tag:blogger.com,1999:blog-51650230771926521442024-02-18T19:51:30.443-08:00McArthur & Company,PA Certified Public Accountants15720 John J Delaney Drive, Suite 400
Charlotte, NC 28277
704.544.8429 info@mcarthurco.comMcArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.comBlogger82125tag:blogger.com,1999:blog-5165023077192652144.post-81511125288529545292012-11-05T08:01:00.001-08:002012-11-05T08:01:34.100-08:00Taxmageddon<br />
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With the election just one short day away (FINALLY), the
media and national spotlight is primarily centered on determining our next
President. While the election for President, House, and Senate are
undoubtedly important, they are not the sole determining factor of the fiscal
cliff that faces our nation and each and every one of us as taxpayers. In
our office, this fiscal cliff or taxmageddon are our primary concern as we move
into the final two months of 2012. </div>
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What is taxmageddon you ask? First, it is a clever
term the media has coined to highlight an important tax law shift.
Second, IT IS AN IMPORTANT TAX LAW SHIFT. This shift is brought on
primarily due to fact that there are many tax provisions expiring at the end of
2012. Congress has yet to act on extending these provisions, therefore,
the tax laws will shift and trigger many changes for taxpayers to face.
With no solution on tap at this time, it’s imperative the taxpayers, businesses
and individuals, take time to work with their CPAs to determine if any action
should be taken prior to year-end.</div>
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This list of tax provisions set to expire at 2012 is rather
long, but I do want to highlight of few key provisions here:</div>
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<li><b style="text-indent: -0.25in;">Tax Rates</b><span style="text-indent: -0.25in;">: The 10% bracket
currently in place will disappear and income in that bracket will revert back
to 15%. All other rates will revert back to a graduated rate schedule of
28%, 31%, 36%, and 39.6%. Additionally, the taxation of </span><i style="text-indent: -0.25in;">qualified
dividends and capital gains</i><span style="text-indent: -0.25in;"> at preferential rates of 0% or 15% will expire
as well. </span></li>
<li><span style="font-family: Symbol; text-indent: -0.25in;"><span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span><b style="text-indent: -0.25in;">Payroll tax deduction</b><span style="text-indent: -0.25in;">: The lower 4.2%
rate for employees’ portion of Social Security payroll will move back to
6.2%. </span></li>
<li><span style="font-family: Symbol; text-indent: -0.25in;"><span style="font-family: 'Times New Roman'; font-size: 7pt;"> </span></span><b style="text-indent: -0.25in;">Sec. 179 Deduction</b><span style="text-indent: -0.25in;">: A huge
deduction in the ability to utilize Sec. 179 for businesses is on the
horizon. The Sec. 179 limit will drop to $25,000.</span></li>
<li><b style="text-indent: -0.25in;">AMT “Patch”</b><span style="text-indent: -0.25in;">: The question here is
will Congress act again as they have for the last several years to patch the
AMT exemption or will the AMT tax become a major force for many taxpayers who
had previously gone unaffected by the tax. </span> </li>
</ul>
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The bottom line is stay tuned and stay connected to your
CPA. Put a plan in place for that can be enacted by 12/31/12. And while
you’re at it, put a backup plan in place as well. As a CPA, we wish we
could get our crystal ball and forecast how Congress will act.
Unfortunately, we cannot. What we can do is work with you to determine
your tax implications of various scenarios and what steps you can take to
control those outcomes. </div>
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<br /></div>
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brad@mcarthurco.com</div>
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704.544.8429</div>
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<br /></div>
McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com2tag:blogger.com,1999:blog-5165023077192652144.post-46717459282745049772012-10-17T12:49:00.002-07:002012-10-17T12:51:19.341-07:00Business Valuations Continued...<br />
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<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">As seen in the last blog, there are multiple reasons to have
your business valued. In the same way, many different methods exist to
determine that value. Through this blog, we will examine a few to see
which one might be right for you.<o:p></o:p></span></div>
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<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">The <i>Income Approach</i> measures the present worth of the
future benefits of business ownership through two types of methods: the
Discounted Future Returns method and the Capitalized Returns method. The
first is used when a business’s future returns can be reasonably estimated and
will differ greatly year to year from the current returns. Factors such
as economic conditions or a change in business structure can cause these
differences. The Capitalized returns method is used when the future
operations of the business are <b>not</b> expected to change greatly from
current or when those future earnings are expected to grow at a predictable
rate.<o:p></o:p></span></div>
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<span style="font-family: Trebuchet MS, sans-serif; font-size: small;">Next, </span><i style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">the Market Approach</i><span style="font-family: Trebuchet MS, sans-serif; font-size: small;"> assumes that a value can be
assigned to a business based on the sale of comparable businesses. This
same method is used most commonly to value homes in the real estate
market. Because of the search for truly comparable companies and the use
of detailed ratios, this method is a very time consuming and expensive option
making it best for large, </span><span style="font-family: Trebuchet MS, sans-serif;">publicly</span><span style="font-family: Trebuchet MS, sans-serif; font-size: small;"> traded companies.<o:p></o:p></span></div>
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<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">Like the Income Approach, <i>the Asset-based Approach</i> has
two applications: the Net Asset Value method and the Liquidation Value
method. When using the Net Asset method, all assets are adjusted to their
fair market value to then determine the value of the business. With the
Liquidation Value method, the net proceeds available after liquidating business
