Professional Accounting Blog

    Accounting For Your Prosperity

    Thoughtful Charitable Planning Can Maximize Tax Savings Under the TCJA

    Posted by Karen McCarthy on Apr 16, 2019 2:39:12 PM

    Topics: Tax Planning & Strategies

    The amount you donate to charity can make an impact on the organizations you support while providing relief from federal income tax. Now that we have had a full year to review the impact of the Tax Cuts and Jobs Act (TCJA), charitable giving can still play a key role in your tax planning.

    The TCJA continues to provide tax benefits for charitable giving for those taxpayers who are able to itemize their deductions. In fact, charitable contributions are one of the few deductions that were enhanced under the Act, which increased the AGI limitation on cash contributions from 50% to 60%. The 30% limitation on contributions of appreciated assets still applies and contributions exceeding the limits may be carried over for up to five years. 

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    Uncertainty Looms Over Some Federal Income Tax Provisions

    Posted by Jonathan Ciccotelli on Apr 16, 2019 11:21:17 AM

    Topics: Tax Planning & Strategies

    Congress has yet to tackle several outstanding uncertainties frustrating both businesses and individual taxpayers. The Tax Cuts and Jobs Act (TCJA), for example, contains several “glitches” requiring legislative fixes. Congress also has neglected to pass the traditional “extenders” legislation that retroactively extend certain tax relief provisions that expired at the end of an earlier year, in this case 2017.  

    TCJA glitches

    The sprawling TCJA signed into law in late 2017 contains some inadvertent glitches that range from a lack of clarity to significant drafting errors. In some cases the glitches may produce unintended and costly consequences. Here are examples of two glitches that still need to be addressed and one that has been addressed recently:

    The “retail” glitch. This prevents retailers, restaurants and other businesses from enjoying 100% bonus depreciation on certain assets. Before the TCJA’s enactment, qualified retail improvement property, qualified restaurant property and qualified leasehold improvement property were depreciated over 15 years under the modified accelerated cost recovery system (MACRS) and over 39 years under the alternative depreciation system (ADS).

    The TCJA classifies all of these property types as qualified improvement property (QIP). QIP generally is defined as any improvement to the interior of a nonresidential real property that’s placed in service after the building was placed in service.

    Congress intended QIP that is placed in service after 2017 to have a 15-year MACRS recovery period and a 20-year recovery under the ADS. Because 15-year property is eligible for bonus depreciation, Congress also intended QIP to be eligible for that break.

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    Guidance on Claiming 20% Rental Deduction

    Posted by Peter DeMarco on Apr 3, 2019 11:13:16 AM

    Topics: Tax Planning & Strategies

    The Internal Revenue Service recently offered welcome news to some business owners still sorting out the impact of the Tax Cuts and Jobs Act. 

    One of the key provisions of the tax reform law passed more than a year ago is a 20% deduction of qualified business income from each of a taxpayer’s qualified trades or businesses when operated as a pass-through entity, like a partnership, S corporation or sole proprietorship. As exciting as the deduction sounds, it also produced plenty of questions that the IRS needed to answer to enable people to understand how it would be applied in practice.

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    DOL Proposes Updated Overtime Rule

    Posted by Jonathan Ciccotelli on Mar 27, 2019 9:23:52 AM

    Topics: Tax Planning & Strategies

    The Trump administration has released its long-awaited proposed rule to update the overtime exemptions for so-called white-collar workers under the Fair Labor Standards Act. The rule increases the minimum weekly standard salary level for both regular workers and highly compensated employees (HCEs). It also increases the total annual compensation requirement for HCEs that’s required to qualify them as exempt. In addition, it retains the often confusing “duties test.”  

    The Trump administration rule generally is more favorable to employers than the Obama administration’s 2016 rule, which a federal district court judge in Texas halted before it could take effect. While the latter was expected to make 4.1 million salaried workers newly eligible for overtime (absent some intervening action by their employers), the U.S. Department of Labor (DOL) predicts that the newly proposed rule will make 1.3 million currently exempt employees nonexempt. The DOL estimates the direct costs for employers under the proposed rule will ring in at $224 million less per year than under the 2016 rule. (It’s unclear whether these figures take into account payroll tax obligations.)

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    IRS Provides QBI Deduction Guidance

    Posted by Jonathan Ciccotelli on Jan 28, 2019 11:32:14 AM

    Topics: Tax Planning & Strategies

    When President Trump signed into law the Tax Cuts and Jobs Act (TCJA) in December 2017, much was made of the dramatic cut in corporate tax rates. But the TCJA also includes a generous deduction for smaller businesses that operate as pass-through entities, with income that is “passed through” to owners and taxed as individual income.

