04
Sep 2018
The S corporation business structure offers many advantages, including limited liability for owners and no double taxation (at least at the federal level). But not all businesses are eligible and, with the new 21% flat income tax rate that now applies to C corporations, S corps may not be quite as attractive as they once were. Tax Comparison The primary reason for electing S status is the combination of the limited liability of a corporation and the ability to pass corporate income, losses, deductions and credits through to shareholders. In other words, S corps generally avoid double taxation of corporate income — once at the corporate level and again when distributed to the shareholder. Instead, S corp tax items pass through to the shareholders’ personal returns and...
04
Sep 2018
The pieces of tax legislation garnering the most attention these days are the Tax Cuts and Jobs Act (TCJA) signed into law last December and the possible “Tax Reform 2.0” that Congress might pass this fall. But for certain individual taxpayers, what happens with “extenders” legislation is also important. Recent History Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The TCJA didn’t address these breaks, but they were retroactively extended through 12/31/17, by the Bipartisan Budget Act of 2018 (BBA), which was signed into law on 2/9/18. Now the question is whether Congress will extend them for 2018 and, if so, when. In...
The Tax Cuts and Jobs Act (TCJA) liberalized the eligibility rules for using the cash method of accounting, making this method — which is simpler than the accrual method — available to more businesses. Now the IRS has provided procedures a small business taxpayer can use to obtain automatic consent to change its method of accounting under the TCJA. If you have the option to use either accounting method, it pays to consider whether switching methods would be beneficial. Cash vs. Accrual Generally, cash-basis businesses recognize income when it’s received and deduct expenses when they’re paid. Accrual-basis businesses, on the other hand, recognize income when it’s earned and deduct expenses when they’re incurred, without regard to the timing of cash receipts or payments. In most cases, a business...
As posted on the Peak Prosperity.com and the Chris Martenson's Peak Prosperity YouTube Channel Background The Crash Course has provided millions of viewers with the context for the massive changes now underway, as economic growth as we've known it is ending due to depleting resources. But it also offers real hope. Those individuals who take informed action today, while we still have time, can lower their exposure to these coming trends -- and even discover a better way of life in the process. In this Blog, I am presenting the 27 (inclusive of the introduction) installments of The Crash Course, one per week. Previous installments of "The Crash Course" can be found here: Blog (#311) Introducing "The Crash Course" Blog (#314) Chapter 1: Three Beliefs Blog (#319) Chapter 2: "The Three 'Es'" Blog...
13
Aug 2018
Converting a traditional IRA to a Roth IRA can provide tax-free growth and tax-free withdrawals in retirement. But what if you convert your traditional IRA — subject to income taxes on all earnings and deductible contributions — and then discover you would have been better off if you hadn’t converted it? Before the Tax Cuts and Jobs Act (TCJA), you could undo a Roth IRA conversion using a “recharacterization.” Effective with 2018 conversions, the TCJA prohibits recharacterizations — permanently. But if you executed a conversion in 2017, you may still be able to undo it. Reasons to recharacterize Generally, if you converted to a Roth IRA in 2017, you have until October 15, 2018, to undo it and avoid the tax hit. Here are some reasons you might want to...
One of the biggest concerns for family business owners is succession planning — transferring ownership and control of the company to the next generation. Often, the best time tax-wise to start transferring ownership is long before the owner is ready to give up control of the business. A family limited partnership (FLP) can help owners enjoy the tax benefits of gradually transferring ownership yet allow them to retain control of the business. How it works To establish an FLP, you transfer your ownership interests to a partnership in exchange for both general and limited partnership interests. You then transfer limited partnership interests to your children. You retain the general partnership interest, which may be as little as 1% of the assets. But as general partner, you can still run...
As posted on the Peak Prosperity.com and the Chris Martenson's Peak Prosperity YouTube Channel Background The Crash Course has provided millions of viewers with the context for the massive changes now underway, as economic growth as we've known it is ending due to depleting resources. But it also offers real hope. Those individuals who take informed action today, while we still have time, can lower their exposure to these coming trends -- and even discover a better way of life in the process. In this Blog, I am presenting the 27 (inclusive of the introduction) installments of The Crash Course, one per week. Previous installments of "The Crash Course" can be found here: Blog (#311) Introducing "The Crash Course" Blog (#314) Chapter 1: Three Beliefs Blog (#319) Chapter 2: "The Three 'Es'" Blog...
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