Category: Accounting & Bookkeeping

PROTECTING AMERICANS FROM TAX HIKES
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PROTECTING AMERICANS FROM TAX HIKES | Stephen J. Ganns

{2:30 minutes to read} On Friday, December 18, 2015, Congress passed the Protecting Americans from Tax Hikes (PATH) Act of 2015, which has some permanent effects for many taxpayers. Whether you are aware of it or not, for most of the last decade, a number of tax credits and deductions had to be reinstated every year. They were usually voted on in December, retroactive for that year, which sometimes made planning impossible. Congress has now made a lot of these credits and deductions permanent. Here is a list that applies to a large number of taxpayers:

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Deferred Tax Balance Sheet Classification for U.S. GAAP is Changing (For the Better)
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Deferred Tax Balance Sheet Classification for U.S. GAAP is Changing (For the Better) | Neil Bass

In our blog from October 26, 2015 we discussed the Top 5 Tax Accounting Differences Between GAAP and IFRS. The Top 5 differences may be summarized as follows:

  1. Balance sheet classification (always noncurrent for IFRS);
  2. Share-based compensation (IFRS requires periodic adjustments due to stock price changes);
  3. FIN 48 (IFRS employs a less-mechanical approach);
  4. Tax allocation among continuing ops, discops and OCI (IFRS employs a less-mechanical approach); and
  5. Inter-company transactions (U.S. GAAP precludes deferred tax asset recognition derived through inter-company transactions).
The most common difference is balance sheet classification.

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IS YOUR RELATIVE A MEDICAL DEPENDENT?
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IS YOUR RELATIVE A MEDICAL DEPENDENT? | Stephen J. Ganns

{2:06 minutes to read} As taxpayers, most of us know all about dependents and what defines a dependent. Most of our dependents over the years have been our children, but they can be other family members such as parents, brothers, sisters, etc. Most of us are somewhat familiar with the rules about regular dependents: • You must provide half of their support; and • They must be children under 19 or full-time students (college or school) from 19–23.

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A NEW WAY TO LOOK AT SOCIAL SECURITY
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A NEW WAY TO LOOK AT SOCIAL SECURITY | Stephen J. Ganns

{5:12 minutes to read} Anytime there's a presidential election, Social Security seems to come into focus in the news. People suggest a million ways to save Social Security: • Raise the retirement age. • Take the cap on income off and make EVERYONE pay on their whole salary. • Eliminate benefits to people with over a certain amount of assets. I, too, have a plan which I think is more fair than the current system, and would also help the economy.

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I’m a Service Company and Formed an LLC. Should I Make an S Corporation Election?
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I’m a Service Company and Formed an LLC. Should I Make an S Corporation Election? | Stephen J. Ganns

{2:42 minutes to read} Twenty years ago, your choices when forming a company were basically to incorporate or not. Now we have an entity called LLC. However, the IRS does not recognize LLCs as business entities.

  • A 1-person LLC files as if it were a sole proprietor.
  • A multiple person LLC (or LLP) files as a partnership.
LLCs  and LLPs can, however, elect to be taxed as a corporation, which then puts them into the situation where the owners must decide if they are going to be a regular C corporation or an S corporation.

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Guaranteeing a U.S. Loan with Foreign Stock? Beware of Section 956
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Guaranteeing a U.S. Loan with Foreign Stock? Beware of Section 956 | Neil Bass

With the U.S. economy experiencing a growth spurt, borrowing is on the rise. Interest rates remain low and debt covenants continue to be light. Lenders want security from their U.S. borrowers, and oftentimes the security is found overseas. At what point does this security result in an effective repatriation of foreign earnings, resulting in taxable income in the U.S.? Internal Revenue Code Section 956, enacted in 1962 and included within “subpart F,” was intended to curtail deferral of U.S. tax on earnings of domestically controlled foreign corporations (CFCs). The proposal was prompted in part by the rapidly rising use by U.S. businesses of subsidiaries incorporated in tax havens. With the enactment of Code Section 956, Congress sought to tax earnings invested in U.S. property on the grounds that the act of bringing such earnings back to the U.S. was “substantially the equivalent of a dividend” to a U.S. shareholder.

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WORKING with TAX EXEMPTS
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WORKING with TAX EXEMPTS | Howard Lipset

Over the years, I have been a volunteer with many charitable organizations – sometimes as a board member, other times as an executive officer and once as the President. And after being away from this kind of involvement, imagine my surprise that I find myself back into it. The cause is Women’s Running, and I am surprised as I am neither a woman nor a runner. At the gym, I prefer the recumbent bike to the treadmill.

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Top 5 Tax Accounting Differences Between GAAP and IFRS
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Top 5 Tax Accounting Differences Between GAAP and IFRS | Neil Bass

The International Financial Reporting Standards (IFRS) – an accounting standard used in most other countries – has several key differences from the standard used by the Generally Accepted Accounting Principles (GAAP) used in the United States. Many companies in the U.S. are now using both accounting systems. It is important for tax professionals to understand some of the key tax accounting differences between GAAP and IFRS.