    The IRS issued proposed regulations for the qualified business income (QBI), or Section 199A, deduction in August 2018. Now, it has released final regulations and additional guidance, just before the first tax season in which taxpayers can claim the deduction. Among other things, the guidance provides clarity on who qualifies for the QBI deduction and how to calculate the deduction amount.

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    Cleveland's Role in the Future of Technology

    Posted by Michael Goldman on Jan 28, 2019 10:07:08 AM

    Topics: Tax Planning & Strategies

    Unless you were just released from prison or escaped the rock that you have been living under for years, you have probably heard of the emerging technology coined “blockchain.” Furthermore, if you conduct business in Cleveland or live in the area you may have heard of the local movement Blockland. I know the hype around this word gives you that same queasiness you feel when people say words or phrases like “lit,” stay woke,” or “bae.” You must fight the urge of punching a wall but instead immerse yourself in something new.  There have been a lot of articles comparing the beginning of the internet to where we are today with blockchain.  If correct, we are at the dawn of something spectacular, a technology that can transform not only the way we do business but how we live our daily lives.  As Beth Mooney, CEO of KeyBank stated at the Blockland Solutions Conference “If you hate change, you will really hate extinction.” 

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    IRS Waives 2018 Underpayment for Many Taxpayers

    Posted by Jonathan Ciccotelli on Jan 21, 2019 1:32:07 PM

    Topics: Tax Planning & Strategies

    The IRS has some good news for certain taxpayers — it’s waiving underpayment penalties for those whose 2018 federal income tax withholding and estimated tax payments came in under their actual tax liabilities for the year. The waiver recognizes that the Tax Cuts and Jobs Act’s (TCJA’s) overhaul of the federal income tax regime made it difficult for some taxpayers to determine the proper amount to have withheld from their paychecks or include in their quarterly estimated tax payments for 2018. 

    The new tax system

    Many taxpayers started seeing more money in their paychecks in February 2018, after their employers made adjustments based on the IRS’s updated withholding tables. The revised tables reflected the TCJA’s increase in the standard deduction, suspension of personal exemptions, and changes in tax rates and brackets.

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    Tax Reform Gives Business Owners Credit for Paying Some Employees on Leave

    Posted by Peter DeMarco on Jan 18, 2019 2:10:56 PM

    Topics: Tax Planning & Strategies

    One of the lesser known tax breaks of tax reform gives business owners some incentive to reconsider the benefits they extend to employees when they take family leave. 

    The Tax Cuts and Jobs Act of 2017 is the tax reform measure so huge, Americans in many ways are still digesting what it will mean for them. That’s true for small business owners who may be unaware that they now have a good reason to consider paying employees when they take a leave of absence to attend to family members.

    The Family and Medical Leave Act of 1993 already requires most businesses with at least 50 employees to allow up to 12 weeks off for certain specified reasons to care for family members. Individuals often use the protection when they experience the birth of a child, for example, or an extended illness in the family.

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    Shutdown Creates Tax Filing Uncertainty

    Posted by Jonathan Ciccotelli on Jan 14, 2019 1:22:16 PM

    Topics: Tax Planning & Strategies

    The IRS has announced that it will begin accepting paper and electronic tax returns for the 2018 tax year on January 28, but much remains to be seen about how the ongoing shutdown of the federal government will affect this year’s filings. Although the Trump administration has stated that the IRS will pay refunds during the closure — a shift from IRS practice in previous government shutdowns — it’s not clear how quickly such refunds can be processed.

    Effects of the shutdown on the IRS so far

    An estimated 800,000 federal government workers have been furloughed since December 22, 2018, due to the impasse between President Trump and Congress over funding for a southern border wall. The most recent contingency plan published for the IRS lapsed on December 31, 2018, but it provided that only 12.5% of the tax agency’s approximately 80,000 employees would be deemed essential and therefore continue working during a shutdown.

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    IRS Issues Proposed Regs on Business Interest Expense Deductions

    Posted by Jonathan Ciccotelli on Dec 12, 2018 2:27:30 PM

    Topics: Tax Planning & Strategies

    In April 2018, the IRS released temporary guidance on the amended limit on deductions for business interest expense for tax years beginning in 2018. Taxpayers were allowed to rely on that guidance while waiting for regulations. The IRS has now published proposed regulations that taxpayers can rely on until final regs are released.

    The proposed regs significantly expand on the temporary guidance. They include, among other notable provisions, a broader definition of interest than businesses have applied in the past.

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