assets and paying off liabilities is then discounted to its present value to
determine the value of the business.<o:p></o:p></span></div>
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<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">There are many other ways to value your business. The most
common for small businesses is the <i>Excess Earnings Approach</i>. This
method first determines the value of all net tangible assets and adds a
reasonable rate of return on those net tangible assets. Next, the value
of the businesses’ intangible assets is computed. These two amounts are
then added together to determine the value of the business. <o:p></o:p></span></div>
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<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">In all business valuations, it is important to remember that
many factors come together to determine the final value that is assigned to the
business. Business valuations can be used as tools for business sales,
estate planning, gift valuations, buy-sell agreements and more. Contact
our Firm if have a need to explore this subject further. <o:p></o:p></span><br />
<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;"><br /></span>
<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">brad@mcarthurco.com</span><br />
<span style="font-family: 'Trebuchet MS', sans-serif; font-size: 12pt;">704.544.8429</span></div>
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McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-20239913666093237872012-09-24T11:24:00.000-07:002012-09-24T11:24:57.896-07:00What is My Business Worth?<br />
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If you’re a small business owner, you’ve likely spent years
and much of your own money building your business, but do you know what that
business is now worth? It is an important question for a number of
reasons: </div>
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<span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">When it’s time to sell, you’ll naturally need
the businesses value</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Owners often need this information when
obtaining financing through a bank</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Gift or estate tax valuations</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Buy/sell agreements</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Personal Financial Statements</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Divorce proceedings</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">Charitable contributions</span><br /><span style="font-family: Symbol; text-indent: -0.25in;">·<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><span style="text-indent: -0.25in;">To defend FMV if the IRS were to ever examine a
sale or acquisition</span><!--[if !supportLists]--></div>
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Over the next few blogs, we’ll look at a few basics of
business valuations. Today, let’s look at a few of those basics. When a
valuation is performed, it is based on a specific point in time and can be
accomplished via a number of methods. The value can even be more
than one number. Any valuation is based upon judgments and estimates; the
ultimate value of a business is based on each person’s assessment of benefits,
risks, and future returns. At the end of the day, a business is valued at
the present worth of the future benefits of ownership: a willing buyer
and a willing seller. </div>
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The general methods of valuation include the Income
Approach, the Market Approach, an Asset-based Approach, Excess Earnings
Approach, but there are other models as well. Within each of these
approaches there are sub-groups and multiple estimates to make. Again, it
is important to note that there are multiple decisions to make by the
individual carrying out the valuation. </div>
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In our next blog, we’ll look further into these methods and
which one might be right for you. In the meantime, if you feel you need
these type of services, please contact our Firm to discuss further. </div>
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<o:p>brad@mcarthurco.com</o:p></div>
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<o:p>704.544.8429</o:p></div>
McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-46922158605982032052012-09-10T08:32:00.002-07:002012-09-10T08:32:53.465-07:00Football is Back! <br />
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<b>Football is Back</b> – <b>Can my business deduct the
expense of Season tickets?</b> </div>
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In cities across America, fans thronged to stadiums to
support their favorite teams. Perhaps a few of you business owners out
there use this as an opportunity to entertain clients and prospects and to
further your business growth and potential. <span lang="EN" style="font-family: Arial, sans-serif; font-size: 9pt;">Generally, you cannot deduct more than the face value of an entertainment
ticket, even if you paid a higher price. For example, you cannot deduct service
fees you pay to ticket agencies or brokers or any amount over the face value of
the tickets you pay to scalpers. </span><span lang="EN"> </span><span lang="EN" style="font-family: Arial, sans-serif; font-size: 9pt;">If you buy season tickets for business use,
you must treat each ticket in the season as a separate item. To determine the
cost of individual tickets, divide the total cost (but not more than face
value) by the number of games or performances in the season. You must keep
records to show whether you use each ticket as a gift or entertainment. Also,
you must be able to prove the cost of nonluxury box seat tickets if you rent a
skybox or other private luxury box for more than one event. For
your luxury box rentals, if expenses for food and beverages are separately
stated, you can deduct these expenses in addition to the amounts allowable for
the skybox, subject to the requirements and limits that apply. The amounts
separately stated for food and beverages must be reasonable. You cannot inflate
the charges for food and beverages to avoid the limited deduction for skybox
rentals.<o:p></o:p></span></div>
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With all entertainment related expenses, the general rules
must be remembered to justify the expense and documented accordingly:</div>
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<!--[if !supportLists]-->1 1.<span style="font-size: 7pt;"> </span><!--[endif]-->Amount: <span style="font-family: Arial, sans-serif; font-size: 9pt;">Cost of each separate expense.
