17 Aug 2022
0

President Biden Signs the Inflation Reduction Act of 2022

Roger Rossmeisl, CPA
Current Events, Individual Tax Briefs, Small Business Tax Briefs
President Biden Signs the Inflation Reduction Act of 2022

On 8/16/22, President Biden signed into law the so-called Inflation Reduction Act of 2022 (H.R. 5376).  In a statement earlier, the White House said, "President Biden and Congressional Democrats have worked together to deliver a historic legislative achievement that defeats special interests, delivers for American families, and grows the economy from the bottom up and middle out". The White House is also planning an event on 9/6/22 to celebrate the enactment of the bill. The $740 billion Act is projected to raise revenue via a new 15% minimum tax on large, profitable corporations and a 1% excise tax on stock buybacks, to achieve the Democrats goal of using the budget reconciliation measure to reduce the U.S. annual deficit (i.e. not the National Debt) by approximately $300...

17 Jul 2022
0

How Do Taxes Factor into an M&A Transaction?

Roger Rossmeisl, CPA
Small Business Tax Briefs
How do Taxes Factor into an M&A Transaction?

Although merger and acquisition activity has been down in 2022, there are still companies being bought and sold. If your business is considering merging with or acquiring another business, it’s important to understand how the transaction will be taxed under current law. Stocks vs. assets From a tax standpoint, a transaction can basically be structured in two ways: 1. Stock (or ownership interest). A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The current 21% corporate federal income tax rate makes buying the stock of a C corporation somewhat more attractive. Reasons: The corporation will pay less tax and generate more...

16 Jul 2022
0

2022 Q3 Tax Calendar for Businesses and Other Employers

Roger Rossmeisl, CPA
Small Business Tax Briefs
2022 Q3 Tax Calendar for Businesses and Other Employers

Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2022. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. August 1 Report income tax withholding and FICA taxes for second quarter 2022 (Form 941), and pay any tax due. (See the exception below, under “August 10.”) File a 2021 calendar-year retirement plan report (Form 5500 or Form 5500-EZ) or request an extension. August 10  Report income tax withholding and FICA taxes for second quarter 2022 (Form 941), if you deposited on time and in full all of the associated taxes due. September 15  ...

16 Jul 2022
0

IRS Issues Mid-Year Business Mileage Rate Increase

Roger Rossmeisl, CPA
Small Business Tax Briefs
IRS Issues Mid-Year Business Mileage Rate Increase

Business owners are aware that the price of gas is historically high, which has made their vehicle costs soar. The average nationwide price of a gallon of unleaded regular gas on June 17 was $5, compared with $3.08 a year earlier, according to the AAA Gas Prices website. A gallon of diesel averaged $5.78 a gallon, compared with $3.21 a year earlier. Fortunately, the IRS is providing some relief. The tax agency announced an increase in the optional standard mileage rate for the last six months of 2022. Taxpayers may use the optional cents-per-mile rate to calculate the deductible costs of operating a vehicle for business. For the second half of 2022 (July 1–December 31), the standard mileage rate for business travel will be 62.5 cents per...

16 Jul 2022
0

Is Your Corporation Eligible for the Dividends-Received Deduction?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Is Your Corporation Eligible for the Dividends-Received Deduction?

There’s a valuable tax deduction available to a C corporation when it receives dividends. The “dividends-received deduction” is designed to reduce or eliminate an extra level of tax on dividends received by a corporation. As a result, a corporation will typically be taxed at a lower rate on dividends than on capital gains. Ordinarily, the deduction is 50% of the dividend, with the result that only 50% of the dividend received is effectively subject to tax. For example, if your corporation receives a $1,000 dividend, it includes $1,000 in income, but after the $500 dividends-received deduction, its taxable income from the dividend is only $500. The deductible percentage of a dividend will increase to 65% of the dividend if your corporation owns 20% or more (by vote...

13 Jul 2022
0

Applying the Research Credit Against Payroll Taxes

Roger Rossmeisl, CPA
Small Business Tax Briefs
Applying the Research Credit Against Payroll Taxes

Here’s an interesting option if your small company or start-up business is planning to claim the research tax credit. Subject to limits, you can elect to apply all or some of any research tax credits that you earn against your payroll taxes instead of your income tax. This payroll tax election may influence some businesses to undertake or increase their research activities. On the other hand, if you’re engaged in or are planning to engage in research activities without regard to tax consequences, be aware that some tax relief could be in your future. Here are some answers to questions about the option. Why is the election important? Many new businesses, even if they have some cash flow, or even net positive cash flow and/or a book profit,...

26 Jun 2022
0

IRS Releases Updated Cost Segregation Audit Techniques Guide

Roger Rossmeisl, CPA
Automotive, Small Business Tax Briefs
IRS Releases Updated Cost Segregation Audit Techniques Guide

On 6/1/22, the IRS made available an update to the "Cost Segregation Audit Techniques Guide" (Publication 5653).  Originally issued in 2004, the purpose of the Audit Techniques Guide (ATG) was to offer guidance to IRS auditors auditing cost segregation studies.  Because the ATG is an interpretation of the law, as opposed to the law itself, it cannot be cited as precedent.  It does however provide an inside look at how the IRS views this subject. The IRS maintains a library of Audit Techniques Guides (ATGs) intended to help IRS examiners during audits by providing insight into issues and accounting methods unique to specific industries. While ATGs are designed to provide guidance for IRS employees, they’re also useful to small business owners and tax professionals who prepare...

05 Jun 2022
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Partners May Have to Report More Income on Tax Returns than they Receive in Cash

Roger Rossmeisl, CPA
Small Business Tax Briefs
Partners May Have to Report More Income on Tax Returns Than They Receive in Cash

Are you a partner in a business? You may have come across a situation that’s puzzling. In a given year, you may be taxed on more partnership income than was distributed to you from the partnership in which you’re a partner. Why does this happen? It’s due to the way partnerships and partners are taxed. Unlike C corporations, partnerships aren’t subject to income tax. Instead, each partner is taxed on the partnership’s earnings — whether or not they’re distributed. Similarly, if a partnership has a loss, the loss is passed through to the partners. (However, various rules may prevent a partner from currently using his or her share of a partnership’s loss to offset other income.) Pass through your share While a partnership isn’t subject to income tax,...

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...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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