outlets,* you may wonder if your federal taxes will be affected. President-elect Biden campaigned on a broad agenda, including a pledge to roll back many of President Trump’s tax policies. In response to the Tax Cuts and Jobs Act (TCJA), Biden has promised a progressive approach to taxation, focused primarily on increasing the burden on businesses and high-income individuals. Of course, his odds… Read more ›

September 30, 2020

Small Businesses: Are First-Year Depreciation Write-Offs Right for You?

Under today’s federal income tax rules, your small business may be able to claim big first-year depreciation write-offs for eligible assets that are placed in service in the current tax year. But that strategy might not be right for every small business every year. Here’s what you should know before claiming 100% first-year bonus depreciation or first-year Section 179 deductions. First-Year Depreciation Breaks The Tax Cuts and Jobs Act (TCJA) included two generous first-year depreciation tax breaks for business taxpayers:… Read more ›

September 30, 2020

How Do the Republican and Democratic Tax Plans Differ?

With the presidential election only weeks away, many people are beginning to pay closer attention to each candidate’s positions on such issues as the COVID-19 pandemic, health care, the environment and taxes. Among their many differences, President Donald Trump and former Vice President Joe Biden have widely divergent tax proposals. Their stances could have a major impact on the amount of taxes you’ll owe in the future. Here’s an overview of each candidate’s tax proposals for both individuals and businesses…. Read more ›

September 28, 2020

IRS Introduces New 1099-NEC Form to Report Nonemployee Compensation

Beginning with Tax Year 2020, the IRS requires payments over $600 to nonemployees to be reported on the new Form 1099-NEC (Nonemployee Compensation). In prior years, these payments were reported on 1099-MISC. Why the new form? In prior years, the due date for Forms 1099-MISC depended on whether any nonemployee compensation was reported in Box 7. If so, the due date was January 31; otherwise the due date was February 28. The new form 1099-NEC was introduced to alleviate the… Read more ›

September 26, 2020

COVID-19: New Law Relaxes the Limit on Business Interest Deductions

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides roughly $2 trillion of much-needed financial relief, including tax relief, to individuals and businesses. This relief is in response to the coronavirus (COVID-19) pandemic. One CARES Act provision temporarily relaxes the Tax Cuts and Jobs Act (TCJA) limitation on deductions for business interest expense. Here’s the story. TCJA Limitation on Business Interest Expense Deductions Before the TCJA, some corporations were subject to the so-called “earnings stripping” rules. Those rules attempted… Read more ›

September 21, 2020

Recapture LIFO at a Lower Tax Rate While You Can

The LIFO (last-in, first-out) accounting method for inventory valuation is one of the few business tax deferrals permitted by the IRS. Intended to benefit businesses through times of economic inflation, LIFO allows companies to include the effect of inflation in their cost of goods sold, thus lowering their taxable income. Many, but not all, auto dealerships use LIFO as a tax deferral strategy, not a permanent tax deduction. Dealers should invest their annual LIFO tax deferral each year to have… Read more ›

September 1, 2020

The IRS Issues Guidance on the Executive Action Deferring Payroll Taxes

On August 28, the IRS issued guidance that provides some explanation of how employers can defer withholding and remitting an employee’s share of Social Security tax when wages are below a certain amount. The guidance in Notice 2020-65 was issued to implement President Trump’s executive action signed in early August. The guidance is brief, and private employers still have questions about whether, and how, to implement the deferral. The President’s action only defers Social Security taxes; it doesn’t forgive them,… Read more ›

August 12, 2020

What Does the Executive Action Deferring Payroll Taxes Mean for Employers and Employees?

On August 8, 2020, President Trump signed an executive memorandum that defers an employee’s portion of Social Security and Medicare taxes from September 1 through December 31, 2020. At this point, the taxes are just deferred, meaning they’ll still have to be paid at a later date. However, the action directs U.S. Treasury Secretary Steven Mnuchin to “explore avenues, including legislation, to eliminate the obligation to pay the taxes.” The exact impact on employers and employees isn’t yet known. There… Read more ›

July 14, 2020

Watch for UBIT When Your Not-for-Profit Pursues New Activities

During these financially challenging times, many not-for-profit organizations have had to get creative to raise adequate revenue to sustain operations. But new activities, however well-intentioned, can lead to tax trouble. Your nonprofit risks exposure to the unrelated business income tax (UBIT) if it operates outside its usual charitable scope. Here’s how to avoid unwanted tax exposure. Regular and Unrelated For tax-exempt organizations, unrelated business income generally is defined as the profits generated by regular trade or business activities that aren’t… Read more ›

July 13, 2020

COVID-19 Crisis May Affect Tax Angles for Rental Property Losses

Economic fallout from the COVID-19 crisis will cause many rental real estate properties to run up tax losses in 2020 — and possibly beyond. Here’s a summary of important federal income tax rules for such losses. What You Can Write Off Rental property owners can deduct mortgage interest and real estate taxes. They can also write off all standard operating expenses that go along with owning rental property. Examples include: Utilities, Insurance, Repairs and maintenance, and Care and maintenance of… Read more ›