Incidental expenses such as taxis, telephones, etc., may be totaled on a daily
basis.</span></div>
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<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
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2.<span style="font-size: 7pt;"> </span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 9pt;">Time: Date of entertainment.</span></div>
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<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
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<!--[if !supportLists]-->3 3.<span style="font-size: 7pt;"> </span><!--[endif]-->Place or Description: <span style="font-family: Arial, sans-serif; font-size: 9pt;">Name and
address or location of place of entertainment. Type of entertainment if not otherwise
apparent.</span></div>
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<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
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<!--[if !supportLists]-->4 4.<span style="font-size: 7pt;"> </span><!--[endif]--><span style="font-family: Arial, sans-serif; font-size: 9pt;">Business Purpose: Business purpose for the expense or the
business benefit gained or expected to be gained. For entertainment, the
nature of the business discussion or activity. If the entertainment was
directly before or after a business discussion: the date, place, nature, and
duration of the business discussion, and the identities of the persons who took
part in both the business discussion and the entertainment activity. </span></div>
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<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
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5. Business Relationship: <span style="font-family: Arial, sans-serif; font-size: 9pt;">Occupations
or other information (such as names, titles, or other designations) about the
recipients that shows their business relationship to you. For
entertainment, you must also prove that you or your employee was present if the
entertainment was a business meal.</span></div>
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Enjoy football season and if your Panthers fan, it’s not
time to panic yet…15 more games to go before a hopeful playoff birth! </div>
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<br /></div>
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brad@mcarthurco.com</div>
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704.544.8429</div>
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<br /></div>
McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-77002429062116315232012-08-30T06:44:00.000-07:002012-08-30T06:44:26.958-07:00Extension Deadlines Looming<br />
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For anyone who extended their corporate returns, partnership
returns, and/or individual returns, extension deadlines are approaching
quickly. </div>
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For Corporations and Partnerships who filed an extension,
your tax returns are due by <b>September 17, 2012</b>. Additionally,
contributions to retirement plans must be made by September 17.</div>
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For Individuals who filed an extension, your tax returns are
due by <b>October 15, 2012.</b> </div>
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Penalties can pile up if not timely filed; therefore, please
take the appropriate steps to file timely. </div>
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If you need assistance completing your 2011 tax returns,
please contact our office as soon as possible. </div>
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<br /></div>
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brad@mcarthurco.com</div>
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704.544.8429 </div>
McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-89937171729980957422012-08-15T07:25:00.000-07:002012-08-15T07:25:13.006-07:00What is AMT?<br />
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AMT is the Alternative Minimum Tax system and establishes a
parallel set of tax rules for taxpayers and tax preparers to work with when
filing individual income tax returns. It was created as a method to
establish a minimum tax for individuals making certain levels of income.
Over the years, various patches and exemptions have lessened the impact of the
AMT, but it is still has a direct impact on many taxpayers. </div>
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Whether you are aware of it or not, each taxpayer must
calculate their taxes under both the “normal” tax guidelines as well as the AMT
tax guidelines. If you pay a CPA or other preparer to complete your tax
returns or use TurboTax or similar software programs, this calculation is being
completed. The reason taxes are calculated under both guidelines is that
you will owe the <u>higher</u> of the normal income taxes and the AMT
tax. </div>
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<b><u>Why Should I Care?<o:p></o:p></u></b></div>
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Over the years, Congress has established exemption levels
that have kept a large number of taxpayers from incurring AMT taxes.
