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A Message to Our Valued Clients

In the interest of public health and the safety of our community, and in compliance with Governor Cuomo’s executive order, Freed Maxick has suspended onsite client work and cancelled all office visits. Meanwhile, our team is working remotely to provide the same high-quality service you have come to expect. Utilizing the best technology at our disposal, we will continue to meet all of your audit, tax, and advisory needs and help you navigate the business implications of the pandemic as it unfolds. You can reach your Freed Maxick representative directly by email or phone, or contact our main line at 716.847.2651.

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Summing It Up

Keeping you ahead of the curve with timely news & updates.


Guide to 2019 Year-End Tax Planning

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The Tax Cuts and Jobs Act (TCJA) of 2017 reduced tax rates for most individuals, introduced a new deduction for owners of sole proprietorships and pass-through entities, increased the standard deduction and, among other things, significantly increased the Alternative Minimum Tax (AMT) exemption and either limited or eliminated many other tax deductions. While the IRS continues to release guidance and update forms to reflect the changes, we offer the following tax planning guide that includes significant opportunities to minimize individual tax obligations.

CAPITAL GAINS

Income from an investment held for more than one year is generally taxed at preferential capital gains rates. For 2019, the long-term capital gain and qualified dividend rates remain unchanged at 0%, 15% or 20%, based on statutory income brackets and adjusted for inflation. For example, the 20% rate applies when taxable income exceeds $488,850 (married filing joint), $461,700 (head of household) or $434,550 (others).

Planning Opportunities:

  • Consider holding capital assets for at least 12 months, as short-term capital gains are taxed at ordinary income rates.
  • Consider gifting appreciated stock or mutual fund shares to relatives in a lower income tax bracket (such as children or grandchildren), who will pay less or no tax on the long-term capital gains when the shares are sold.
  • Consider selling unrealized loss positions in your investment portfolio to offset capital gains recognized earlier in the year.
  • Consider investments in Qualified Opportunity Funds, which allow investors to defer gain recognition.

NET INVESTMENT INCOME TAX (NIIT)

In addition to income tax, individual taxpayers with modified adjusted gross income (MAGI) of more than $200,000 per year ($250,000 if married filing joint; $125,000 if married filing separately) may be subject to net investment income tax. NIIT equals 3.8% of the lesser of (a) net investment income or (b) the amount by which MAGI exceeds the applicable threshold. Net investment income includes interest, dividends, capital gains, rental income (unless derived from ordinary business activities) and passive activities, less deductions properly allocated to net investment income.

Planning Opportunities:

  • Consider electing installment sale treatment so that gains are spread over a number of years. By spreading the income over multiple years, current year net investment income and MAGI may be reduced to minimize or eliminate the 3.8% tax for the current and future tax years.
  • Consider selling unrealized loss positions in your investment portfolio to offset capital gains recognized earlier in the year.
  • Tax-exempt income is not subject to the 3.8% tax. Consider switching investments to tax-exempt investments if it makes sense for your portfolio. State taxation of such investments should also be considered.

SMALL BUSINESS OWNERS

If you own a business, consider the following strategies to minimize taxes:

  • Defer income – If your business uses the cash method of accounting, you can defer billing and collections for products until year-end. If you use the accrual method, you can delay shipping products or delivering services.
  • Accelerate Expenses – If you are a cash basis taxpayer, consider accelerating expenses by paying for business expenses by year-end. Credit card payments are deductible in the year charged rather than paid.
  • Employ Your Child – If you are self-employed, consider employing your child to work in the family business. The child will be taxed at their rate on earnings (earnings are not subject to Kiddie Tax). Wages paid by sole proprietors to children age 17 or younger are exempt from Social Security, Medicare and federal unemployment taxes. Make sure wages paid are reasonable given the child’s age and work skills.
  • Home Office Deduction – The TCJA suspended the home office deduction for employees who work from home. However, this deduction still applies if you are self-employed and have a home office that is used primarily for business activities.
  • Acquire Assets – Acquiring business assets may be a good tax-planning strategy depending on your business situation. For assets with a useful life of more than one year, you generally must depreciate the cost over a period of years, depending on asset type. As a part of TCJA, the following favorable provisions were revised and made available for depreciating fixed assets, maximizing deductions:
    • Section 179 Expensing Election – This election allows you to deduct 100% of the cost of qualifying assets rather than recovering them through depreciation. The maximum amount that can be expensed for 2019 is $1.02 million. This amount is reduced (but not below zero) by the amount by which the cost of total qualifying property exceeds $2.55 million.
    • Bonus Depreciation – The TCJA establishes a 100% first-year deduction for qualified assets placed into service through December 31, 2022, with a recovery period of 20 years or less. This provision applies to both new and used property and was expanded to include qualified film, television and live theatrical productions. (For the period January 1, 2023 – December 31, 2026, bonus depreciation is scheduled to be gradually reduced.)

MEDICAL DEDUCTIONS

For 2019, medical expenses can be deducted to the extent the expenses exceed 10% of adjusted gross income (increased from 7.5% in 2018). Eligible expenses include health insurance premiums (if not deducted elsewhere on your income tax return), long-term care insurance premiums (subject to limitations), medical and dental services and prescription drugs. You may also deduct expenses paid for medical care of a child for whom you provide more than half of total support.

Planning Opportunities:

  • Since individuals generally use cash basis accounting, medical expenses must be paid in the year incurred in order to be deductible. Credit card payments are deductible in the year charged, rather than paid. Be aware, however, that prepayment of medical services in advance of the year services are actually rendered may not accelerate the deduction.
  • If possible, consider bunching elective medical procedures into alternating years (for services and purchases for which timing is within your control, without negatively impacting your or your family’s health) if it will help you exceed the 10% floor and if you have enough total itemized deductions to benefit from itemizing. 

MORTGAGE INTEREST

For tax years 2018-2025, the TCJA reduces the limit on mortgage debt incurred after December 15, 2017, from $1 million to $750,000. Interest on debt incurred prior to December 15, 2017, but refinanced later, is deductible to the extent the new debt does not exceed the original debt. The TCJA also suspends the prior provision that allowed up to $100,000 of interest on home equity debt to be treated as deductible qualified residence interest.

Planning Opportunities:

  • Keep track of how and when you spend proceeds of a loan. For example, if you used a portion of your mortgage debt to acquire business assets, that portion is deductible as trade or business interest or as investment interest expense.
  • Elect out of treatment of debt secured by a qualified residence. This election allows you to characterize interest expense on home equity debt under the specified interest tracing rules and to preserve an otherwise nondeductible expense.

CHARITABLE DONATIONS

Year-end is a great time to make donations to qualified charities. Generally, cash donations to public charities are fully deductible up to 60% of adjusted gross income (AGI), and gifts of appreciated property or gifts for use by public charities are deductible up to 30% of AGI. This benefit only applies if you itemize deductions. For donations made during the year, be sure to get acknowledgment letters from the qualified charities for both cash and property (including stock donations) over $250. If you are not certain if a particular charity is qualified, you can consult the IRS website at http://apps.irs.gov/app/eos/ to search for the organization in question.

Planning Opportunities:

  • Consider bunching donations into alternating years if your total itemized deductions on those years would surpass your standard deduction. A donor-advised fund allows donors to make a charitable contribution, receive an immediate tax deduction and then recommend grants from the fund over time.
  • Donate appreciated stock to charity to avoid paying capital gains tax and get a fair market value deduction for stocks held for more than one year.
  • Sell depreciated stock and donate the cash proceeds to charity. You will receive a charitable deduction as well as a capital loss benefit on the sale of stock. Capital losses offset capital gains, and any resulting net loss in future years offsets a maximum of $3,000 in ordinary income for a married filing joint taxpayer ($1,500 for all other taxpayers).

