31 May 2022
0

Want to Turn a Hobby into a Business? Watch Out for the Tax Rules

Roger Rossmeisl, CPA
Individual Tax Briefs
Want to Turn a Hobby into a Business? Watch out for the Tax Rules

Like many people, you may have dreamed of turning a hobby into a regular business. You won’t have any tax headaches if your new business is profitable. But what if the new enterprise consistently generates losses (your deductions exceed income) and you claim them on your tax return? You can generally deduct losses for expenses incurred in a bona fide business. However, the IRS may step in and say the venture is a hobby — an activity not engaged in for profit — rather than a business. Then you’ll be unable to deduct losses. By contrast, if the new enterprise isn’t affected by the hobby loss rules because it’s profitable, all otherwise allowable expenses are deductible on Schedule C, even if they exceed income from the...

31 May 2022
0

The Tax Mechanics Involved in the Sale of Trade or Business Property

Roger Rossmeisl, CPA
Small Business Tax Briefs
The Tax Mechanics Involved in the Sale of Trade or Business Property

What are the tax consequences of selling property used in your trade or business? There are many rules that can potentially apply to the sale of business property. Thus, to simplify discussion, let’s assume that the property you want to sell is land or depreciable property used in your business, and has been held by you for more than a year. (There are different rules for property held primarily for sale to customers in the ordinary course of business; intellectual property; low-income housing; property that involves farming or livestock; and other types of property.) General rules Under the Internal Revenue Code, your gains and losses from sales of business property are netted against each other. The net gain or loss qualifies for tax treatment as follows: 1) If the...

30 May 2022
0

Autonomous Ride-Hailing Will Displace Industry Incumbents

Roger Rossmeisl, CPA
Automotive, Technology
Autonomous Ride-Hailing Will Displace Industry Incumbents

As posted to the ARK Invest YouTube Channel on 5/19/22 (Run Time: 16 min, 20 sec) ARK Invest believes that autonomous ride-hailing will reduce the cost of mobility to one-eighth the average cost of ride-hail today, spurring widespread adoption and unleashing unprecedented economic productivity.  ARK believes that this could be "one of the most meaningful economic productivity delivering innovations of all time" and the GDP contribution from autonomous ride-hail systems could total around $26 trillion by 2030. Originally aired on 1/25/22, Big Ideas Summit 2022 features in-depth presentations from ARK's research team and seeks to educate attendees on the impact of breakthrough technologies and the investment opportunities they could create. (This is Blog Post #1209) ARK Invest ARK is an investment manager focused solely on disruptive innovation. Rooted in over...

30 May 2022
0

How to Qualify for – and Keep – Cyber Insurance Coverage

Roger Rossmeisl, CPA
Fraud Briefs
How to Qualify for - and keep - Cyber Insurance Coverage

These days, it’s common for businesses to purchase cyber insurance to help mitigate financial losses from network breaches. According to the U.S. Government Accountability Office, the proportion of businesses adding cyber coverage increased from 26% in 2016 to 47% in 2020. But in the event of a loss, processing such claims can be expensive, and insurers are becoming more selective about the companies they agree to insure and for how much. In response to mounting losses from cybercrime, insurers are also raising premiums. If your company wants to qualify for cyber insurance at an affordable price, we recommend the following five steps: 1. Spend time with the application.  Insurers ask applicants to complete a security questionnaire to help them understand the risks facing the companies. Answering the...

30 May 2022
0

Thinking About Converting Your Home Into a Rental Property?

Roger Rossmeisl, CPA
Individual Tax Briefs
Thinking About Converting Your Home into a Rental Property?

In some cases, homeowners decide to move to new residences, but keep their present homes and rent them out. If you’re thinking of doing this, you’re probably aware of the financial risks and rewards. However, you also should know that renting out your home carries potential tax benefits and pitfalls. You’re generally treated as a regular real estate landlord once you begin renting your home. That means you must report rental income on your tax return, but also are entitled to offsetting landlord deductions for the money you spend on utilities, operating expenses, incidental repairs and maintenance (for example, fixing a leak in the roof). Additionally, you can claim depreciation deductions for the home. You can fully offset rental income with otherwise allowable landlord deductions. Passive activity...

30 May 2022
0

Tax Considerations When Adding a New Partner at Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax Considerations When Adding a New Partner at Your Business

Adding a new partner in a partnership has several financial and legal implications. Let’s say you and your partners are planning to admit a new partner. The new partner will acquire a one-third interest in the partnership by making a cash contribution to it. Let’s further assume that your bases in your partnership interests are sufficient so that the decrease in your portions of the partnership’s liabilities because of the new partner’s entry won’t reduce your bases to zero. Not as simple as it seems Although the entry of a new partner appears to be a simple matter, it’s necessary to plan the new person’s entry properly in order to avoid various tax problems. Here are two issues to consider: First, if there’s a change in the partners’...

30 May 2022
0

Taking a Red Pen to Financials for Valuation Purposes

Roger Rossmeisl, CPA
Valuation Briefs
Taking a Red Pen to Financials for Valuation Purposes

Financial statements are an important source of data for valuing a business. But they tell only part of the story. An accurate business valuation hinges on a comprehensive understanding of the subject company’s relative performance and its future earnings power. To help clarify matters, experts often make various adjustments to the financials. Here are some examples. Non-recurring adjustments From a valuator’s perspective, an obvious shortcoming of financial statements is that they demonstrate historic results, not expected performance. Historical data is less relevant if operations are expected to change in the future. For example, a valuator might remove extraordinary or unusual items — such as proceeds from a legal settlement or short-term effects of hurricane damage — from a company’s income statement. Similarly, to better reflect future earnings potential,...

23 May 2022
0

Issues to Consider After Your File Your Tax Return

Roger Rossmeisl, CPA
Individual Tax Briefs
Issues to Consider After You File Your Tax Return

The tax filing deadline for 2021 has passed. Now that your tax return has been successfully filed with the IRS, there may still be some issues to bear in mind. Here are three considerations: 1. You can throw some tax records away now You should hang onto tax records related to your return for as long as the IRS can audit your return or assess additional taxes. The statute of limitations is generally three years after you file your return (four years for California). So you can generally get rid of most records related to tax returns for 2018 and earlier years. (If you filed an extension for your 2018 return, hold on to your records until at least three years from when you filed the extended...

23 May 2022
0

Keep Cybercriminals from Stealing Your Business’s Brand

Roger Rossmeisl, CPA
Fraud Briefs
Keep Cybercriminals from Stealing Your Businesss Brand

When criminals steal an individual’s identity, the victim can take steps to minimize potential damage by, for example, notifying credit agencies and freezing bank accounts. But what happens if a cybercrook steals a company’s identity and uses it to engage in fraud? This situation can be more complicated — and expensive — to resolve. Fraudsters who use your business’s digital assets for their benefit are known as brandjackers. Brandjacking schemes may involve copying websites, social media accounts, logos and email domains to lure your customers, suppliers and other stakeholders and defraud them. But you can fight back. Consider taking these seven steps: 1. Monitor social media chatter.  Maintaining control of your brand and its digital assets is critical to detecting brandjacking. A big part of this is monitoring...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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