09 Sep 2024
0

It’s Time for Your Small Business to Think About Year-End Tax Planning

Roger Rossmeisl, CPA
Small Business Tax Briefs
It's Time for your Small Business to Think About Year-End Tax Planning

With Labor Day in the rearview mirror, it’s time to take proactive steps that may help lower your small business’s taxes for this year and next. The strategy of deferring income and accelerating deductions to minimize taxes can be effective for most businesses, as is the approach of bunching deductible expenses into this year or next to maximize their tax value. Do you expect to be in a higher tax bracket next year? If so, then opposite strategies may produce better results. For example, you could pull income into 2024 to be taxed at lower rates, and defer deductible expenses until 2025, when they can be claimed to offset higher-taxed income. Here are some other ideas that may help you save tax dollars if you act soon. Estimated...

09 Sep 2024
0

Fraud Disasters Require a Contingency Plan Too

Roger Rossmeisl, CPA
Fraud Briefs
Fraud Disasters Require a Contingency Plan Too

Your business probably has a disaster plan — or a set of procedures for dealing with a fire, natural disaster, terrorist attack or other emergency that could disrupt operations and threaten lives. Although a fraud contingency plan probably isn’t as critical, it’s still important for most companies to have one. Here’s how to draft and put a fraud contingency plan in place. Where are your weaknesses? Start by meeting with your senior management team and financial advisors to devise as many fraud scenarios as you can dream up. Consider how your internal controls could be breached — whether the perpetrator is a relatively new hire, an experienced department manager, a high-ranking executive or an outside party. Next, decide which scenarios are most likely to occur given such factors...

09 Sep 2024
0

Reasons an LLC Might Be the Ideal Choice for your Small to Medium-Size Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Reasons an LLC Might be the Ideal Choice for your Small to Medium-Size Business

Choosing the right business entity is a key decision for any business. The entity you pick can affect your tax bill, your personal liability and other issues. For many businesses, a limited liability company (LLC) is an attractive choice. It can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide the owners with several benefits. Like the shareholders of a corporation, the owners of an LLC (called members rather than shareholders or partners) generally aren’t liable for business debts except to the extent of their investment. Therefore, an owner can operate a business with the security of knowing that personal assets (such as a home or individual investment account) are protected from the entity’s...

09 Sep 2024
0

Supreme Court: COLI Proceeds are Included in Business Value

Roger Rossmeisl, CPA
Valuation Briefs
Supreme Court: COLI Proceeds are Included in Business Value

A recent U.S. Supreme Court ruling resolves a circuit split on a business valuation issue — and it could have a major impact on the value of many closely held companies going forward. In Connelly v. IRS (144 S. Ct. 1406, 2024), the Court held that corporate-owned life insurance (COLI) designed to fund the redemption of a deceased shareholder’s stock under a buy-sell agreement should be considered a corporate asset when calculating the value of the decedent’s shares for purposes of the federal estate tax. Here’s a summary of the case and how it may affect owners of other private companies. IRS challenges estate’s valuation Two brothers co-owned a building supply company. They entered into a buy-sell agreement to ensure that the business remained in the family if...

09 Sep 2024
0

6 Tax-Free Income Opportunities

Roger Rossmeisl, CPA
Individual Tax Briefs
6 Tax-Free Income Opportunities

Believe it or not, there are ways to collect tax-free income and gains. Here are some of the best opportunities to put money in your pocket without current federal income tax implications: Roth IRAs offer tax-free income accumulation and withdrawals. Unlike withdrawals from traditional IRAs, qualified Roth IRA withdrawals are free from federal income tax. A qualified withdrawal is one that’s taken after you’ve reached age 59½ and had at least one Roth IRA open for over five years, or you are disabled or deceased. After your death, your heirs can take federal-income-tax-free qualified Roth IRA withdrawals, with proper planning. A large amount of profit from a home sale is tax-free. In one of the best tax-saving deals, an unmarried seller of a principal residence can exclude...

09 Sep 2024
0

Are You Liable for Two Additional Taxes on Your Income?