However, as of this point of 2012, the AMT exemption level is set to drop to
its lowest level since the early 2000’s. In 2011, the AMT exemption
amount was $74,450 for a couple married filing jointly and $48,450 for a single
individual. In 2012, the exemption amounts drop to $45,000 for a couple
married filing jointly and $33,750 for a single individual. </div>
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If you paid AMT in the past, this reduced exemption will
likely increase your AMT tax. If you have not been subject to AMT in the
prior years, the reduced exemption could introduce this additional tax to you
and your tax return. </div>
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There is a light at the end of the tunnel. It has been
routine for Congress to pass AMT tax patches to increase or extend exemption
amounts to avoid millions of additional taxpayers becoming subject to AMT
tax. To be clear, right now, no such patch has passed for 2012 and will
not likely be entertained until after the November elections. Between now
and then, take a look at your tax picture with your CPA to see how the AMT
changes may (or may not) affect your 2012 tax filings.</div>
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<br /></div>
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brad@mcarthurco.com</div>
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704.544.8429</div>
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<br /></div>
McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-23051753023282926862012-08-02T08:00:00.000-07:002012-08-02T08:00:09.128-07:00NC Sales Tax Free Weekend is Here!!<br />
The annual North Carolina sales tax holiday begins Friday, Aug. 3 and runs
through Sunday, Aug. 5. Shoppers can save money on certain purchases of items
like clothing, school supplies and computers. <br />
The popular event includes clothing, footwear, and school supplies of $100 or
less per item; school instructional materials of $300 or less per item; sports
and recreational equipment of $50 or less per item; computers of $3,500 or less
per item; and computer supplies of $250 or less per item from sales tax. Tablet
computers and netbooks of $3,500 or less per item qualify; eReaders do not. <br />
Items are not necessarily exempt from sales tax just because they are
required by a child's school or sports team. Visit NCDOR's website for a <a href="http://www.dornc.com/taxes/sales/holiday_exempt.pdf">http://www.dornc.com/taxes/sales/holiday_exempt.pdf</a>
of items that qualify. <br />
<br />
The holiday begins at 12:01 a.m. Friday and lasts until 11:59 p.m. Sunday.
Participation in the sales tax holiday is required; retailers cannot opt out. <br />
<br />
Retailers may not charge sales tax on exempt items sold during the holiday
and tell shoppers to request a refund from the Department of Revenue. In cases
where the sales tax is charged on purchases that should be exempt, a customer's
only option to obtain a refund is from the retailer. <br />
<br />
Discounts from <strong>retailers' coupons</strong> are deducted from the
price of an item before determining if the item is eligible for the sales tax
exemption. Example: a customer buys a dress priced at $105 and uses a
retailer's coupon for a 10 percent discount. The discounted sales price of the
dress is $94.50 ($105.00 - $10.50 = $94.50) and the dress is exempt from sales
tax if purchased during the holiday. <strong>Manufacturers' coupons</strong>
are treated just the opposite way and are not deducted from the sales price
before determining an item's eligibility for the sales tax exemption. <br />
<br />
<strong>Rebates</strong> do not affect the sales price of an item for the
sales tax holiday. Example: a computer priced at $4,000 with a $600 rebate is
not exempt from sales taxes. The amount of the rebate is not deducted from the
sales price of the computer before determining if the computer is eligible for
the sales tax exemption. <br />
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Happy shopping! </div>
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<br /></div>
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brad@mcarthurco.com</div>
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704.544.8429</div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-63803487857094624972012-07-03T07:06:00.002-07:002012-07-03T07:06:37.427-07:0010 Tips on a Tax Credit for Child & Dependent Care Expenses<br />
In IRS Tax Tip 2012-46, the IRS provides the basic guidelines to determining
your eligibility the tax credits available for child and dependent care
expenses. Below are 10 points the IRS wants you to know about claiming
the credit for child and dependent care expenses.<br />
<br />
1. The care must have been provided for one or more qualifying persons. A
qualifying person is your dependent child age 12 or younger when the care was
provided. Additionally, your spouse and certain other individuals who are
physically or mentally incapable of self-care may also be qualifying persons.
You must identify each qualifying person on your tax return.<br />
<br />
2. The care must have been provided so you – and your spouse if you are
married filing jointly – could work or look for work.<br />
<br />
3. You – and your spouse if you file jointly – must have earned income from
wages, salaries, tips, other taxable employee compensation or net earnings from
self-employment. One spouse may be considered as having earned income if they
were a full-time student or were physically or mentally unable to care for
themselves.<br />
<br />
4. The payments for care cannot be paid to your spouse, to the parent of
your qualifying person, to someone you can claim as your dependent on your
return, or to your child who will not be age 19 or older by the end of the year
even if he or she is not your dependent. You must identify the care provider(s)
on your tax return.<br />
<br />
5. Your filing status must be single, married filing jointly, head of
household or qualifying widow(er) with a dependent child.<br />
<br />
6. The qualifying person must have lived with you for more than half of
2011. There are exceptions for the birth or death of a qualifying person, or a
child of divorced or separated parents. <br />
<br />
7. The credit can be up to 35 percent of your qualifying expenses, depending
upon your adjusted gross income.<br />
<br />
8. For 2011, you could use up to $3,000 of expenses paid in a year for one
qualifying individual or $6,000 for two or more qualifying individuals to
figure the credit.<br />
<br />
9. The qualifying expenses must be reduced by the amount of any dependent
care benefits provided by your employer that you deduct or exclude from your
income, such as a flexible spending account for daycare expenses.<br />
<br />
10. If you pay someone to come to your home and care for your dependent or
spouse, you may be a household employer and may have to withhold and pay Social
Security and Medicare tax and pay federal unemployment tax. <br />
<br />
Know your options related to child care expenses and do not miss this
valuable tax credit opportunity.<br />
<br />
brad@mcarthurco.com<br />
704.544.8429<br />McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com1tag:blogger.com,1999:blog-5165023077192652144.post-40169167345168177422012-06-21T10:16:00.000-07:002012-06-21T10:16:55.017-07:00NC Provides New Deduction for Net Business Income<br />
<div class="MsoNormal">
As detailed by the NC DOR on their website in Directive
PD-12-2, NC law provides a deduction in calculating North Carolina taxable
income for individuals equal to “An amount not to exceed fifty thousand dollars
($50,000) of net business income the taxpayer receives during the taxable year.