401(k) AND SEP CONTRIBUTIONS

Contributions to a traditional employer-sponsored defined contribution plan are typically pretax, therefore reducing taxable income. If you are an employee and your company offers a 401(k) plan, you should try to maximize your contribution to boost your retirement savings and save current year taxes. The maximum contribution to a 401(k) plan increased to $19,000 in 2019 (from $18,500 in 2018) and is scheduled to increase to $19,500 for 2020. Employees age 50 or older can also make an additional “catch-up” contribution of up to $6,000 (scheduled to increase to $6,500 in 2020.)

If you are self-employed, consider setting up a self-employed retirement plan (SEP) or some other type of retirement plan in order to maximize the allowable contribution each year.

QUALIFIED CHARITABLE DISTRIBUTIONS (QCD)

Taxpayers who have reached age 70½ can donate up to $100,000 of traditional and Roth IRA distributions directly to qualified charities. The donation satisfies the minimum distribution requirement and is excluded from taxable income. A charitable deduction cannot be claimed for the contribution.

HEALTH SAVINGS ACCOUNT (HSA)

If you are covered by a qualified high-deductible health plan, you can either contribute pretax income to an employer-sponsored Health Savings Account (HSA) or make deductible contributions to an HSA you set up yourself. For 2019, the maximum contributions are $3,500 for single taxpayers (increased from $3,450 in 2018) and $7,100 for family coverage (increased from $7,000 in 2018). Taxpayers aged 55 or older as of the end of the tax year can contribute an additional $1,000. (This means HSA holders can contribute and reduce income by $9,000 if both spouses are over 55.) There is no “use it or lose it” provision with HSAs, as you can carry over unused balances from year to year. Consider paying for qualified out-of-pocket medical expenses with personal funds rather than HSA funds.  You can leave funds invested in your HSA to grow on a tax-deferred basis creating a pool of money to use for medical expenses later in life.

FLEXIBLE SPENDING ACCOUNT (FSA)

Amounts contributed to a healthcare Flexible Spending Account (FSA) are not subject to federal income, Social Security or Medicare taxes. For 2019, the maximum contribution is limited to $2,700 (increased from $2,650 in 2018). Historically, the “use it or lose it” provision applied to amounts contributed to a flexible spending account. However, there is a carryover provision which allows participating employees to carryover up to $500 of unused funds to the following year if your employer offers this option. Some employers may offer a grace period to incur eligible medical expenses, generally two-and-a-half months after year-end. Check with your employer for the rules on the established FSA plan.

Tax Situation ReviewIf you wish to discuss tax planning strategy for the new rules that are generally going into effect for the 2019 tax year, please call the State and Local Tax team at 716.847.2651 to schedule a complimentary Tax Situation Review. Or, click on the button, give us your contact information, and a member of our staff will connect with you to schedule a discussion.

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What is the "Sailing Permit" for U.S. Resident and Nonresident Aliens

sailing permit“The exodus continues. It’s like the party’s over and the last one to leave gets stuck with the check!”

  • Agent Zed, “Men in Black” (a film about aliens)

Immigration laws and tax laws frequently go hand in hand – unsurprising given how complex both can be.

For resident and nonresident aliens who wish to leave the United States, the concept of the “sailing permit” can be one of the most important items of business that must be resolved before departing. But what exactly is a “sailing permit?” (Spoiler: It has nothing to do with maritime law, marina fees, or the United States Coast Guard.)

Internal Revenue Code Section 6851(d)(1) specifies that “[n]o alien shall depart from the United States unless he first procures from the Secretary a certificate that he has complied with all the obligations imposed on him by the income tax laws,” subject to certain exceptions by regulatory authorities. This certificate, simply put, is result of the IRS’s review and concurrence that an alien is up to date with all income tax obligations and is therefore cleared to leave.  

The IRS refers to this certificate in informational materials as a “tax clearance document,” but it’s also known as a “departure permit” or, more commonly, as a “sailing permit.”