Roger Rossmeisl, CPA
Individual Tax Briefs
Are You Liable for Two Additional Taxes on Your Income?

Having a high income may mean you owe two extra taxes: the 3.8% net investment income tax (NIIT) and a 0.9% additional Medicare tax on wage and self-employment income. Let’s take a look at these taxes and what they could mean for you. 1. The NIIT In addition to income tax, this tax applies on your net investment income. The NIIT only affects taxpayers with adjusted gross incomes (AGIs) exceeding $250,000 for joint filers, $200,000 for single taxpayers and heads of household, and $125,000 for married individuals filing separately. If your AGI is above the threshold that applies ($250,000, $200,000 or $125,000), the NIIT applies to the lesser of 1) your net investment income for the tax year, or 2) the excess of your AGI for the tax...

09 Sep 2024
0

Craft Partnership Agreements and LLC Operating Agreements with Precision

Roger Rossmeisl, CPA
Small Business Tax Briefs
Craft Partnership Agreements and LLC Operating Agreements with Precision

Partnerships are often used for business and investment activities. So are multi-member LLCs that are treated as partnerships for tax purposes. A major reason is that these entities offer federal income tax advantages, the most important of which is pass-through taxation. They also must follow some special and sometimes complicated federal income tax rules. Governing documents A partnership is governed by a partnership agreement, which specifies the rights and obligations of the entity and its partners. Similarly, an LLC is governed by an operating agreement, which specifies the rights and obligations of the entity and its members. These governing documents should address certain tax-related issues. Here are some key points when creating partnership and LLC governing documents. Partnership tax basics The tax numbers of a partnership are allocated to...

09 Sep 2024
0

What You Can Do About Workers’ Comp Fraud

Roger Rossmeisl, CPA
Fraud Briefs
What You Can Do About Workers' Comp Fraud

Workers’ compensation insurance can provide medical care and financial assistance to employees who are injured or incapacitated at work. However, this important benefit is also subject to fraud perpetrated by dishonest workers. The Coalition Against Insurance Fraud says that 16% of workers’ comp claims are fraudulent, adding up to $9 billion in annual losses. Such losses hurt businesses, insurers and states. But you can help reduce the possibility that a scheme will be perpetrated in your organization. Common employee and employer schemes Employees violate workers’ comp rules if they file claims for injuries they didn’t experience or injuries or illnesses they did experience, but not at work. Workers’ comp fraudsters also might exaggerate the severity of their injuries or illnesses, or falsely state that they can’t work in...

09 Sep 2024
0

Working Remotely May Be Convenient, But May Also Have Tax Consequences

Roger Rossmeisl, CPA
Individual Tax Briefs
Working Remotely May be Convenient, But May Also Have Tax Consequences

Many employees began working remotely during the pandemic and continue doing so today. Remote work has many advantages for employers and employees, and as a result, it’s here to stay in many industries. But it may also lead to some tax surprises, especially if workers cross state lines. Double taxation may occur It’s not unusual for employees to work remotely for an employer in another state. For some businesses, remote work has become a permanent arrangement that allows employees to live and work further away from a physical office. If you live in one state and work remotely for an employer in another state, familiarize yourself with the tax laws in both states and determine how they may affect you. For example, you may need to file income...

09 Sep 2024
0

Valuing a Business for a Dissenting or Oppressed Shareholder Case

Roger Rossmeisl, CPA
Valuation Briefs
Valuing a Business for a Dissenting or Oppressed Shareholder Case

Shareholders who own a minority interest in a business may not always agree with key decisions made by controlling shareholders. For instance, a minority shareholder might object to a stock-for-stock or “squeeze-out” merger. Or, if a proposed transaction will reduce a minority shareholder’s compensation or divert corporate assets, that individual may file an oppression suit. In such cases, courts will often apply a “fair value” remedy. What is fair value? Most states have adopted the Model Business Corporation Act (MBCA), which entitles dissenting or oppressed minority shareholders to receive fair value for their interests. Under the MBCA, fair value is the value of the shares immediately before the corporate action to which the dissenter objects. It generally excludes any change in value in anticipation of the corporate...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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