automotive cpa Archives - Page 12 of 36

06 Sep 2021

What IRS Auditors Know About Your Business Industry

In order to prepare for a business audit, an IRS examiner generally does research about the specific industry and issues on the taxpayer’s return. Examiners may use IRS “Audit Techniques Guides (ATGs).” A little-known secret is that these guides are available to the public on the IRS website. In other words, your business can use the same guides to gain insight into what IRS auditors know, and what the IRS is looking for in terms of compliance with tax laws and regulations. Many ATGs target specific industries or businesses, such as new vehicle dealerships, construction, aerospace, art galleries, architecture and veterinary medicine. Others address issues that frequently arise in audits, such as executive compensation, passive activity losses and capitalization of tangible property. Unique issues IRS auditors need to...

27 Aug 2021

Possible Tax Consequences of Guaranteeing a Loan to your Corporation

Roger Rossmeisl, CPA

Automotive, Small Business Tax Briefs

Possible Tax Consequences of Guaranteeing a Loan to Your Corporation

What if you decide to, or are asked to, guarantee a loan to your corporation? Before agreeing to act as a guarantor, endorser or indemnitor of a debt obligation of your closely held corporation, be aware of the possible tax consequences. If your corporation defaults on the loan and you’re required to pay principal or interest under the guarantee agreement, you don’t want to be blindsided. Business vs. non-business If you’re compelled to make good on the obligation, the payment of principal or interest in discharge of the obligation generally results in a bad debt deduction. This may be either a business or a non-business bad debt deduction. If it’s a business bad debt, it’s deductible against ordinary income. A business bad debt can be either totally...

15 Aug 2021

California AB-150 Provides SALT Cap Work-Around

Roger Rossmeisl, CPA

Automotive, Small Business Tax Briefs

California AB-150 Provides SALT Cap Work-Around

While Congress develops legislation that would eliminate, and/or otherwise mitigate, the current TCJA implemented state and local tax (SALT) limit on an individual taxpayer's ability to take the itemized deduction for state and local taxes, California has just passed legislation which offers a work-around that will allow many Californians to mitigate the effects of the current $10,000 federal limitation on SALT deductions. On 7/16/2021, Governor Newsom signed into law AB-150, which provides a means by which certain pass-through entities (Qualified Entities) can make an election to pay California income tax (at the entity-level) on behalf of their owners, for which their consent must be given. The benefits yielded could be substantial for pass-through entity owners for which work-around makes sense. Curiously the IRS has approved these...

05 Aug 2021

How New Business Start-up Expenses are Handled on your Tax Return

Roger Rossmeisl, CPA

Small Business Tax Briefs

How New Business Start-up Expenses are Handled on your Tax Return

Despite the COVID-19 pandemic, government officials are seeing a large increase in the number of new businesses being launched. From June 2020 through June 2021, the U.S. Census Bureau reports that business applications are up 18.6%. The Bureau measures this by the number of businesses applying for an Employer Identification Number. Entrepreneurs often don’t know that many of the expenses incurred by start-ups can’t be currently deducted. You should be aware that the way you handle some of your initial expenses can make a large difference in your federal tax bill. How to treat expenses for tax purposes If you’re starting or planning to launch a new business, keep these three rules in mind: Start-up costs include those incurred or paid while creating an active trade or business...

04 Aug 2021

Who in your Business Can Be Hit with the “Trust Fund Recovery Penalty”?

Roger Rossmeisl, CPA

Small Business Tax Briefs

Who in your Business can be Hit with the Trust Fund Recovery Penalty?

There’s a harsh tax penalty that you could be at risk for paying personally if you own or manage a business with employees. It’s called the “Trust Fund Recovery Penalty” and it applies to the Social Security and income taxes required to be withheld by a business from its employees’ wages. Because taxes are considered property of the government, the employer holds them in “trust” on the government’s behalf until they’re paid over. The penalty is also sometimes called the “100% penalty” because the person liable and responsible for the taxes will be penalized 100% of the taxes due. Accordingly, the amounts IRS seeks when the penalty is applied are usually substantial, and IRS is aggressive in enforcing the penalty. Wide-ranging penalty The Trust Fund Recovery Penalty is...

