05 Mar 2024
0

Taking Your Spouse on a Business Trip? Can You Write Off the Costs?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Taking Your Spouse on a Business Trip? Can You Write Off the Costs?

A recent report shows that post-pandemic global business travel is going strong. The market reached $665.3 billion in 2022 and is estimated to hit $928.4 billion by 2030, according to a report from Research and Markets. If you own your own company and travel for business, you may wonder whether you can deduct the costs of having your spouse accompany you on trips. Is your spouse an employee? The rules for deducting a spouse’s travel costs are very restrictive. First of all, to qualify for the deduction, your spouse must be your employee. This means you can’t deduct the travel costs of a spouse, even if his or her presence has a bona fide business purpose, unless the spouse is an employee of your business. This requirement prevents tax...

05 Mar 2024
0

When to Consider Subsequent Events in a Business Valuation

Roger Rossmeisl, CPA
Valuation Briefs
When to Consider Subsequent Events in a Business Valuation

Business valuators sometimes consider major events that happen after the valuation date. For example, what if a business is subsequently sold, files for bankruptcy, discovers new technological advances, or experiences a major fraud loss, data breach or natural catastrophe? Such events could potentially affect a business’s fair market value, but whether a valuator will consider a particular event depends on the facts and circumstances of the valuation assignment. “Known or knowable” principle In general, events that are known or knowable on the valuation date will be factored into a valuation. Or valuators might consider the risk that a particular event will happen. But there are several exceptions. For example, in Estate of Jung v. Commissioner (101 T.C. 412, 1993), the U.S. Tax Court concluded, “Actual sales made in...

05 Mar 2024
0

If You Didn’t Contribute to an IRA Last Year, There’s Still Time

Roger Rossmeisl, CPA
Individual Tax Briefs
If You Didn't Contribute to an IRA Last Year, There's Still Time

If you’re gathering documents to file your 2023 tax return and you’re concerned that your tax bill may be higher than you’d like, there might still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the April 15, 2024, filing date and benefit from the tax savings on your 2023 return. Who is eligible? You can make a deductible contribution to a traditional IRA if: You and your spouse aren’t active participants in an employer-sponsored retirement plan, or You or your spouse are an active participant in an employer plan, but your modified adjusted gross income (AGI) doesn’t exceed certain levels that vary from year to year by filing status. For 2023, if you’re a...

25 Feb 2024
0

Get Ready for the 2023 Gift Tax Return Deadline

Roger Rossmeisl, CPA
Individual Tax Briefs
Get Ready for the 2023 Gift Tax Return Deadline

Did you make large gifts to your children, grandchildren or others last year? If so, it’s important to determine if you’re required to file a 2023 gift tax return. In some cases, it might be beneficial to file one — even if it’s not required. Who must file? The annual gift tax exclusion has increased in 2024 to $18,000 but was $17,000 for 2023. Generally, you must file a gift tax return for 2023 if, during the tax year, you made gifts: That exceeded the $17,000-per-recipient gift tax annual exclusion for 2023 (other than to your U.S. citizen spouse), That you wish to split with your spouse to take advantage of your combined $34,000 annual exclusion for 2023, That exceeded the $175,000 annual exclusion in 2023 for...

25 Feb 2024
0

Early Revenue Recognition: Not Just Bad Accounting, But Fraud

Roger Rossmeisl, CPA
Fraud Briefs
Early Revenue Recognition: Not Just Bad Accounting, But Fraud

Although financial statement fraud is the least common form of occupational theft (9% of incidents), it costs organizations the most in financial losses, according to the Association of Certified Fraud Examiners. Businesses defrauded by financial statement schemes had median losses of $593,000. Early revenue recognition, which distorts profits and can artificially boost a business’s financial profile, is popular among financial statement fraud perpetrators. To comply with Generally Accepted Accounting Principles and preserve your company’s reputation, you must prevent such activities on your watch. It’s also important to be able to detect them in the financial statements of business partners, including acquisition targets and customers applying for credit. Schemes and warning signs Owners, executives and others with access to financial statements might recognize revenue improperly by delivering products early,...

