17 Oct 2020
0

Tax Rules for Deducting Software

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax Rules for Deducting Software

Do you buy or lease computer software to use in your business? Do you develop computer software for use in your business, or for sale or lease to others? Then you should be aware of the complex rules that apply to determine the tax rules for deducting software, whether you're buying, leasing or developing. Purchased software Some software costs are deemed to be costs of “purchased” software, meaning software that’s either: Non-customized software available to the general public under a non-exclusive license or Acquired from a contractor who is at economic risk should the software not perform.  The entire cost of purchased software can be deducted in the year that it’s placed into service. The cases in which the costs are ineligible for this immediate write-off are the...

12 Oct 2020
0

How to Handle Business Website Costs for Tax Purposes

Roger Rossmeisl, CPA
Small Business Tax Briefs
How to Handle Business Website Costs for Tax Purposes

The business use of websites is widespread. But surprisingly, the IRS hasn’t yet issued formal guidance on when Internet website costs can be deducted. Fortunately, established rules that generally apply to the deductibility of business costs, and IRS guidance that applies to software costs, provide business taxpayers launching a website with some guidance as to the proper treatment of the costs. Hardware or software? Let’s start with the hardware you may need to operate a website. The costs involved fall under the standard rules for depreciable equipment. Specifically, once these assets are up and running, you can deduct 100% of the cost in the first year they’re placed in service (before 2023). This favorable treatment is allowed under the 100% first-year bonus depreciation break. In later years, you can...

30 Sep 2020
0

Key Points About Bonus Depreciation

Roger Rossmeisl, CPA
Small Business Tax Briefs
Key Points About Bonus Depreciation

You’re probably aware of the 100% bonus depreciation tax break that’s available for a wide range of qualifying property. Here are five key points about bonus depreciation to be aware of when it comes to this powerful tax-saving tool. Bonus depreciation is scheduled to phase out Under current law, 100% bonus depreciation will be phased out in steps for property placed in service in calendar years 2023 through 2027. Thus, an 80% rate will apply to property placed in service in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, and a 0% rate will apply in 2027 and later years. For certain aircraft (generally, company planes) and for the pre-January 1, 2027 costs of certain property with a long production period, the phaseout...

26 Sep 2020
0

Payroll Tax Deferral – More Qs Than As

Roger Rossmeisl, CPA
Small Business Tax Briefs
Payroll Tax Deferrals - More Qs Than As

President Trump issued a Presidential Memorandum on 8/8/20 directing the Treasury Secretary to defer certain payroll tax obligations of certain American workers. Employers were immediately faced with the decision of whether to defer taxes, or continue to withhold as usual. The primary reason for the hesitation was the unanswered questions regarding deferral, key among them being what happens when an employee resigns (or is terminated) before the end of the year. This Blog Post seeks to outline, as of the time of this writing, what is known, and not known, about the payroll tax deferral and what business owners should consider before deciding to move forward . . . or not. The Presidential Memorandum The Presidential Memorandum states that the Treasury Secretary may defer the withholding, deposit,...

22 Sep 2020
0

Changes to Excess Business Losses

Roger Rossmeisl, CPA
Small Business Tax Briefs
Changes to Excess Business Losses

The Coronavirus Aid, Relief and Economic Security (CARES) Act made changes to excess business losses. This includes some changes that are retroactive and there may be opportunities for some businesses to file amended tax returns. If you hold an interest in a business, or may do so in the future, here is more information about the changes. Deferral of the excess business loss limits The Tax Cuts and Jobs Act (TCJA) provided that net tax losses from active businesses in excess of an inflation-adjusted $500,000 for joint filers, or an inflation-adjusted $250,000 for other covered taxpayers, are to be treated as net operating loss (NOL) carryforwards in the following tax year. The covered taxpayers are individuals, estates and trusts that own businesses directly or as partners in a...

22 Sep 2020
0

2020 Q4 Tax Calendar: Key Deadlines for Businesses

Roger Rossmeisl, CPA
Small Business Tax Briefs
2020 Q4 Tax Calendar Key Deadlines for Businesses

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2020. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Thursday, October 15 If a calendar-year C corporation that filed an automatic six-month extension: File a 2019 income tax return (Form 1120) and pay any tax, interest and penalties due. Make contributions for 2019 to certain employer-sponsored retirement plans. Monday, November 2 Report income tax withholding and FICA taxes for third quarter 2020 (Form 941) and pay any tax due. (See exception below under “November 10.”) Tuesday, November 10 Report income tax withholding and FICA taxes for third quarter 2020 (Form 941), if you deposited on time (and in full) all of the associated...

13 Sep 2020
0

Employers Have Questions About FICA Deferrals

Roger Rossmeisl, CPA
Small Business Tax Briefs
Employers Have Questions About FICA Deferrals

The IRS has provided guidance to employers regarding the recent presidential action to allow employers to defer the withholding, deposit and payment of certain payroll tax obligations.  The three-page guidance in Notice 2020-65 was issued to implement President Trump’s executive memorandum signed on August 8.  Even with the guidance, employers have questions about FICA deferral, specifically whether, and how, to implement the optional deferral. The President’s action only defers the employee’s share of Social Security taxes; it doesn’t forgive them, meaning employees will still have to pay the taxes later unless Congress acts to eliminate the liability. (The payroll services provider for federal employers announced that federal employees will have their taxes deferred.)  Deferral basics President Trump issued the memorandum in light of the COVID-19 crisis. He directed the...

06 Sep 2020
0

Filing Cash Transaction Reports for Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Filing Cash Transaction Reports for Your Business

Does your business receive large amounts of cash or cash equivalents? You may be required to begin filing cash transaction reports with the IRS to report these transactions. Filing requirements Each person engaged in a trade or business who, in the course of operating, receives more than $10,000 in cash in one transaction, or in two or more related transactions, must file Form 8300. Any transactions conducted in a 24-hour period are considered related transactions. Transactions are also considered related even if they occur over a period of more than 24 hours if the recipient knows, or has reason to know, that each transaction is one of a series of connected transactions. To complete a Form 8300, you will need personal information about the person making the cash...

23 Aug 2020
0

Why is Partner Taxable Income Different than Cash Received

Roger Rossmeisl, CPA
Small Business Tax Briefs
Why is Partner Taxable Income Different than Cash Received

If you’re a partner in a business, you may have come across a situation that gave you pause. 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 is partner taxable income different than cash received? The answer lies in the way partnerships and partners are taxed. Unlike regular 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 share of a partnership’s loss to offset other income.) Separate entity While a partnership isn’t...

23 Aug 2020
0

Bartering is a Taxable Transaction

Roger Rossmeisl, CPA
Small Business Tax Briefs
Bartering is a Taxable Transaction

During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the bartering is a taxable transaction for both parties. For example, if a computer consultant agrees to exchange services with an advertising agency, both parties are taxed on the fair market value of the services received. This is the amount they would normally charge for the same services. If the parties agree to the value of the services in advance, that will be considered the fair market...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

RECENT BLOG ENTRIES

JOIN OUR E-NEWS

LET’S GET SOCIAL

Twitter
Facebook
LinkedIn
logo ©2019 Roger Rossmeisl | Effusion