05 Mar 2024
0

Taking Your Spouse on a Business Trip? Can You Write Off the Costs?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Taking Your Spouse on a Business Trip? Can You Write Off the Costs?

A recent report shows that post-pandemic global business travel is going strong. The market reached $665.3 billion in 2022 and is estimated to hit $928.4 billion by 2030, according to a report from Research and Markets. If you own your own company and travel for business, you may wonder whether you can deduct the costs of having your spouse accompany you on trips. Is your spouse an employee? The rules for deducting a spouse’s travel costs are very restrictive. First of all, to qualify for the deduction, your spouse must be your employee. This means you can’t deduct the travel costs of a spouse, even if his or her presence has a bona fide business purpose, unless the spouse is an employee of your business. This requirement prevents tax...

25 Feb 2024
0

What’s the Best Accounting Method Route for Business Tax Purposes?

Roger Rossmeisl, CPA
Small Business Tax Briefs
What's the Best Accounting Method Route for Business Tax Purposes?

Businesses basically have two accounting methods to figure their taxable income: cash and accrual. Many businesses have a choice of which method to use for tax purposes. The cash method often provides significant tax benefits for eligible businesses, though some may be better off using the accrual method. Thus, it may be prudent for your business to evaluate its method to ensure that it’s the most advantageous approach. Eligibility to use the cash method “Small businesses,” as defined by the tax code, are generally eligible to use either cash or accrual accounting for tax purposes. (Some businesses may also be eligible to use various hybrid approaches.) Before the Tax Cuts and Jobs Act (TCJA) took effect, the gross receipts threshold for classification as a small business varied...

18 Feb 2024
0

9 Tax Considerations if you’re Starting a Business as a Sole Proprietor

Roger Rossmeisl, CPA
Small Business Tax Briefs
9 Tax Considerations if you're Starting a Business as a Sole Proprietor

When launching a small business, many entrepreneurs start out as sole proprietors. If you’re launching a venture as a sole proprietorship, you need to understand the tax issues involved. Here are nine considerations: 1. You may qualify for the pass-through deduction. To the extent your business generates qualified business income, you’re currently eligible to claim the 20% pass-through deduction, subject to limitations. The deduction is taken “below the line,” meaning it reduces taxable income, rather than being taken “above the line” against your gross income. However, you can take the deduction even if you don’t itemize deductions and instead claim the standard deduction. Be aware that this deduction is only available through 2025, unless Congress acts to extend it. 2. You report income and expenses on Schedule...

18 Feb 2024
0

Update on IRS Efforts to Combat Questionable ERTC Claims

Roger Rossmeisl, CPA
Small Business Tax Briefs
Update on IRS Efforts to Combat Questionable ERTC Claims

The Employee Retention Tax Credit (ERTC) was introduced back when COVID-19 temporarily closed many businesses. The credit provided cash that helped enable struggling businesses to retain employees. Even though the ERTC expired for most employers at the end of the third quarter of 2021, it could still be claimed on amended returns after that. According to the IRS, it began receiving a deluge of “questionable” ERTC claims as some unscrupulous promotors asserted that large tax refunds could easily be obtained — even though there are stringent eligibility requirements. “We saw aggressive marketing around this credit, and well-intentioned businesses were misled into filing claims,” explained IRS Commissioner Danny Werfel. Last year, in a series of actions, the IRS began cracking down on potentially fraudulent claims. They began with...

13 Feb 2024
0

Tax-Favored Qualified Small Business Corporation Status Could Help Your Thrive

Roger Rossmeisl, CPA
Small Business Tax Briefs
Tax-Favored Qualified Small Business Corporation Status Could Help You Thrive

Operating your small business as a Qualified Small Business Corporation (QSBC) could be a tax-wise idea. Tax-free treatment for eligible stock gains QSBCs are the same as garden-variety C corporations for tax and legal purposes — except QSBC shareholders are potentially eligible to exclude from federal income tax 100% of their stock sale gains. That translates into a 0% federal income tax rate on QSBC stock sale profits! However, you must meet several requirements set forth in Section 1202 of the Internal Revenue Code, and not all shares meet the tax-law description of QSBC stock. Finally, there are limitations on the amount of QSBC stock sale gain that you can exclude in any one tax year (but they’re unlikely to apply). Stock acquisition date is key The 100% federal...

13 Feb 2024
0

Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

Roger Rossmeisl, CPA
Small Business Tax Briefs
Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. Credit fundamentals The FICA credit applies to tips that your staff members receive from customers when they buy food and beverages. It doesn’t matter if the food and beverages are consumed on or off the premises. Although tips are paid by customers, for FICA purposes, they’re treated as if you paid them to your employees. As you know, your employees are required to report their tips to you. You must: Withhold and remit the employee’s share of FICA taxes, and Pay the employer’s share of those taxes. How the...

04 Feb 2024
0

Defer a Current Tax Bill with a Like-Kind Exchange

Roger Rossmeisl, CPA
Small Business Tax Briefs
Defer a Current Tax Bill with a Like-Kind Exchange

If you’re interested in selling commercial or investment real estate that has appreciated significantly, one way to defer a tax bill on the gain is with a §1031 “like-kind” exchange. With this transaction, you exchange the property rather than sell it. Although the real estate market has been tough recently in some locations, there are still profitable opportunities (with high resulting tax bills) when the like-kind exchange strategy may be attractive. A like-kind exchange is any exchange of real property held for investment or for productive use in your trade or business (relinquished property) for like-kind investment, trade or business real property (replacement property). For these purposes, like-kind is broadly defined, and most real property is considered to be like-kind with other real property. However, neither the...

21 Jan 2024
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Treasury and IRS Issue Guidance on the Qualified Alternative Fuel Vehicle Refueling Property Credit

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
Treasury and IRS Issue Guidance on the Qualified Alternative Fuel Vehicle Refueling Property Credit

As reported via IR-2024-16 on 1/19/2024 The Internal Revenue Service and the Department of the Treasury today issued Notice 2024-20 to provide guidance on eligible census tracts for the qualified alternative fuel vehicle refueling property credit (the tax credit applicable to the installation of EV chargers) and to announce the intent to propose regulations for the credit. The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property. The changes apply to qualified alternative fuel vehicle refueling property placed in service after December 31, 2022 and before January 1, 2033. Business vs Non-Business Property Property Not Subject to Depreciation The credit amount for property not subject to depreciation is 30% of the cost of the qualified property placed in service during the tax year.  The credit is...

14 Jan 2024
0

FinCEN Alerts BOI Reporting Companies to Fraud Attempts

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
FinCEN Alerts BOI Reporting Companies to Fraud Attempts

As the Financial Crimes Enforcement Network (FinCEN) opens its beneficial ownership information (BOI) reporting portal, its BOI webpage, reflects a fraud alert for individuals and entities who may be subject to beneficial ownership information (BOI) reporting. According to the FinCEN fraud alert, individuals and entities that may be subject to the beneficial ownership information (BOI) reporting requirements have been receiving fraudulent correspondence, via email or traditional mail, that appears as though it came from FinCEN.  In some instances, the fraudulent correspondence may be titled "Important Compliance Notice" and ask the recipient to click on a URL or to scan a QR code. Be advised that e-mails or letters such as this are fraudulent, according to the alert. FinCEN cautions individuals that it does not send unsolicited requests for information,...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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