As mentioned earlier, all departing resident and nonresident aliens must obtain this document, with the following exceptions: foreign diplomats, employees of international organizations, exchange students and industrial trainees, aliens who earn no U.S. income, and commuting employees who reside in Canada or Mexico whose wages have U.S. taxes withheld.  

Applying for a Sailing Permit from the IRS

If you don’t meet an exception, the application for a sailing permit is done using one of two forms: Form 2063 or Form 1040-C.  

Form 2063 is the simpler and easier of the two forms to prepare, but has certain conditions that must be met. Resident aliens who have taxable income but are not, in the IRS’s evaluation, leaving to avoid paying income taxes, may file this form. Additionally, resident and nonresident aliens who have no taxable income for the current and preceding year may file this form. Form 2063 is short, but more importantly doesn’t require you to calculate and pay tax.  If you don’t qualify for Form 2063, your only avenue is to file Form 1040-C, which is more onerous and requires a calculation of tax before you can receive a sailing permit.  

Regardless of the form you need to file, the window of time you have is limited and you’ll need quite a bit of information to make the process go as smoothly as possible. If you are a resident or nonresident alien and you think you may need to apply for the sailing permit, we stand ready to assist you in the process.  

Tax Planning and Advice for Resident and Nonresident Aliens

We at Freed Maxick pride ourselves on our experience and expertise with sailing permits and other international tax matters. If you are a resident or nonresident alien, and would like to discuss your tax and compliance responsibilities, please connect with us here , or call us at 716.847.2651 to schedule a brief conversation.

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The Basics of a Special Needs Trust

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Caring for a loved one with a disability or extra needs is wrought with many challenges. One of these challenges can be how to leave assets to this beloved after your death in such a way that does not disqualify them from the governmental benefits to which they are entitled. A “special needs trust” can be one solution to this problem.

Funding Special Needs Trusts

Sometimes called a supplemental needs trust, a special needs trust is established for the benefit of a person with special needs to help him or her financially after your death. Usually established by parents for their disabled children or by children for their elderly parents, it is a vehicle by which to leave money or property behind without giving direct control over the assets. In this manner, the value of the assets in trust can be excluded from being considered in federal or state means-tested benefits of the beneficiary, thus allowing them to still receive such items as Supplemental Security Income (SSI) or Medicaid.

Several kinds of assets such as cash, real estate, business interests, stocks or intangible assets can be held in a special needs trust. Property belonging to the beneficiary can be used to fund the trust or assets from another party can be used instead, but both sources of assets should not fund the same trust, meaning there can be more than one special needs trust established for someone.

Improving Quality of Life

Collectively, these assets are used by the trustee(s) (who cannot be the beneficiary) to fund expenses that improve the quality of life for the beneficiary and that are not already covered by existing government benefits. Some examples of such expenses include:

  • Additional caregiving or personal therapy, including visits to or expenses of a companion
  • Reasonable expenses for experiences such as travel and visits to relatives or entertainment
  • Costs for special transportation
  • Personal items

The trust would pay for such expenses directly rather than the beneficiary receiving cash to pay for these expenses him or herself, which might jeopardize benefits.

Finally, a special needs trust has a finite life. It will terminate either when the funds in the trust are depleted, the beneficiary no longer needs the trust, or the beneficiary passes away.

Other Options

Note that there are other avenues by which to give assets or the use of assets to your disabled loved one, one of them being a 529-ABLE plan administered by each state. However, with those plans there are limitations on the annual contribution to the plan and the total value the plan can achieve.

If you are considering one of these vehicles to improve the quality of life of someone in your life with special needs, please contact us so we can help you get started.

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Don’t Be A Stranger! Stay in Touch With Your CPA Throughout the Year.

1031 Like Kind Exchanges - Buffalo Rochester NY

Your CPA Can Help You Avoid Paying Taxes—But Only if They Know What's Going On!

