10 Dec 2022
0

Strategies for Investors to Cut Taxes as Year-End Approaches

Roger Rossmeisl, CPA
Individual Tax Briefs
Strategies for Investors to Cut Taxes as Year-End Approaches

The overall stock market has been down during 2022 but there have been some bright spots. As year-end approaches, consider making some moves to make the best tax use of paper losses and actual losses from your stock market investments. Tax rates on sales Individuals are subject to tax at a rate as high as 37% on short-term capital gains and ordinary income. But long-term capital gains on most investment assets receive favorable treatment. They’re taxed at rates ranging from 0% to 20% depending on your taxable income (inclusive of the gains). High-income taxpayers may pay an additional 3.8% net investment income tax. Sell at a loss to offset earlier gains  Have you realized gains earlier in the year from sales of stock held for more than one year...

10 Dec 2022
0

Intangible Assets: How Must the Costs Incurred by Capitalized?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Intangible Assets: How Must the Costs Incurred be Capitalized?

These days, most businesses have some intangible assets. The tax treatment of these assets can be complex. What makes intangibles so complicated? IRS regulations require the capitalization of costs to: Acquire or create an intangible asset, Create or enhance a separate, distinct intangible asset, Create or enhance a “future benefit” identified in IRS guidance as capitalizable, or “Facilitate” the acquisition or creation of an intangible asset. Capitalized costs can’t be deducted in the year paid or incurred. If they’re deductible at all, they must be ratably deducted over the life of the asset (or, for some assets, over periods specified by the tax code or under regulations). However, capitalization generally isn't required for costs not exceeding $5,000 and for amounts paid to create or facilitate the creation of...

10 Dec 2022
0

Will Your Business Valuation Expert Survive a Daubert Challenge?

Roger Rossmeisl, CPA
Valuation Briefs
Will Your Business Valuation Expert Survive a Daubert Challenge?

The 30-year anniversary of Daubert v. Merrell Dow Pharmaceuticals Inc. (509 U.S. 579) will be coming up in 2023. This decision officially made federal judges the “gatekeepers” of expert evidence against “junk science.” Landmark case In 1993, Daubert established a two-pronged test for admissibility under Rule 702 of the Federal Rules of Evidence: An expert’s methodology must be 1) reliable, and 2) relevant. This case also identified four nonexclusive factors to consider in determining the reliability of an expert’s theory or technique: Has it been tested, and can it be tested? Has it been subject to peer review or publication? What’s its known or potential error rate? Is it generally accepted in the relevant scientific or technical community?   The discounted cash flow method is an example of a...

10 Dec 2022
0

Year-End Giving to Charity or Loved Ones

Roger Rossmeisl, CPA
Individual Tax Briefs
Year-End Giving to Charity or Loved Ones

The holiday season is here and many people plan to donate to their favorite charities or give money or assets to their loved ones before the end of the year. Here are the basic tax rules involved in these transactions. Donating to charity  In 2022, in order to receive a charitable donation write-off, you must itemize deductions on your tax return. What if you want to give gifts of investments to your favorite charities? There are a couple of points to keep in mind. First, don’t give away investments in taxable brokerage accounts that are currently worth less than what you paid for them. Instead, sell the shares and claim the resulting capital loss on your tax return. Then, give the cash proceeds from the sale to charity....

09 Dec 2022
0

Don’t Fall for Invoice Fraud Schemes

Roger Rossmeisl, CPA
Fraud Briefs
Don't Fall for Invoice Fraud Schemes

Middle-market businesses lose an average of almost $300,000 annually to invoice fraud, according to a recent survey by software company Medius and researcher Censuswide. Invoice fraud can be challenging to spot — and even more difficult to recover from — but your company can take steps to prevent it from happening. Common types The most common type of invoice fraud is fraudulent billing. In billing schemes, a real or fake vendor sends an invoice for goods or services that the business never received (and may not have ordered in the first place). Overbilling schemes are similar. Your company may have received goods it ordered, but the vendor’s invoice is higher than agreed upon. Duplicate billing is where a fraud perpetrator sends you the same invoice more than...