In the case of a married couple filing a joint return where both spouses
receive or incur net business income, the maximum dollar amounts apply
separately to each spouse’s net business income, not to exceed a total of one
hundred thousand dollars ($100,000). For purposes of this subdivision,
the term ‘business income’ does not include income that is considered passive
income under the Code.” </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Inherent to determining if this deduction is applicable to
your tax situation is the determination if you or your spouse have “business
income.” The directive says that business income includes Schedule C,
Schedule F, and Schedule E income as long as the income is not “passive
income.” </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Our Firm will be actively communicating this information to
our clients, but should you have any questions regarding the discussion please
contact our Firm to discuss. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.544.8429 </div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-8462938148517122152012-06-04T08:36:00.001-07:002012-06-04T08:36:51.216-07:00NC Tax Credit for Children with Disabilities Requiring Special Education<br />
<div class="MsoNormal">
The state of NC allows for a tax credit for taxpayers who
pay tuition and special education and related services expenses for an eligible
dependent child. This credit is effective for tax years beginning on or
after January 1, 2011. For full details regarding this tax credit, please
click on the following link: <a href="http://www.dor.state.nc.us/practitioner/individual/directives/pd-12-1.pdf">http://www.dor.state.nc.us/practitioner/individual/directives/pd-12-1.pdf</a></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In brief, the credit is the lesser of $3,000 per semester
for each eligible dependent child or the amount the taxpayer paid during the
tax year for tuition and special education and related services expenses.
For purposes of the credit, there are only two semesters during each tax
year. Therefore, for 2012, the maximum credit allowed per eligible
dependent child is $6,000 ($3,000 for each semester). The credit is
limited to the amount of North Carolina income tax for the year reduced by the
sum of any other credits. However, any unused portion of the credit may
be carried forward for three succeeding years. There are items that both
reduce the credit and disqualify and child from being eligible that should be
further understood prior to applying the credit to your tax filing.
Additionally, there is a lengthy list of documentation that must be in your
records to accurately claim the credit. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
An eligible dependent child for the purposes of this credit
is defined as a child who is a NC resident and enrolled in grades kindergarten
through 12 in a nonpublic or a public school where tuition is charged by the
local board of education. In addition, the child must meet ALL of the
following criteria:</div>
<div class="MsoNormal" style="text-indent: 0px;">
<span style="text-indent: -0.25in;">1. </span><span style="font-size: 7pt; text-indent: -0.25in;"> </span><span style="text-indent: -0.25in;">Is a child with a disability who requires
special education and related services because of that disability.</span></div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
2 2. Was determined to require an individualized
education program. An individualized education program is a written
statement for a child with a disability that is developed, reviewed,
implemented and revised consistent with IDEA and Sate law.</div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
3 3. <span style="font-size: 7pt;"> </span>Receives special education services on a daily
basis.</div>
<div class="MsoListParagraph" style="mso-list: l0 level1 lfo1; text-indent: -.25in;">
4 4. Is a child which the taxpayer is entitled to
deduct a personal exemption under section 151(c) of the Code for the tax year.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Every three years, an eligible dependent child must be
reevaluated by the local education agency to verify that the child continues to
be a child with a disability who requires special education and related
services because of that disability. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If you feel you are eligible for this credit, please contact
our offices for an evaluation as you want to make sure all of the appropriate
steps are taken and the documentation is required is on file for the
application of this credit.<br />
<br />
brad@mcarthurco.com<br />
704.544.8429</div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-17261064320491150542012-05-21T12:27:00.000-07:002012-05-21T12:27:08.838-07:00Residential Energy Efficient Property Credit<br />
This tax credit helps individual taxpayers pay for qualified residential
alternative energy equipment, such as solar hot water heaters, solar
electricity equipment and wind turbines. The credit, which runs through 2016,
is 30 percent of the cost of qualified property. There is no cap on the amount
of credit available, except for fuel cell property. Generally, you may include
labor costs when figuring the credit and you can carry forward any unused
portions of this credit. Qualifying equipment must have been installed on or in
connection with your home located in the United States; geothermal heat pumps
qualify only when installed on or in connection with your main home located in
the United States.<br />
<div class="MsoNormal">
Not all energy-efficient improvements qualify so be sure you
have the manufacturer’s tax credit certification statement, which can usually
be found on the manufacturer’s website or with the product packaging.<br />
<br />
If you're eligible, you can claim this credit on Form 5695, Residential Energy
Credits when you file your Federal income tax return. Also, note this is a tax
credit and not a deduction, so it will generally reduce the amount of tax owed
dollar for dollar. Finally, you may claim this credit regardless of
whether you itemize deductions on IRS Schedule A.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For more details, you can visit <a href="http://www.energystar.gov/index.cfm?c=tax_credits.tx_index">http://www.energystar.gov/index.cfm?c=tax_credits.tx_index</a>.
