24 Dec 2020
0

No Deduction in California for Expenditures Paid with Forgiven PPP Funds

Roger Rossmeisl, CPA
Small Business Tax Briefs
No Deduction in California for Expenditures Paid with Forgiven PPP Funds

With the prospect that ordinarily tax deductible business expenses will still be deductible if they were paid for with forgiven PPP loan funds contained in the Coronavirus Response and Relief Supplemental Appropriations Act, 2021, attention turns to the California treatment of same. The answer is that California currently does not conform to the federal amendment to this law contained in the new stimulus bill.  As such, business expenditures paid for with forgiven PPP loan funds must be reversed for California tax purposes. The source of this position is California AB 1577 which states that any deductions for expenses paid with forgiven PPP loan funds are specifically non-deductible. (This is Blog Post #943)  ...

13 Dec 2020
0

Reminder for Businesses to Register with CalSavers

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
Reminder for Businesses to Register with CalSavers

California has begun their mandate of employer participation in the CalSavers Program.  The program's 3-year phase-in is as follows: Number of Employees: Registration Required by: >100 09/30/2020 >50 06/30/2021 >=5 06/30/2022 What is CalSavers? CalSavers is California’s new retirement savings program for workers in the private sector who do not currently have a way to save at work (i.e. the employer does not provide an employee retirement plan (EBP)). While "eligible employers" are required to make the Plan available, it is voluntary for employees.  CalSavers operates similar to a Roth IRA. Plan is funded by employee savings (no employer fees or contributions). "Eligible Employers" must enroll all employees in a CalSavers account unless the employee formally opts-out. Employee participation is completely voluntary and they can opt-in or opt-out at any time. Plan is administered by...

12 Dec 2020
0

The Importance of S Corporation Basis and Distribution Elections

Roger Rossmeisl, CPA
Small Business Tax Briefs
The Importance of S Corporation Basis and Distribution Elections

S corporations can provide tax advantages over C corporations in the right circumstances. This is true if you expect that the business will incur losses in its early years because shareholders in a C corporation generally get no tax benefit from such losses. Conversely, as an S corporation shareholder, you can deduct your percentage share of these losses on your personal tax return to the extent of your basis in the stock and any loans you personally make to the entity. Losses that can’t be deducted because they exceed your basis are carried forward and can be deducted by you when there’s sufficient basis. Therefore, your ability to use losses that pass through from an S corporation depends on your basis in the corporation’s stock and debt....

12 Dec 2020
0

Taking a Traditional IRA Distribution

Roger Rossmeisl, CPA
Individual Tax Briefs
Taking a Traditional IRA Distribution

Although planning is needed to help build the biggest possible nest egg in your traditional IRA (including a SEP-IRA and SIMPLE-IRA), it’s even more critical that you plan for withdrawals from these tax-deferred retirement vehicles. There are three areas where knowing the fine points of the IRA distribution rules can make a big difference in how much you and your family will keep after taxes.  Here are some things to know when taking a traditional IRA distribution. Early distributions What if you need to take money out of a traditional IRA before age 59½? For example, you may need money to pay your child’s education expenses, make a down payment on a new home or meet necessary living expenses if you retire early. In these cases, any...

12 Dec 2020
0

5 Ways to Take Cash Out of Your Corporation

Roger Rossmeisl, CPA
Small Business Tax Briefs
5 Ways to Take Cash Out of Your Corporation

Owners of closely held corporations are often interested in easily withdrawing money from their businesses at the lowest possible tax cost. The simplest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient, since it’s taxable to you to the extent of your corporation’s “earnings and profits.” And it’s not deductible by the corporation.  Fortunately, there are several alternative methods that may allow you to withdraw cash from a corporation while avoiding dividend treatment. Here are 5 ways to take cash out of your closely-held corporation to consider: Capital repayments. To the extent that you’ve capitalized the corporation with debt, including amounts that you’ve advanced to the business, the corporation can repay the debt without the repayment being treated as a...

12 Dec 2020
0

Is Your Business Vulnerable to Identity Theft?

Roger Rossmeisl, CPA
Fraud Briefs
Is Your Business Vulnerable to Identity Theft?

According to data company Dun & Bradstreet, business identity theft increased more than 250% in the first half of 2020. You can thank the pandemic — and the government’s release of relief and recovery funds to qualified U.S. businesses — for this remarkable number. In a more typical year, crooks use stolen business identities to file fraudulent tax returns, apply for credit and empty bank accounts. Is your business vulnerable? However they might try to use your company’s information, there are steps you can take to reduce the risk. Protecting sensitive information Thieves often use malware to infect computers and gather sensitive data from businesses. They also create fake websites that trick employees into entering login and password information. To protect against these tactics, deploy patches when...

12 Dec 2020
0

Health Savings Account for Your Small Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Health Savings Account for Your Small Business

Small business owners are well aware of the increasing cost of employee health care benefits. As a result, your business may be interested in providing some of these benefits through an employer-sponsored Health Savings Account (HSA). Or perhaps you already have an HSA. It’s a good time to review how these accounts work since the IRS recently announced the relevant inflation-adjusted amounts for 2021. The basics of HSAs For eligible individuals, HSAs offer a tax-advantaged way to set aside funds (or have their employers do so) to meet future medical needs. Here are the key tax benefits: Contributions that participants make to an HSA are deductible, within limits. Contributions that employers make aren’t taxed to participants. Earnings on the funds within an HSA aren’t taxed, so the...

11 Dec 2020
0

Don’t Make Computer and Equipment Theft Easy

Roger Rossmeisl, CPA
Fraud Briefs
Dont Make Computer and Equipment Theft Easy

These days, many offices and other workspaces are nearly empty as employees work from home. This can make companies that don’t safeguard their computers, printers and other equipment vulnerable to theft from outsiders. Even during normal times, businesses often lose assets because crooked employees walk out with them. Here’s how to protect valuable property — no matter who’s eyeing it. Asserting ownership First, claim your business’s assets. This means adding security plates and indelible identity markings to machines. These additions can help you track stolen equipment, inhibit resale and discourage thieves from trying to steal in the first place. Security software can help you track stolen computers online. As soon as the thief connects to the Internet, the computer’s software contacts a security firm’s monitoring system, which traces...

09 Dec 2020
0

QBI Deduction Basics and Year-End Tax Tip

Roger Rossmeisl, CPA
Small Business Tax Briefs
QBI Deduction Basics and Year-End Tax Tip

If you own a business, you may wonder if you’re eligible to take the qualified business income (QBI) deduction. Sometimes this is referred to as the pass-through deduction or the §199A deduction. The QBI deduction: Is available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships, and S corporations, as well as trusts and estates. Is intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate. Is taken “below the line.” In other words, it reduces your taxable income but not your adjusted gross income. Is available regardless of whether you itemize deductions or take the standard deduction. Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For...

07 Dec 2020
0

How Series EE Savings Bonds are Taxed

Roger Rossmeisl, CPA
Individual Tax Briefs
How Series EE Savings Bonds are Taxes

Many people have Series EE savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself and put them away in a file cabinet or safe deposit box. You may wonder: How is the interest you earn on EE bonds 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? Fixed or variable interest 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 were sold at half their face value. For example, if you own 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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