Own a vacation home? Adjusting rental vs. personal use might save taxes

| Tax Briefs

Now that we’ve hit midsummer, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences: If you rent it out for less than 15 days: You don’t have to report the income. But expenses associated with the rental (such as advertising and cleaning) won’t be deductible. If you rent it out for 15 days or more: You must report the income. But what expenses you can deduct depends on how the home is classified for tax purposes, Read more [...]

How can I make our 401(k) audit run smoothly?

| Audit and Accounting, Business Miscellaneous

Part 2 of 2 in the “How to survive a 401(k) audit” series By Justin Schwartz, CPA   Preparing for a defined benefit or profit sharing plan audit may seem like a daunting task; however, understanding which key areas the auditor may be testing should help put your mind at ease.  Auditors typically focus on three main areas:  participant data, employee/employer contributions and withdrawals from the plan.  We will focus on participant data and employee/employer contributions below. Auditors Read more [...]

Claiming a federal tax deduction for moving costs

| Tax Briefs

Summer is a popular time to move, whether it’s so the kids don’t have to change schools mid-school-year, to avoid having to move in bad weather or simply because it can be an easier time to sell a home. Unfortunately, moving can be expensive. The good news is that you might be eligible for a federal tax deduction for your moving costs.   Pass the tests   The first requirement is that the move be work-related. You don’t have to be an employee; the self-employed can also be eligible for Read more [...]

Pay attention to the details when selling investments

| Tax Briefs

The tax consequences of the sale of an investment, as well as your net return, can be affected by a variety of factors. You’re probably focused on factors such as how much you paid for the investment vs. how much you’re selling it for, whether you held the investment long-term (more than one year) and the tax rate that will apply.   But there are additional details you should pay attention to. If you don’t, the tax consequences of a sale may be different from what you expect. Here are a Read more [...]

Business owners: Put your successor in a position to succeed

| Business Briefs

When it comes time to transition your role as business owner to someone else, you’ll face many changes. One of them is becoming a mentor. As such, you’ll have to communicate clearly, show some patience and have a clear conception of what you want to accomplish before stepping down. Here are some tips on putting your successor in a position to succeed. Key information Find ways to continuously pass on your knowledge. Too often, vital business knowledge is lost when leadership or ownership Read more [...]

Donating a vehicle might not provide the tax deduction you expect

| Tax Briefs

All charitable donations aren’t created equal — some provide larger deductions than others. And it isn’t necessarily just how much or even what you donate that matters. How the charity uses your donation might also affect your deduction. Take vehicle donations, for example. If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it. Determining your deduction You can deduct the vehicle’s fair market value (FMV) if the charity: Read more [...]

Do you know the tax implications of your C corp.’s buy-sell agreement?

| Tax Briefs

Private companies with more than one owner should have a buy-sell agreement to spell out how ownership shares will change hands should an owner depart. For businesses structured as C corporations, the agreement also has significant tax implications that are important to understand.   Buy-sell basics   A buy-sell agreement sets up parameters for the transfer of ownership interests following stated “triggering events,” such as an owner’s death or long-term disability, loss of license or Read more [...]

Could stronger governance benefit your business?

| Business Briefs

Every company has at least one owner. And, in many cases, there exists other leadership through the organizational chart. But not every business has strong governance. In a nutshell, governance is the set of rules, practices and processes by which a company is directed and controlled. Strengthening it can help ensure productivity, reduce legal risks and, when the time comes, ease ownership transitions. Looking at business structure Good governance starts with the initial organization (or Read more [...]

Business owners: When it comes to IRS audits, be prepared

| Tax Briefs

If you recently filed your 2016 income tax return (rather than filing for an extension), you may now be wondering whether it’s likely that your business could be audited by the IRS based on your filing. Here’s what every business owner should know about the process. Catching the IRS’s eye Many business audits occur randomly, but a variety of tax-return-related items are likely to raise red flags with the IRS and may lead to an audit. Here are a few examples: Significant inconsistencies Read more [...]

Real estate investor vs. professional: Why it matters

| Tax Briefs

Income and losses from investment real estate or rental property are passive by definition — unless you’re a real estate professional. Why does this matter? Passive income may be subject to the 3.8% net investment income tax (NIIT), and passive losses generally are deductible only against passive income, with the excess being carried forward. Of course the NIIT is part of the Affordable Care Act (ACA) and might be eliminated under ACA repeal and replace legislation or tax reform legislation. Read more [...]