</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.544.8429</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-18970005705078404032012-05-16T13:35:00.001-07:002012-05-16T13:35:35.995-07:00What Do You Really Pay In Taxes?<br />
<div class="MsoNormal">
One of the few certainties of life is that everyone pays
taxes. Income and property tax are just part of the picture. When you pay a
utility bill, rent a room and pump gas into your car, you also pay taxes. So
how do all of the taxes you pay affect your bottom line? The AICPA's new tax
calculator, Total Tax InsightsTM, gives the public a clearer view at no cost.
Check out your tax life at <a href="http://www.totaltaxinsights.org/">http://www.totaltaxinsights.org/</a>.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.544.8429 </div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-75435034549510005322012-05-07T08:41:00.001-07:002012-05-07T08:41:47.123-07:00What should I do if I receive an IRS notice?<br />
The IRS sends millions of letters and notices to taxpayers for a variety of
reasons. Many of these letters and notices can be dealt with simply, without
having to call or visit an IRS office. One the most important things to
keep in mind is to NOT automatically pay the amount due without fully
understanding what the Notice states and what options you have available to
you. However, it is just as important to deal with the Notice in a timely
manner. The fact that it might be unpleasant or time consuming is not a
valid excuse to ignore an IRS Notice. The IRS is serious about its
deadlines and the longer you neglect the required action, the more serious your
issue may be come. <br />
The IRS specifically lays out the following eight facts in Tax Tip 2012-73:<br />
<br />
<div style="margin-bottom: .0001pt; margin: 0in;">
1. There are a number of reasons
why the IRS might send you a notice. Notices may request payment, notify you of
account changes, or request additional information. A notice normally covers a
very specific issue about your account or tax return.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
2. Each letter and notice offers
specific instructions on what action you need to take.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
3. If you receive a correction
notice, you should review the correspondence and compare it with the
information on your return.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
4. If you agree with the correction
to your account, then usually no reply is necessary unless a payment is due or
the notice directs otherwise.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
5. If you do not agree with the
correction the IRS made, it is important to respond as requested. You should
send a written explanation of why you disagree and include any documents and
information you want the IRS to consider along with the bottom tear-off portion
of the notice. Mail the information to the IRS address shown in the upper left
of the notice. Allow at least 30 days for a response.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
6. Most correspondence can be
handled without calling or visiting an IRS office. However, if you have
questions, call the telephone number in the upper right of the notice. Have a
copy of your tax return and the correspondence available when you call to help
the IRS respond to your inquiry.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
7. It’s important to keep copies of
any correspondence with your records.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
8. IRS notices and letters are sent
by mail. The IRS does not correspond by email about taxpayer accounts or tax
returns.</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
When all else fails, the best route
is to contact your CPA and work with them to determine the best course of
action. </div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
brad@mcarthurco.com</div>
<div style="margin-bottom: .0001pt; margin: 0in;">
704.544.8429</div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-25368798596866033492012-04-09T08:06:00.002-07:002012-04-09T08:06:48.134-07:00The Deadline Looms<br />
<div class="MsoNormal">
April 17th is right around the corner and marks the end of the
line for taxpayers to either file their returns or file an extension.
Keep in mind that extending your return only extends your time to file, NOT
your time to pay. If you extend your tax filing and owe taxes, you should
make a payment with your extension filing. Otherwise, you will be subject
to failure-to-pay penalties as well interest on the unpaid balance. This
is an important distinction for all of you out there filing an extension.