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Which Business Entity Is Right for You?
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Which Business Entity Is Right for You? | Stephen J. Ganns

{3:42 minutes to read} Starting a business? What type of business entity should you be? For a small business person, there are various types of entities that can be the vehicle you need to run your business. Corporation There are 2 types of corporations: a C-Corporation (C-Corp) or an S-Corporation (S-Corp). Most small businesses will not use the C-Corp entity because it is simply much more than they need. This vehicle is used by larger businesses that need to retain money in the corporation or wish to issue separate classes of stock or have a large number of shareholders.

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Can You Sue Yourself? Sure. Why Not? (The AIG Foreign Tax Credit Affair)
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Can You Sue Yourself? Sure. Why Not? (The AIG Foreign Tax Credit Affair) | Neil Bass

Foreign tax credits are designed for fairness. If you’re conducting business in multiple countries, foreign tax credits provide relief from double taxation, such that the same profits are not taxed twice. For example, if you’re a US-based company conducting business outside of the United States, the profits earned outside of the US would typically be subject to foreign income tax. The IRS may also want to tax the profits, however.

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Continuity of Business Issues for Section 382 Ownership Changes
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Continuity of Business Issues for Section 382 Ownership Changes | Neil Bass

Loss corporations which have had a recent change of ownership may need to be concerned about “continuity of business.” Internal Revenue Code Section 382 (“§ 382”) addresses the impact that ownership changes have on corporations that carry a Net Operating Loss (“NOL”). A corporation with a NOL is commonly called a “loss corporation.” If a loss corporation incurs an ownership change under § 382, the utilization of its NOL is limited.

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Wacky Tax Rates for Interim Periods
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Wacky Tax Rates for Interim Periods | Neil Bass

Companies that report interim financial statements need to record an income tax expense or benefit on their quarterly Profit & Loss statement. For interim reporting purposes, such companies must calculate a tax expense or benefit. This is accomplished by projecting an effective tax rate for the entire year, which could be difficult at times. Corporate effective tax rates for U.S. corporations tend to hover around 40 percent. However, if a company’s projected income for the year is relatively low, or close to “break-even,” interesting results could materialize.

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Though Hard to Believe, Children CAN Sometimes Save You Money
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Though Hard to Believe, Children CAN Sometimes Save You Money | Stephen J. Ganns

{3:42 minutes to read} If you are a working parent or a parent looking for work, you will probably need to pay for childcare. These expenses could qualify for a tax credit that could reduce your federal and state income taxes. The credit is commonly referred to as the Child Dependant Care Credit, but like everything else in the tax code, it is subject to certain regulations.

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Small Business Record Keeping
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Small Business Record Keeping | Stephen Ganns

{3:48 minutes to read} We often get questions at our accounting firm from our clients, especially our small business clients, regarding what kind of records they should keep, how they should keep them, and so forth. Many times with a small business, either the owner keeps their own records, or their spouse/significant other keeps the records. These people may be trained in their own business, but not necessarily in record keeping.

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Letter from the IRS? Don’t Panic!
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Letter from the IRS? Don’t Panic | Stephen Ganns

{3:48 minutes to read} The IRS mails many notices and letters to taxpayers each year. There are a variety of reasons why this might happen. Here are some things you should know in case you receive one. First, do not panic. You can often take care of any notice by simply responding to it. The IRS notice will usually be about a specific issue on your Federal tax return and/or tax account, such as:

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If You Missed the Tax Deadline, Don’t Fret
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If You Missed the Tax Deadline, Don’t Fret | Stephen Ganns

{2:42 minutes to read} For whatever reason, you did not file your taxes on time:

  • Maybe you forgot;
  • Maybe your accountant forgot;
  • Maybe you just don’t care.
Well, you should care, because it’s not best practices to fail to file a tax return if you are required to. If you forgot to file, here’s some advice: File as soon as you can! Especially if you’re getting a refund! Why let the IRS or any state agency hold your money? Let’s say you owe money!

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Sadly Tax Season Is Over. What to Do Now?
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Sadly Tax Season Is Over What to Do Now | Stephen Ganns

{3:48 minutes to read} So you visited with your tax preparer and hopefully they gave you some good advice. Now it’s time to put some of that advice into action. When it’s not tax time, there are things that all taxpayers should do in order to alleviate their tax burden for the next year.

1. If you are an employee, and are either getting too large of a refund or having to paying taxes, you might want to check your withholding.

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TIPA: 4 Tax Deductions That Were Reinstated for 2014
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TIPA 4 Tax Deductions That Were Reinstated for 2014 | Susan Moussi

{2:09 minutes to read} The Tax Increase Prevention Act of 2014 (TIPA), which Congress passed on December 16, 2014, restores certain deductions and credits that were not going to be available in 2014. Here are four of the most common deductions: 1. The Qualified Tuition Deduction

  • If you paid education expenses last year, you have the option of getting a credit or a deduction for expenses incurred to pay tuition and fees.
  • You may be able to write off as much as $4,000.