For many people, the process of putting together tax information for their accountant is a burdensome chore. The chore can be that much worse when you have a small business or rental properties, etc. You finally get it done and submitted, and you sit and await your fate: refund or balance due. Whew. With that behind you, you file your records away, and are happy you don’t have to deal with that for another year. You go about your life, dealing with your real life issues… should I sell this property? Buy this one? What do we do with mom’s home, now that she is entering assisted living?

More than the messenger of whether you owe additional taxes

Your CPA is your strategic partner in minimizing taxes due. We are your advocate. But we can’t help you after the fact, when you turn in your records at tax time. We need you to contact us during the process of making these decisions, in case there are things you need to know.

Here is a real world example from the 2016 filing season.

A client of mine sent his records in and included information on the sale of one rental property and the purchase of another rental property. He assumed that because he rolled the profit from the sale into a new property, he wouldn’t be taxed on that gain. Unfortunately, that was an incorrect assumption.

When exchanging like properties, there is a way to avoid paying taxes in the near-term. Known as a Section 1031 exchange, there are several requirements that must be met. Had my client contacted me when he was contemplating the sale, I could have helped him do it in a way to avoid taxes on the transaction in 2015. But because he didn’t call me, he ended up paying a few thousand dollars in tax. This was not good news for me to deliver, and it was not good news for him to receive.

Here’s another example… My own mother.

A retiree, my mother decided to withdraw from her IRA to finance a small addition to her home. She had taxes withheld from the distribution, and assumed she would be OK. She never even thought to call and ask me. What she failed to consider was that her distribution was substantial enough to make her Social Security income taxable. She ended up paying several thousand dollars in tax, much more so than interest she would have paid on a bank loan.

The moral of the story is that we are here to help you, if you just stay in touch with us during the year. Sometimes a quick ten-minute phone call may be all that is necessary. It never hurts to ask, and there are no stupid questions. Other times, we may need a bit more information from you to sort it out. But the time necessary to evaluate it saves us time during busy season, and could potentially save you a lot of tax dollars.

So please, don’t be a stranger. We want to hear from you! For starters, contact us today.

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Three Tax Credits You Should Know About

NY State Tax CreditsWith the new release of income tax credits, three New York State business tax credits have been extended or created to help reduce New York State income tax liability. These credits include potential claims for refundable credits even if you do not owe any income tax and may benefit employers.

For a full explaination of these credits please see our client alert here.

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Understand What Will Affect Your FBAR Filings

By: Howard B. Epstein, CPA

world_connected-1.jpgThe Bank Records and Foreign Transactions Act- commonly referred to as the Bank Secrecy Act, became law in 1970 out of a growing complexity of the national and international economy, and technological revolution. Activities increased not just at home but abroad. This allowed the IRS to require citizens or residents of the U.S., or a person in, or doing business in the U.S. to file reports on any financial accounts with aggregate totals valuing $10,000 or more.  But did you know……

As a result of new legislation on foreign tax reporting and disclosure of financial assets, some taxpayers may be required to file the new foreign financial assets disclosure statement (Form 8938) with the income tax return, and the Report of Foreign Bank and Financial Accounts (FBAR) seperately. Filings and returns are due April 15th or June 15th, if living in the U.S. For those living outside the U.S., extensions for October 15th filings can go through December 15th. These reporting requirements will potentially add to both taxpayer roadblocks and the complexity of tax law changes.

On March 18, 2010, the President signed the HIRE Act, containing the Foreign Account Tax Compliance Act, into law. Addressing taxpayer concerns, the law requires individual taxpayers with foreign financial assets with an aggregate balance exceeding stipulated dollar amounts during a taxable year to file a disclosure statement with his or her income tax return for that taxable year. The stipulated dollar amounts can be found in IRS Form 8938. Beginning with 2011 individual tax return filings; the new law requires compliance with filing the disclosure statement (Form 8938) describing the maximum value of the assets during the taxable year. The disclosure statement should also provide the following information in the case of a:

  • Financial account – the name and address of the foreign financial institution in which such accounts are maintained and the number of such account.