If you need assistance with getting an extension filed or determining how much
tax you should pay with your extension, then please contact our office before
time runs out.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
In the meantime, good luck with the completion of this tax
season and remember that an accurate and complete filing is just as important
as a timely one! </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.544.8429</div>
<div class="MsoNormal">
<br /></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-73379928639542121962012-03-26T09:06:00.001-07:002012-03-26T09:06:20.197-07:00Mortgage Debt Forgiveness: 10 Key Points<br />
Our friends at the IRS have provided another concise guide to an
unfortunate aspect of these tough economic times. In Tax Tip 2012-39, the
IRS lays out the basics on dealing with debt forgiveness. If you find
yourself in this position and the below does not help address your tax
reporting concerns, please contact our Firm to discuss further. <br />
<br />
Canceled debt is normally taxable to you, but there are exceptions. One of
those exceptions is available to homeowners whose mortgage debt is partly or
entirely forgiven during tax years 2007 through 2012.<br />
The IRS would like you to know these 10 facts about Mortgage Debt
Forgiveness:<br />
<br />
1. Normally, debt forgiveness results in taxable income. However, under the
Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to
$2 million of debt forgiven on your principal residence.<br />
2. The limit is $1 million for a married person filing a separate return.<br />
3. You may exclude debt reduced through mortgage restructuring, as well as
mortgage debt forgiven in a foreclosure.<br />
4. To qualify, the debt must have been used to buy, build or substantially
improve your principal residence and be secured by that residence.<br />
5. Refinanced debt proceeds used for the purpose of substantially improving
your principal residence also qualify for the exclusion.<br />
6. Proceeds of refinanced debt used for other purposes – for example, to pay
off credit card debt – do not qualify for the exclusion.<br />
7. If you qualify, claim the special exclusion by filling out Form 982,
Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to
your federal income tax return for the tax year in which the qualified debt was
forgiven.<br />
8. Debt forgiven on second homes, rental property, business property, credit
cards or car loans does not qualify for the tax relief provision. In some
cases, however, other tax relief provisions – such as insolvency – may be
applicable. IRS Form 982 provides more details about these provisions.<br />
9. If your debt is reduced or eliminated, you normally will receive a
year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By
law, this form must show the amount of debt forgiven and the fair market value
of any property foreclosed.<br />
10. Examine the Form 1099-C carefully. Notify the lender immediately if any
of the information shown is incorrect. You should pay particular attention to
the amount of debt forgiven in Box 2 as well as the value listed for your home
in Box 7.<br />
<br />
<div class="MsoNormal">
For more information about the Mortgage Forgiveness Debt
Relief Act of 2007, visit <a href="http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTIwMjI4LjU4NDE0NDEmbWVzc2FnZWlkPU1EQi1QUkQtQlVMLTIwMTIwMjI4LjU4NDE0NDEmZGF0YWJhc2VpZD0xMDAxJnNlcmlhbD0xNjg5MjUyNCZlbWFpbGlkPWJyYWRAbWNhcnRodXJjby5jb20mdXNlcmlkPWJyYWRAbWNhcnRodXJjby5jb20mZmw9JmV4dHJhPU11bHRpdmFyaWF0ZUlkPSYmJg==&&&130&&&http://www.irs.gov">www.irs.gov</a>.
IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and
Abandonments, is also an excellent resource.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p>brad@mcarthurco.com</o:p></div>
<div class="MsoNormal">
<o:p>704.544.8429</o:p></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-62011724284583381132012-03-12T06:28:00.001-07:002012-03-12T06:29:40.446-07:001099 Rules Reviewed<br />
<div class="MsoNormal" style="text-align: justify;">
Generally, any trade or<b>
business</b> that makes payments in the course of that trade or business of<b> interest,
rents, compensations, remuneration for services, annuities, etc. aggregating
$600 or more for the year to a single payee is required to report the payments
to the IRS and to the recipient of the payments by filing Form 1099. </b>This
reporting requirement generally <i>does not apply</i> <i>to payments to
corporations</i>. However, the 1099 reporting requirements do apply to payments
made to corporations for attorneys' fees, and to amounts paid to corporations
providing medical or health care services.</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
A Form 1099 is generally required
to be filed with the recipient of the payment by January 31 of the year
following the year the payment is made. A copy of Form 1099 is generally
required to be filed with the IRS by the end of February of the year following
the year the payment is made. </div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The penalties for failing to file
1099s, or filing 1099s late, are significant. For example, if a Form 1099 is
filed after August 1<sup>st</sup> and the failure to file is not intentional,
there is a $100 penalty for failing to file Form 1099 with the recipient of the
payment and<i> an additional</i> $100 penalty for failing to file a copy of
Form 1099 with the IRS (for a total penalty of $200). <b><u>Note!</u></b>
IRS may waive these penalties if you can show reasonable cause for failing to
file the form. <b><u>Caution!</u></b> If you intentionally fail to file Form
1099, then the penalty increases to <i>at least <b>$500</b></i><b> per 1099 </b>(a
$250 penalty for failing to file Form 1099 with the recipient of the payment
and a $250 penalty for failing to file a copy with the IRS).</div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
The IRS has included two new
questions concerning Form 1099 on all business returns, including Form 1040,
Schedule C, Schedule F, and Schedule E as well as Forms 1065, 1120, and 1120-S.
