28 Nov 2021
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Recent FTB Clarifications on Pass-Through Entity Tax (AB-150)

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
Recent FTB Clarifications on Pass-Through Entity Tax (AB-150)

Recent pass-through entity (PTE) tax (AB-150) clarifications from the Franchise Tax Board (FTB) underscore that detailed planning is critical when considering this credit. For an overview of AB-150, also see our initial 8/15/21 post on this subject: "California AB-150 Provides SALT Cap Workaround". PTE Election The election to pay the tax is: made annually, is irrevocable, and can only be made on an original, timely filed return, including extensions   PTE Tax Due Date (2021 Tax Year) For the initial year the PTE tax credit concepts exists (2021) the tax is due by original due date of the 2021 tax year return, without regard to extensions.  For calendar-year taxpayers, that is March 15, 2022. Logistics of PTE Tax Payments / K-1 Recipient Credits Prior to the original due date of the tax...

18 Nov 2021
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Showing Appreciation and Gain Tax Breaks with Holiday Business Gifts and Parties

Roger Rossmeisl, CPA
Small Business Tax Briefs
Showing Appreciation and Gain Tax Breaks with Holiday Business Gifts and Parties

The holiday season will soon be here. At this time of year, your business may want to show its gratitude to employees and customers by giving them gifts or hosting holiday parties again after a year of forgoing them due to the pandemic. It’s a good time to brush up on the tax rules associated with these expenses. Are they tax deductible by your business and is the value taxable to the recipients? Gifts to customers If you give gifts to customers and clients, they’re deductible up to $25 per recipient per year. For purposes of the $25 limit, you don’t need to include “incidental” costs that don’t substantially add to the gift’s value. These costs include engraving, gift wrapping, packaging and shipping. Also excluded from the...

18 Nov 2021
0

6 Steps to Prepare Your Business for a Sale

Roger Rossmeisl, CPA
Valuation Briefs
6 Steps to Prepare Your Business for a Sale

The COVID-19 pandemic has put unprecedented stress on private business owners. Some are now considering selling their businesses. Before putting your business on the market, it’s important to prepare it for sale. Here are six steps to consider. Clean up the financials Buyers are most interested in an acquisition target’s core competencies, and they usually prefer a clean, simple transaction. Consider buying out minority investors who could object to a deal and removing nonessential items from your balance sheet. Examples of items that could complicate a sale include underperforming segments, non-operating assets and shareholder loans. Sales are often based on multiples of earnings or earnings before interest, taxes, depreciation and amortization (EBITDA). Do what you can to maximize your bottom line. That includes cutting extraneous expenses...

17 Nov 2021
0

Strategies for Donating to Charity or Gifting to Loved Ones

Roger Rossmeisl, CPA
Individual Tax Briefs
Strategies for Donating to Charity or Gifting to Loved Ones

As we approach the holidays, many people plan to donate to their favorite charities or give money or assets to their loved ones. Here are the basic tax rules involved in these transactions. Donating to charity  Normally, if you take the standard deduction and don’t itemize, you can’t claim a deduction for charitable contributions. But for 2021 under a COVID-19 relief law, you’re allowed to claim a limited deduction on your tax return for cash contributions made to qualifying charitable organizations. You can claim a deduction of up to $300 for cash contributions made during this year. This deduction increases to $600 for a married couple filing jointly in 2021. What if you want to give gifts of investments to your favorite charities? There are a couple of...

17 Nov 2021
0

Check Kiting is No Game

Roger Rossmeisl, CPA
Fraud Briefs
Check Kiting is No Game

Despite the business community’s rapid adoption of digital payment methods, some companies continue to rely on paper checks. But there’s a long-standing problem with checks: They make businesses vulnerable to several damaging types of fraud, including check kiting. Here’s how the scheme works. Riding the float In a check kiting scheme, the perpetrator takes advantage of the “float,” or the time between when a check is deposited and when the bank collects funds on the check. In essence, a bank that accepts check deposits and releases funds immediately provides account holders with interest-free loans. Some unethical businesses take advantage of this process. Although the total number of days it takes banks to process checks and collect funds has declined in recent years, there’s still opportunity to capitalize on...

17 Nov 2021
0

Factors To Consider When Choosing a Business Entity

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
Factors to Consider When Choosing a Business Entity

Are you planning to launch a business or thinking about changing your business entity? If so, you need to determine which entity will work best for you — a C corporation or a pass-through entity such as a sole-proprietorship, partnership, limited liability company (LLC) or S corporation. There are many factors to consider and proposed federal tax law changes being considered by Congress may affect your decision. The corporate federal income tax is currently imposed at a flat 21% rate, while the current individual federal income tax rates begin at 10% and go up to 37%. The difference in rates can be mitigated by the qualified business income (QBI) deduction that’s available to eligible pass-through entity owners that are individuals, estates and trusts. Note that non-corporate taxpayers...

16 Nov 2021
0

Factor in Taxes if You’re Relocating to Another State in Retirement

Roger Rossmeisl, CPA
Individual Tax Briefs
Factor in Taxes if Youre Relocating to Another State in Retirement

Are you considering a relocating to another state when you retire? Perhaps you want to relocate to an area where your loved ones live or where the weather is more pleasant. But while you’re thinking about how many square feet you’ll need in a retirement home, don’t forget to factor in state and local taxes. Establishing residency for state tax purposes may be more complicated than it initially appears to be. What are all applicable taxes? It may seem like a good option to simply move to a state with no personal income tax. But, to make a good decision, you must consider all taxes that can potentially apply to a state resident. In addition to income taxes, these may include property taxes, sales taxes and estate taxes. If...

16 Nov 2021
0

Typosquatters are Leading Innocent Victims Astray

Roger Rossmeisl, CPA
Fraud Briefs
Typosquatters are Leading Innocent Victims Astray

Typosquatting takes advantage of an inclination among internet users known as “fat fingers” — a tendency to hit the wrong keys and enter misspelled trademarks or brands. Like phishing, typosquatting is a type of social engineering that tricks people into visiting websites they didn’t intend to visit. These schemes can harm both consumers and the businesses whose names are abused. Connection to cybersquatting Typosquatting is connected to cybersquatting, where someone registers a site’s domain name that includes a trademark and then tries to profit by selling that name to the trademark owner. With typosquatting, fraudsters register URLs that are common misspellings of company and brand names. For example, a bad actor might register landswnd.com and lnadsend.com. Then, when users try to visit the site of retailer Lands’...

12 Nov 2021
0

Maximize Your Depreciation with a Cost Segregation Study

Roger Rossmeisl, CPA
Small Business Tax Briefs
Maximize Your Depreciation with a Cost Segregation Study

If your business is depreciating over a 30-year period the entire cost of constructing the building that houses your operation, you should consider a cost segregation study. It might allow you to accelerate depreciation deductions on certain items, thereby reducing taxes and boosting cash flow. And under current law, the potential benefits of a cost segregation study are now even greater than they were a few years ago due to enhancements to certain depreciation-related tax breaks. Fundamentals of depreciation Generally, business buildings have a 39-year depreciation period (27.5 years for residential rental properties). Usually, you depreciate a building’s structural components, including walls, windows, HVAC systems, elevators, plumbing and wiring, along with the building. Personal property — such as equipment, machinery, furniture and fixtures — is eligible for...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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