03 Aug 2021

10 Facts About the Pass-Through Deduction for Qualified Business Income

Roger Rossmeisl, CPA

Small Business Tax Briefs

10 Facts About the Pass-Through Deduction for Qualified Business Income

Are you eligible to take the deduction for qualified business income (QBI)? Here are 10 facts about this valuable tax break, referred to as the pass-through deduction, QBI deduction or §199A deduction. It’s available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships and S corporations. It may also be claimed by trusts and estates. The deduction is intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate. It’s taken “below the line.” That means it reduces your taxable income but not your adjusted gross income. But it’s available regardless of whether you itemize deductions or take the standard deduction. The deduction has two components: 20% of QBI from a domestic business operated as...

27 Jul 2021

Business Meal and Vehicle Expense Recordkeeping DOs and DON’Ts

Roger Rossmeisl, CPA

Small Business Tax Briefs

Business Meal and Vehicle Expense Recordkeeping DOs and DONTs

If you’re claiming deductions for business meals or auto expenses, expect the IRS to closely review them. In some cases, taxpayers have incomplete documentation or try to create records months (or years) later. In doing so, they fail to meet the strict substantiation requirements set forth under tax law. Tax auditors are adept at rooting out inconsistencies, omissions and errors in taxpayers’ records, as illustrated by one recent U.S. Tax Court case. Facts of the case In the case, the taxpayer ran a notary and paralegal business. She deducted business meals and vehicle expenses that she allegedly incurred in connection with her business. The deductions were denied by the IRS and the court. Tax law “establishes higher substantiation requirements” for these and certain other expenses, the court noted....

20 Jul 2021

IRS 2021 “Dirty Dozen” – Persuading Taxpayers into Unscrupulous Actions

Roger Rossmeisl, CPA

Fraud Briefs

IRS 2021 Dirty Dozen - Persuading Taxpayers into Unscrupulous Actions

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. This year's "Dirty Dozen" is separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (See Blog Post 1049) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (See Blog Post 1051) Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements (This Blog Post) The Internal Revenue Service, in IR 2021-144, concluded the "Dirty Dozen" list of tax scams with a warning to taxpayers...

20 Jul 2021

IRS 2021 “Dirty Dozen” – Preying on Unsuspecting Victims

Roger Rossmeisl, CPA

Fraud Briefs

IRS 2021 Dirty Dozen - Preying on Unsuspecting Victims

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. This year's "Dirty Dozen" is separated into four separate categories: Pandemic-related scams like Economic Impact Payment theft (See Blog Post 1049) Personal information cons including phishing, ransomware and phone "vishing" (See Blog Post 1050) Ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud (This Blog Post) Schemes that persuade taxpayers into unscrupulous actions such as Offer In Compromise mills and syndicated conservation easements (See Blog Post 1052) The Internal Revenue Service, via IR 2021-141, continued its "Dirty Dozen" tax scams with a warning for people to watch...

What IRS Auditors Know About Your Business Industry

Possible Tax Consequences of Guaranteeing a Loan to your Corporation

California AB-150 Provides SALT Cap Work-Around

How New Business Start-up Expenses are Handled on your Tax Return

Who in your Business Can Be Hit with the “Trust Fund Recovery Penalty”?

10 Facts About the Pass-Through Deduction for Qualified Business Income

Business Meal and Vehicle Expense Recordkeeping DOs and DON’Ts

IRS 2021 “Dirty Dozen” – Persuading Taxpayers into Unscrupulous Actions

IRS 2021 “Dirty Dozen” – Preying on Unsuspecting Victims

ROGER ROSSMEISL, CPA

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