Tax News Archives - Page 11 of 28

Nov
16
2018

Donate appreciated stock for twice the tax benefits

Did you know that you may be able to enjoy two tax benefits if you donate long-term appreciated stock instead of cash? First, if you itemize, you can claim a charitable deduction equal to the stock’s fair market value. Second, you can avoid the capital gains tax you’d pay if you sold the stock. But the charitable deduction will provide a tax benefit only if your total itemized deductions exceed your standard deduction,

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
09
2018

2018 tax return questions?

Do you have questions about your 2018 tax return? The IRS has launched a webpage titled “Tax Reform,” with links to detailed information related to the Tax Cuts and Jobs Act. The page has three sections, the first of which addresses individual taxpayers, on topics such as withholding; tax credits and deductions; and issues affecting members of the U.S. Armed Forces. Section 2 deals with business taxpayers and covers income, credits and deductions, depreciation,

Nov
09
2018

Now’s the time to review your business expenses

As we approach the end of the year, it’s a good idea to review your business’s expenses for deductibility. At the same time, consider whether you’d benefit from accelerating certain expenses into this year. There’s no master list of deductible business expenses in the Internal Revenue Code (IRC). Some deductions are expressly authorized or excluded, but most are governed by the general rule of IRC Sec. 162, which permits businesses to deduct their “ordinary and necessary” expenses.

Nov
08
2018

Year End Tax Planning

Year-end tax planning can ease the tax bite of capital gains and losses. While many people have made money on the stock market this year, there are others who’ve recognized losses on securities. The right year-end tax planning strategy for an individual’s capital gains and losses will depend on a series of factors, including the amount of regular taxable income, the tax rate that applies to the individual’s “adjusted net capital gain,” whether recognized capital gains are long- or short-term,

Nov
07
2018

Year-end Tax Planning 2018

Most businesses are affected by the Tax Cuts and Jobs Act. That’s why the IRS is reminding business owners to be aware of the many significant changes before this year ends. These include the new qualified business income deduction, which could reduce taxes for pass-throughs, and the temporary 100% expensing for certain business assets. Also affected is the tax treatment of employee fringe benefits such as the deductibility of transportation benefits, moving expense reimbursements and more.

Nov
06
2018

Passive Activity Losses

Passive activity losses (PALs) can generally only offset passive activity income, not employment income, unless the taxpayer is a real estate professional. One married couple had income from his job as an engineer, and PALs from her managing their rental properties. They claimed the PALs against his employment income and submitted time logs to show she materially participated in the rental activities. The IRS found her time logged fell short of the 750-hour threshold to qualify as a real estate pro and denied the PALs.