Archives

Nov
15
2018

Pastoral Donations





Voluntary pastoral donations to a minister were taxable income, not nontaxable gifts. A congregation’s minister collected voluntary donations in specially marked envelopes labeled “pastoral gifts.” The minister argued that these donations were nontaxable gifts. The U.S. Tax Court ruled that the donations were taxable income for several reasons including they far exceeded the sum of his deemed salary and parsonage allowance, and they were meant to keep him at his post.

Nov
14
2018

Selling your business? Defer — and possibly reduce — tax with an installment sale





You’re ready to sell your business and want to get the return from it you’ve earned from the time and money you’ve invested. That means getting a good price and minimizing the tax hit on the proceeds. One option that can help defer tax is an installment sale. Spreading gain over several years is especially beneficial if it allows you to stay under the thresholds for triggering the 3.8% net investment income tax or the 20% long-term capital gains rate.

Nov
13
2018

Backup Withholding Update


Attention small businesses: The IRS has updated its Publication 1281 on backup withholding to reflect a key change made by the Tax Cuts and Jobs Act. Because of the change, effective 1/1/18, the backup withholding tax rate dropped from 28% to 24%. Backup withholding applies when taxpayers fail to supply their correct taxpayer identification number to a payer. It also applies, following notification by the IRS, in other situations such as when taxpayers underreport interest or dividend income on federal tax returns.

Nov
11
2018

Currency Transaction Reports


Despite recommendations made in previous audits, the IRS still fails to use Currency Transaction Reports (CTRs) in an effective manner, according to a Treasury Inspector General for Tax Administration (TIGTA) audit. Financial institutions must file CTRs with the Financial Crimes Enforcement Network for transactions that exceed $10,000 or multiple currency transactions that aggregate more than $10,000 in one day. The IRS isn’t making “systemic use” of data derived from CTRs in its examinations, the audit noted.

Nov
10
2018

Why your nonprofit’s internal and year end financial statements may differ





If your not-for-profit prepares internal financial statements for your board on a monthly, quarterly or other basis, you may notice that they deviate in significant ways from year end statements. What’s going on? Most likely, differences are due to cash basis vs. accrual basis accounting. Your auditors likely convert your cash basis financials to accrual basis statements. The statements also may differ because your auditors have proposed adjusting certain entries for reasonable estimates.