05 Jun 2022
0

IRA Charitable Donations as an Alternative to Taxable Required Distributions

Roger Rossmeisl, CPA
Individual Tax Briefs
IRA Charitable Donations as an Alternative to Taxable Required Distributions

Are you a charitably minded individual who is also taking distributions from a traditional IRA? You may want to consider the tax advantages of making a cash donation to an IRS-approved charity out of your IRA. When distributions are taken directly out of traditional IRAs, federal income tax of up to 37% in 2022 will have to be paid. State income taxes may also be owed. Qualified charitable distributions One popular way to transfer IRA assets to charity is via a tax provision that allows IRA owners who are age 70½ or older to direct up to $100,000 per year of their IRA distributions to charity. These distributions are known as qualified charitable distributions (QCDs). The money given to charity counts toward your required minimum distributions (RMDs) but...

05 Jun 2022
0

3 Approaches to Valuing a Business

Roger Rossmeisl, CPA
Valuation Briefs
3 Approaches to Valuing a Business

Valuing a private business is a complex endeavor. But, when all is said and done, valuation analyses boil down to three general approaches. 1. Market approach Under this approach, valuators derive pricing multiples from public or private comparable transactions. These pricing multiples are then applied to the subject company to derive its value. For example, an expert might calculate a median price-to-earnings multiple of 4.5 based on a sample of six comparable transactions. Then the valuator would multiply the subject company’s earnings by 4.5 to arrive at its value. The expert also must consider whether adjustments are warranted to account for the differences between the subject company and comparable firms. Two popular methods fall under the market approach. First, the guideline public company method uses the prices paid for...

05 Jun 2022
0

Preparing for the Lower 1099-K Filing Threshold

Roger Rossmeisl, CPA
Small Business Tax Briefs
Preparing for the Lower 1099-K Filing Threshold

Businesses should be aware that they may be responsible for issuing more information reporting forms for 2022 because more workers may fall into the required range of income to be reported. Beginning this year, the threshold has dropped significantly for the filing of Form 1099-K, “Payment Card and Third-Party Network Transactions.” Businesses and workers in certain industries may receive more of these forms and some people may even get them based on personal transactions. Background of the change Banks and online payment networks — payment settlement entities (PSEs) or third-party settlement organizations (TPSOs) — must report payments in a trade or business to the IRS and recipients. This is done on Form 1099-K. These entities include Venmo and CashApp, as well as gig economy facilitators such as...

05 Jun 2022
0

Caring for an Elderly Relative? You May Be Eligible for Tax Breaks

Roger Rossmeisl, CPA
Individual Tax Briefs
Caring for an Elderly Relative? You May Be Eligible for Tax Breaks

Taking care of an elderly parent or grandparent may provide more than just personal satisfaction. You could also be eligible for tax breaks. Here’s a rundown of some of them. Medical expenses. If the individual qualifies as your “medical dependent,” and you itemize deductions on your tax return, you can include any medical expenses you incur for the individual along with your own when determining your medical deduction. The test for determining whether an individual qualifies as your “medical dependent” is less stringent than that used to determine whether an individual is your “dependent,” which is discussed below. In general, an individual qualifies as a medical dependent if you provide over 50% of his or her support, including medical costs. However, bear in mind that...

05 Jun 2022
0

Calculating Corporate Estimated Tax

Roger Rossmeisl, CPA
Small Business Tax Briefs
Calculating Corporate Estimated Tax

The next quarterly estimated tax payment deadline is June 15 for individuals and businesses so it’s a good time to review the rules for computing corporate federal estimated payments. You want your business to pay the minimum amount of estimated taxes without triggering the penalty for underpayment of estimated tax. Four methods The required installment of estimated tax that a corporation must pay to avoid a penalty is the lowest amount determined under each of the following four methods: Under the current year method, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the current tax year’s return (or, if no return is filed, 25% of the tax for the current year) by each of four installment due dates. The...

05 Jun 2022
0

Highlights from the Latest ACFE Fraud Report

Roger Rossmeisl, CPA
Fraud Briefs
Highlights from the Latest ACFE Fraud Report

Preventing, detecting, and investigating occupational fraud requires a deep understanding of the types of schemes, potential financial losses, emerging threats and risk mitigation strategies. To that end, the Association of Certified Fraud Examiners (ACFE) has published its “Report to the Nations,” the preeminent source for occupational fraud statistics and trends, every two years since 1996. The 2022 ACFE report covers 2,110 occupational fraud cases in 23 industries and in 133 countries. Surveyed organizations have lost more than $3.6 billion to fraud. The report can help your organization understand and mitigate fraud threats. Here are some of the highlights. Three types The ACFE divides occupational fraud schemes into three types: Asset misappropriation.  This includes cash theft, fraudulent disbursements, larceny and misuse of inventory and is the most common type of...

31 May 2022
0

Valuable Gifts to Charity May Require an Appraisal

Roger Rossmeisl, CPA
Individual Tax Briefs
Valuable Gifts to Charity May Require an Appraisal

If you donate valuable items to charity, you may be required to get an appraisal. The IRS requires donors and charitable organizations to supply certain information to prove their right to deduct charitable contributions. If you donate an item of property (or a group of similar items) worth more than $5,000, certain appraisal requirements apply. You must: Get a “qualified appraisal,” Receive the qualified appraisal before your tax return is due, Attach an “appraisal summary” to the first tax return on which the deduction is claimed, Include other information with the return, and Maintain certain records. Keep these definitions in mind. A qualified appraisal is a complex and detailed document. It must be prepared and signed by a qualified appraiser. An appraisal summary is a summary of a...

31 May 2022
0

Businesses May Receive Notices About Information Returns That Don’t Match IRS Records

Roger Rossmeisl, CPA
Small Business Tax Briefs
Businesses May Receive Notices About Information Returns That Dont Match IRS Records

The IRS has begun mailing notices to businesses, financial institutions and other payers that filed certain returns with information that doesn’t match the agency’s records. These CP2100 and CP2100A notices are sent by the IRS twice a year to payers who filed information returns that are missing a Taxpayer Identification Number (TIN), have an incorrect name or have a combination of both. Each notice has a list of persons who received payments from the business with identified TIN issues. If you receive one of these notices, you need to compare the accounts listed on the notice with your records and correct or update your records, if necessary. This can also include correcting backup withholding on payments made to payees. Which returns are involved?  Businesses, financial institutions and other payers are...

31 May 2022
0

Valuing Non-Compete Agreements in Business Combinations

Roger Rossmeisl, CPA
Valuation Briefs
Valuing Non-Compete Agreements in Business Combinations

Purchase price allocations are an important part of negotiating a successful M&A transaction. The value of most assets — such as receivables, inventory and equipment — may be fairly straightforward. But the value of non-compete agreements is often a sticking point. To complicate matters, the buyer and seller may have conflicting tax objectives. This is because the buyer must amortize the amount allocated to non-competes over 15 years, whereas the seller must recognize the allocation as ordinary income. When the buyer and seller allocate different amounts to a non-compete agreement on their respective tax forms, they may trigger unwanted attention from the IRS. An objective business valuation professional can help the parties come to an agreement on the allocation amount before the deal closes. Factors to consider Under a...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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