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Does Net Investment Income Tax Apply to You?
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Does Net Investment Income Tax Apply to You | Stephen Ganns

{2:12 minutes to read} As many of you know, in 2013 a new tax came into being. It is called the Net Investment Income Tax. This is a tax on investment income, at a rate of 3.8%, on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold based on your filing status. The income thresholds are as follows:

  • Single or head of household – $200,000
  • Married, filing jointly, or qualifying widow(er) with a child – $250,000

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A Refresher on Capital Gains and Losses
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A Refresher on Capital Gains and Losses | Stephen Ganns

3:54 minutes to read} Most taxpayers are aware of capital gains and losses, because somewhere along the way they might have sold some stocks and/or bonds. Just to clarify a little more about what capital gains/losses are, and what is reportable and not, I offer the following: Capital Assets Capital assets include property such as:

  • Stocks
  • Bonds
  • Securities
  • Home
  • Car
  • Investment property (i.e. rental piece of real estate)
Another type of asset that a business will have is inventory. To clarify:

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Don’t Wait Until April! 8 Reasons to File Taxes Early
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Don’t Wait Until April! 8 Reasons to File Taxes Early | Susan Moussi

{3:05 minutes to read} Do you file your taxes as soon as your documents arrive in the mail, or sometime in April? It’s open season right now. Here are eight reasons why, when it comes to filing taxes, sooner is better than later. 1. FAFSA Forms This time of year, if you’re a parent of a college student, you may be filling out the Free Application for Student Aid (FAFSA).

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3 “Tips” on Tip and Gratuity Income
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3 Tips on Tip and Gratuity Income | Stephen Ganns

{1:50 minutes to read} If you receive tips or gratuities at work, there are some things you should know about that type of income as it relates to taxes. To help, here are a few “Tips.” 1. All tips and gratuity income is taxable, whether in the form of cash or other items or gifts such as event tickets. 2. Restaurant workers, the largest group of employees in our country earning tips, must also include any tip splitting agreements they have with other employees.

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5 STEPS TO TAKE BEFORE OPENING YOUR SMALL BUSINESS
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5 STEPS TO TAKE BEFORE OPENING YOUR SMALL BUSINESS | Mathew Heggem

{3:04 minutes to read} It’s all about relationships. Relationships with your customers and vendors are at the core of your success. No startup or small business can thrive without positive referral relationships. Paperwork is what documents these relationships, yet so many business owners find themselves on the wrong side of the line that separates mild disorganization from utter chaos. Here are a few tips to help you tame that paper tiger growing in your back office:

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Dependents and Exemptions – Get the Tax Facts!
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Dependents and Exemptions – Get the Tax Facts! | Stephen Ganns

{3:30 minutes to read} Basically, there are two types of exemptions:

  • Personal
  • Dependent
Usually, you can deduct $3,950 for each exemption you claim on your 2014 tax return. Most states also give a deduction for dependents. Most states also give a deduction for dependents. If you file a joint return, you will usually claim exemptions for yourself and your spouse. If you file a separate return, you can still claim exemptions for your spouse as long as they:

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Business Filing Deadlines for the 2014 Tax Year
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Business Filing Deadlines for the 2014 Tax Year | Susan Moussi

{3:30 minutes to read} At the beginning of every year, most businesses find themselves in a rush to complete all of the necessary tax documents within the allotted time set forth by the government(s). They are busy reconciling all of their accounts in order to provide their tax preparer with the information that is necessary in order to file their income tax returns – which may be due as early as March 15th in some circumstances.

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ACCURATE INVENTORY: IS MANAGEMENT MORE IMPORTANT THAN CONTROL?
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ACCURATE INVENTORY: IS MANAGEMENT MORE IMPORTANT THAN CONTROL? | Mathew Heggem

Maintaining an up-to-date inventory may seem like a challenge at first, but the rewards are worth it. ​If a business does not track inventory accurately and strike a balance between inventory and sales, perishable items may spoil. On the other hand, if inventory is too low, customers may get angry and take their business elsewhere. Customer service is not the only thing that can be affected by inventory.

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Your Rights as a TaxPayer
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Your Rights as a TaxPayer | Stephen Ganns

[Time to Read: 1.3 mins] Did you realize as a taxpayer you have rights? Well, actually, you do. As citizens of the United States of America, who are responsible to pay taxes in order to allow our government to continue to run, we do have some rights. The following are excerpts from an IRS publication, which delineates those rights:

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6 Ways Your Client Can Damage Their Credit Score
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6 Ways Your Client Can Damage Their Credit Score | Georg Finder

[Time to Read: 4.3 mins] During the period of a divorce, a client’s credit score is vulnerable to self-inflicted damage, mostly due to scared thinking, not thinking at all, or even rushing into decisions. The following illustrates 6 seemingly minor actions which can cause major harm to your client’s credit score, often prolonging their inability to get credit approval, job acceptance, and insurance. 1.   Close credit accounts with small balances

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