  • Stock or security – the name and address of the foreign issuer and such information as is necessary to identify the class or issue of which such stock or security is part of.

  • Contract, interest, or other instrument – such information as is necessary to identify such contract, interest, or other instrument and the name(s) and addresses of all foreign issuers and counterparties with respect to such contact, interest, or other instrument.

What should you do next?

It is important to note that while there are similarities between the FBAR and FATCA filings, there are also a number of differences when filing each of the Forms. Freed Maxick International tax practice professionals are here to assist you with your FBAR filings. We can assess FBAR filing requirements and prepare current and past due FBARs. We can navigate the IRS guidelines and minimize potential penalties through the various IRS Voluntary Disclosure Programs available. Contact us to connect with our experts.

 

 

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How to Maximize the Oil & Gas Industry Tax Filing Requirements

Various Tax Credits Available to Industries

Author: Jeff Zawada, CPA


Most of the energy used in the United States comes from Fossil Fuels; petroleum, coal, and natural gas, with crude oil products currently used as the dominant source of energy.

According to the EIA (the United States Energy Information Administration) and OPEC, market fundamentals and expectations strengthened in January 2013; forecasting growth from 110,000 bpd to 1.05 million bpd over the course of the next 22 years. While only a 12% growth rate, compared to the 26% growth from 2004-2012, EIA projections are conservative and likely to increase.

What credits are available?

The IRS has specified tax credits for the oil and gas industry; at the state level legislation varies.  “Fracking” — more formally known as high volume hydraulic fracturing — involves injecting large amounts of sand, water and chemicals deep underground at high pressures to extract natural gas from rock formations. The drilling is concentrated in the Marcellus Shale formation, a deep repository that runs through West Virginia, Ohio, Pennsylvania and New York.  Natural gas drilling, while maintaining certain growth expectations, is still hitting barriers in New York State.  

  • Permit applications for conventional vertical gas well, which are still allowed in NYS, have dropped from roughly 600 in 2008 to below 200 in 2012.

  • Site specific special assessment reviews have to be done on an individual basis.

  • Currently Governor Cuomo is expected to announce a formal decision after the Geisinger Health System study, launched in Pennsylvania by Degenstein Foundation, is finished.

State by State Analysis: Quick snapshot

  • Pennsylvania has created over 140,000 jobs in the last few years in the drilling industry. With the launch of the Geisinger Health study, PA will provide deeper insight into drilling impact and incentives across the board.

  • Ohio’s Knox and Stark Counties saw the most drilling activity since 2010, at 43 wells drilled. In total Ohio currently has 11 counties reporting drilling. The state of Ohio also maintains a cost recovery assessment, as per law 1509.50. All money collected, pursuant to section C of this law, shall be deposited in Ohio state treasury to the credit of the oil and gas well fund.

  • In New York State, the NYS Energy Research and Development Authority (NYSERDA) has recently provided incentives for alternative fuel trucks. Credits such as: vouchers of up to $40,000 for the purchase of compressed natural gas, hybrid electric and all-electric Class 3 through 8 trucks operating in New York City, and vouchers that cover up to 80% of the cost of purchasing and installing emission reduction equipment for medium- and heavy-duty diesel vehicles operating primarily in New York City; requests for pre-qualification are now being accepted- currently there is a wait list. E85, compressed natural gas, and hydrogen fuel that is used exclusively to operate a motor vehicle engine is exempt from state sales and use taxes. Additionally, NY cities and counties may reduce the sales and use tax imposed on 20% biodiesel blends (B20) to 80% of the diesel fuel tax rate. The exemption and rate reduction are in effect until September 1, 2014 (Reference from: New York Tax Law 1111 and 1115).

What credits are available to your business? Have you maximized your IDC planning? Learn more HERE.

Freed Maxick understands the growing complexity and nature of the oil and gas industry.  We can navigate industry tax filing requirements, locate tax credits, and help with financial statement audits, reviews and compilations. Still have questions?  Contact us to connect with our experts, or call us at 716-847-2651.