08 Dec 2022
0

Is Your Business Closing? Here are your Final Tax Responsibilities

Roger Rossmeisl, CPA
Small Business Tax Briefs
Is Your Business Closing? Here are your Final Tax Responsibilities

Businesses shut down for many reasons. Some of the reasons that businesses shutter their doors: An owner retirement, A lease expiration, Staffing shortages, Partner conflicts, and Increased supply costs. If you’ve decided to close your business, we’re here to assist you in any way we can, including taking care of the various tax obligations that must be met. For example, a business must file a final income tax return and some other related forms for the year it closes. The type of return to be filed depends on the type of business you have. Here’s a rundown of the basic requirements. Sole Proprietorships. You’ll need to file the usual Schedule C, “Profit or Loss from Business,” with your individual return for the year you close the business. You...

08 Dec 2022
0

How Savings Bonds are Taxed

Roger Rossmeisl, CPA
Individual Tax Briefs
How Savings Bonds are Taxed

Many people have savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself. You may wonder how the interest you earn is taxed. And if they reach final maturity, what action do you need to take to ensure there’s no loss of interest or unanticipated tax consequences? Interest deferral  Series EE Bonds dated May 2005 and after earn a fixed rate of interest. Bonds purchased between May 1997 and April 30, 2005, earn a variable market-based rate of return. Paper Series EE Bonds, issued between 1980 and 2012, are sold at half their face value. For example, you pay $25 for a $50 bond. The bond isn’t worth its face value until it matures. New...

06 Dec 2022
0

Going Concern Value, Liquidation Value or Somewhere in Between

Roger Rossmeisl, CPA
Valuation Briefs
Going Concern Value, Liquidation Value or Somewhere in Between?

When valuing a business, it’s important to clearly identify the appropriate premise of value. There are two basic options: going concern value or liquidation value. In general, liquidation value sets the floor for a company’s value. When a company is “worth more dead than alive” — such as in a Chapter 7 bankruptcy filing — liquidation value is typically the appropriate premise of value. But it also may be relevant in other situations, as a recent Michigan Court of Appeals case demonstrates. Going concern vs. liquidation value Most valuations focus on a business’s going-concern value. That is, what’s the value of a business enterprise that’s expected to continue to operate into the future? But in certain situations, liquidation value can be an important benchmark. There are two types...

06 Dec 2022
0

Computer Software Costs: How Does Your Business Deduct Them?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Computer Software Costs: How Does Your Business Deduct Them?

These days, most businesses buy or lease computer software to use in their operations. Or perhaps your business develops computer software to use in your products or services or sells or leases software to others. In any of these situations, you should be aware of the complex rules that determine the tax treatment of the expenses of buying, leasing or developing computer software. Software you buy Some software costs are deemed to be costs of “purchased” software, meaning it’s either: Non-customized software available to the general public under a nonexclusive license, or Acquired from a contractor who is at economic risk should the software not perform.   The entire cost of purchased software can be deducted in the year that it’s placed into service. The cases in which the...

20 Nov 2022
0

The Disruption of Transportation

Roger Rossmeisl, CPA
Automotive, Technology
The Disruption of Transportation

The Great Transformation (Part 2) - The Disruption of Transportation As posted to the Tony Seba YouTube Channel on 10/31/2022 (Run Time 18 min, 23 sec) Part 2 of Tony Seba’s latest presentation on what he calls "The Great Transformation", discusses the disruption of transportation by autonomous, electric, fleet vehicles: Transportation as a Service. "The Great Transformation" is a deep dive into the key technologies that are converging in the 2020s and how they will disrupt the five foundational sectors of the economy: Information, Food, Energy, Transportation and Materials.   Seba’s work focuses on the complex patterns and dynamics of change, disruption, and transformation at all scales. He is the author of Clean Disruption of Energy and Transportation, and co-author of Rethinking Humanity. The rest of the presentation can be seen here: The...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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