25 Feb 2024
0

What’s the Best Accounting Method Route for Business Tax Purposes?

Roger Rossmeisl, CPA
Small Business Tax Briefs
What's the Best Accounting Method Route for Business Tax Purposes?

Businesses basically have two accounting methods to figure their taxable income: cash and accrual. Many businesses have a choice of which method to use for tax purposes. The cash method often provides significant tax benefits for eligible businesses, though some may be better off using the accrual method. Thus, it may be prudent for your business to evaluate its method to ensure that it’s the most advantageous approach. Eligibility to use the cash method “Small businesses,” as defined by the tax code, are generally eligible to use either cash or accrual accounting for tax purposes. (Some businesses may also be eligible to use various hybrid approaches.) Before the Tax Cuts and Jobs Act (TCJA) took effect, the gross receipts threshold for classification as a small business varied...

25 Feb 2024
0

Filing Jointly or Separately as a Married Couple: What’s the Difference?

Roger Rossmeisl, CPA
Individual Tax Briefs
Filing Jointly or Separately as a Married Couple: What's the Difference?

When you file your tax return, a tax filing status must be chosen. This status is used to determine your standard deduction, tax rates, eligibility for certain tax breaks and your correct tax. The five filing statuses are: Single Married filing jointly, Married filing separately, Head of household, and Qualifying surviving spouse. If you’re married, you may wonder if you should file joint or separate tax returns. It depends on your individual tax situation. In general, you should choose the filing status that results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS...

18 Feb 2024
0

Factoring Industry Risk into the Business Valuation Equation

Roger Rossmeisl, CPA
Valuation Briefs
Factoring Industry Risk into the Business Valuation Equation

There’s generally a trade-off between risk and return in business valuation. Investors expect to receive a higher return as a company exposes them to greater risk. Industry-specific risk is an important consideration when estimating an investor’s expected return. Here’s how valuators measure industry risk and factor it into their analyses. Key factors Virtually every business valuation report includes a section on industry risk. Several factors are considered when measuring industry risk, including: Growth prospects. Valuators evaluate the industry’s outlook, including its seasonal and cyclical trends and stage of development. Strong, predictable growth prospects generally equate to lower industry risk and higher value. Relative power of suppliers and customers. It’s important to look up and down the company’s supply chain to determine which players have the greatest negotiating power. Businesses...

18 Feb 2024
0

9 Tax Considerations if you’re Starting a Business as a Sole Proprietor

Roger Rossmeisl, CPA
Small Business Tax Briefs
9 Tax Considerations if you're Starting a Business as a Sole Proprietor

When launching a small business, many entrepreneurs start out as sole proprietors. If you’re launching a venture as a sole proprietorship, you need to understand the tax issues involved. Here are nine considerations: 1. You may qualify for the pass-through deduction. To the extent your business generates qualified business income, you’re currently eligible to claim the 20% pass-through deduction, subject to limitations. The deduction is taken “below the line,” meaning it reduces taxable income, rather than being taken “above the line” against your gross income. However, you can take the deduction even if you don’t itemize deductions and instead claim the standard deduction. Be aware that this deduction is only available through 2025, unless Congress acts to extend it. 2. You report income and expenses on Schedule...

18 Feb 2024
0

If You Gave to Charity in 2023, Check to See That Your Have Substantiation

Roger Rossmeisl, CPA
Individual Tax Briefs
If Your Gave to Charity in 2023, Check to See That You Have Substantiation

Did you donate to charity last year? Acknowledgment letters from the charities you gave to may have already shown up in your mailbox. But if you don’t receive such a letter, can you still claim a deduction for the gift on your 2023 income tax return? It depends. What the law requires To prove a charitable donation for which you claim a tax deduction, you must comply with IRS substantiation requirements. For a donation of $250 or more, this includes obtaining a contemporaneous written acknowledgment from the charitable organization stating the amount of the donation, whether you received any goods or services in consideration for the donation and the value of any such goods or services. “Contemporaneous” means the earlier of: The date you file your tax return, or ...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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