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"Snowbird" Tax Info: Canadians Filing U.S. Tax Residency

By: Howard Epstein, CPA

Are you a Canadian “snowbird” spending winters in the United States? You may not realize it, but you could be considered a U.S. tax resident. If this is the case, the basis on which tax residency is determined is through the IRS “Substantial Presence Test.”

For this purpose, you will be considered a U.S. tax resident if you meet the following requirements:

  • Physically present in the United States at least 31 days in the current year, and

  • 183 days during the 3 year period that includes the current year and the 2 years immediately before that.

If you fall into this category, don’t panic! There is potential relief available to Canadian citizens that are caught by this Substantial Presence Test:

  • You are present in the U.S. for fewer than 183 days in the current year.

  • You maintain a “tax home” in a foreign country during the year.

  • You have a “closer connection” to the foreign country where your “tax home” is than to the U.S.

Are there exceptions to the rule?

There are exceptions to the substantial presence test. The following are a few examples:

  • Days you are in the United States for less than 24 hours- when you are in transit between two places outside the United States.

  • Days you are in the United States as a crew member of a foreign vessel.

  • Days you can classify “exempt individual.”

The term “exempt individual” does not refer to someone exempt from U.S. taxes, but to anyone that claims exemption from counting days of presence in the United States. For example- a teacher or trainee temporarily in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. For a full list of exemptions and exceptions, please refer to the IRS substantial presence test.

What should you do next?

If you exclude days of presence in the United States because you fall under a special category, you must file Form 8840 (Closer Connection Statement) or Form 8843 (Statement of exempt individuals and individuals with a medical condition).

Freed Maxick International tax practice professionals can help you determine if you qualify as a U.S. tax resident, and assist you with Substantial Presence Test filings. We can navigate the IRS guidelines and minimize potential penalties. Contact us to connect with our experts. 

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Tax Update for Country Clubs| Golf Course Owners

It’s always a benefit to business and real estate owners to uncover ways to save money. Did you know that the tax depreciation records of golf course owners likely contain a tax deduction that can be claimed for the 2012 tax year?

The tax deduction is claimed by adopting specific sections of the temporary repair regulations that were issued in December 2011. The IRS is allowing taxpayers to adopt specific sections of these regulations for their 2012 tax year and to defer other sections that may result in income until the 2014 tax year.  Specific sections of these regulations allow taxpayers to claim a deduction for assets that are now reclassified as repairs, routine maintenance, or were disposed of before 2012.

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It’s a lot of information to wade through, but CSP 360 and their affiliate Freed Maxick CPAs can help country clubs and golf course owners navigate through the complex regulations.

Get the Tangible Property Q&A now to learn more!

Check out a few examples of how we can help:

1) Tax Deductions: Golf course owners that capitalized improvements to buildings and the course since 1987, likely removed or abandoned assets as a result. The remaining tax basis in these assets and perhaps, the costs of removal, can be claimed as a tax deduction for 2012 tax year. 

For another example, let’s assume during 2008 that $1 Million of structural improvements were made to a club house facility and $1 Million of land improvements were made to the golf course bringing the total investment to $8 Million. A cost segregation specialist identifies $1 Million of tax basis remaining in the real and personal property disposed of in conjunction with the improvements.

Result? The golf club owner is entitled to claim a $1 Million tax deduction for the 2012 tax year. 


2) Regulation Changes
: All golf course owners should prepare for other changes under these regulations which may affect current accounting policies and procedures. For example, a golf course owner that has historically expensed assets for tax purposes based on their book capitalization policy may need to act before 2014 to be able to continue to deduct assets under this policy beginning in 2014. In addition, all golf course owners will be required to review their treatment of materials and supplies and repairs in order to comply with the new repair regulations. 


3) Uncovering Cash Flow:
For example, let’s assume a club house was constructed and placed in service during 2004 with an original cost of $2 Million and the golf course was constructed with an original cost of $4 Million for a total capitalized cost of $6 Million. A cost segregation study reclassified $2.4 Million of the capitalized cost as land improvements and tangible personal property. 

Result? This reclassification results in a $1.5 Million tax deduction for 2012 providing additional cash flow from the federal and state income tax savings. 

CSP 360 is affiliated with Freed Maxick CPAs and is one of the nation's leading providers of cost segregation and consulting services to real estate owners. CSP 360 is the national leader in providing cost segregation services to the golf and hospitality industries. Our experienced team of Construction Engineers and CPAs work in the cost segregation service niche with no outsourcing.

Allow us to show you how our Cost Segregation and CapX services could result in a substantial income tax savings for the 2012 tax year. Contact Us today to learn more about how we can assist.

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ASC 740: Income Tax Accounting for 2013 LIVE Webcast 5/17

Event Details:                                                                                                   

With the ever-changing and complex regulatory environment, compliance with accounting for income taxes
(ASC 740), formerly known as FAS 109, has become more difficult for companies to manage efficiently. Companies must work hard to ensure that they minimize compliance related errors with the current tax laws and financial accounting and reporting standards. 

In this two-hour LIVE webcast on May 17th, a panel of distinguished professionals assembled by The Knowledge Group will discuss the significant topics related to tax accounting rules and implementation of ASC 740. The faculty will discuss:

  • Brief Overview of ASC 740 and Refresher in Current and Deferred Tax Computation
     
  • Pertinent Accounting Principles and Tax Accounting Provisions
     
  • Application of ASC 740 to State and International Income Taxes
     
  • Hot Topics in Internal Controls
     
  • Issues Relating to Compensation and Benefits Developments
     
  • Best Practices and Practical Guidance for Tax Preparation, Compliance and Effectiveness
     
  • Up-to-the-Minute Regulatory Updates

This is a must attend event for Finance Executives, CPAs, Attorneys, Enrolled Agents, Tax Practitioners, and other Interested Professionals. Attending this course will give you the tools you need to understand the latest developments in ASC-740.

Course Level: Intermediate
Prerequisite: None
Method Of Presentation: Group-Based-Internet
Developer: The Knowledge Group, LLC
Recommended CLE/CPE Hours: 1.75 - 2.0
Advance Preparation: Print and review course materials
Course Code: 134416
Course Fee:
$199 - $249 (Early Bird Discounted Rate - on or before 05/07/2013)
$299 - $349 (Regular Rate - registration after 05/07/2013)
$149 (Government / Nonprofit Rate)
(Please click here for details)

 

Featured Speakers for ASC 740: Income Tax Accounting for 2013 LIVE Webcast :

Douglas I Schwartz, LLC
Douglas I. Schwartz, CPA/CFF, Cr.FA
Managing Member
speaker bio »»

Freed Maxick CPAs, PC
Mark A. Stebbins, CPA
Director - Tax Practice Leader
speaker bio »»

Freed Maxick CPAs, PC
Samuel C. DiSalvo, CPA J.D.
Director
speaker bio »»

Who Should Attend?

- Finance Executives
- CPAs
- Tax Attorneys
- Enrolled Agents
- Tax Practitioners
- Tax Directors
- Tax Managers/Executive
- Internal Audits
- CFOs
- Financial Planners and Executives
- Tax Consultants
- And Other Interested Professionals

Why Attend?

This is a must attend event for anyone interested in understanding the related issues and changes to Income Tax Accounting (ASC 740). In this live virtual course, you will hear:

- Detailed guidance explained by the most qualified key leaders & experts
- Hear directly from experienced practitioners & thought leaders
- Interact directly with panel during Q&A

Advanced registration is recommended as space is limited. Please click the “Register” button below to enroll in this course today. Significant discounts apply for early registrants.

Registration Information:                                                                                                                                    

(Click here for information on group registrations and discounts)


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