The questions are <b>1)</b> “Did you make any payments in 2011 that would
require you to file Form(s) 1099", <b>and 2)</b> “If ‘Yes,’ did you or
will you file all required Forms 1099?”<b> </b> These questions now must
be answered when preparing your business returns.</div>
<div class="MsoNormal" style="text-align: justify;">
</div>
<div class="MsoNormal">
The 1099 rules are confusing to many small business
owners. If you have questions on how you should treat a given service
provider, please contact our Firm or your CPA for assistance. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.5448429</div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-5752850436350033342012-02-27T07:50:00.000-08:002012-02-27T07:50:16.463-08:00Eight Things to Know about Medical and Dental Expenses and Your Taxes<br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">If you,
your spouse or dependents had significant medical or dental costs in 2011, you
may be able to deduct those expenses when you file your tax return. Here are
eight things the IRS wants you to know about medical and dental expenses and
other benefits.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">1.
You must itemize</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">
You deduct qualifying medical and dental expenses if you itemize on Form 1040,
Schedule A.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">2.
Deduction is limited</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> You can deduct total medical care expenses that exceed
7.5 percent of your adjusted gross income for the year. You figure this on Form
1040, Schedule A.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">3.
Expenses must have been paid in 2011</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> You can include the medical and
dental expenses you paid during the year, regardless of when the services were
provided. You’ll need to have good receipts or records to substantiate your
expenses.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">4.
You can’t deduct reimbursed expenses</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> Your total medical expenses for the
year must be reduced by any reimbursement. Normally, it makes no difference if
you receive the reimbursement or if it is paid directly to the doctor or
hospital.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">5.
Whose expenses qualify </span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">You may include qualified medical expenses
you pay for yourself, your spouse and your dependents. Some exceptions and
special rules apply to divorced or separated parents, taxpayers with a multiple
support agreement or those with a qualifying relative who is not your child.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">6.
Types of expenses that qualify</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> You can deduct expenses primarily paid for
the diagnosis, cure, mitigation, treatment or prevention of disease, or
treatment affecting any structure or function of the body. For drugs, you can
only deduct prescription medication and insulin. You can also include premiums
for medical, dental and some long-term care insurance in your expenses.
Starting in 2011, you can also include lactation supplies.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">7.
Transportation costs may qualify</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> You may deduct transportation costs
primarily for and essential to medical care that qualify as medical expenses.
You can deduct the actual fare for a taxi, bus, train, plane or ambulance as
well as tolls and parking fees. If you use your car for medical transportation,
you can deduct actual out-of-pocket expenses such as gas and oil, or you can
deduct the standard mileage rate for medical expenses, which is 19 cents per
mile for 2011.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;">8.
Tax-favored saving for medical expenses</span></strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"> Distributions from Health Savings
Accounts and withdrawals from Flexible Spending Arrangements may be tax free if
used to pay qualified medical expenses including prescription medication and
insulin.<o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt;"><br /></span><br />
<div class="MsoNormal">
For additional information, see Publication 502, Medical and
Dental Expenses or Publication 969, Health Savings Accounts and Other
Tax-Favored Health Plans,</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The above information was from IRS Tax Tip 2012-30.
Please contact our Firm if you have any further questions.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com</div>
<div class="MsoNormal">
704.544.8429</div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-86162805554992661302012-02-13T09:50:00.000-08:002012-02-13T09:51:42.534-08:00Tax Law Changes for the 2011 Federal Tax Returns<br />
<div class="MsoNormal">
Our friends at the IRS provided a recent update of tax
return changes that you should be aware of when filing your 2011 tax
returns. From IRS Tax Tip 2012-27,</div>
<span style="font-family: Calibri, sans-serif; font-size: 11pt;">Before you
file your 2011 federal income tax return in 2012, you should be aware of a few
important tax changes that took effect in 2011. Check <a href="http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTIwMjA5LjU0ODgyOTEmbWVzc2FnZWlkPU1EQi1QUkQtQlVMLTIwMTIwMjA5LjU0ODgyOTEmZGF0YWJhc2VpZD0xMDAxJnNlcmlhbD0xNjg3MTA3MCZlbWFpbGlkPWJyYWRAbWNhcnRodXJjby5jb20mdXNlcmlkPWJyYWRAbWNhcnRodXJjby5jb20mZmw9JmV4dHJhPU11bHRpdmFyaWF0ZUlkPSYmJg==&&&130&&&http://www.IRS.gov">www.IRS.gov</a>
before you file for updates on any new legislation that may affect your tax
return.<o:p></o:p></span><br />
<span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Due
date of return.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">
File your federal tax return by April 17, 2012. The due date is April 17,
instead of April 15, because April 15 is a Sunday and April 16 is the
Emancipation Day holiday in the District of Columbia.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">New
forms.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">
In most cases, you must report your capital gains and losses on the new Form
8949, Sales and Other Dispositions of Capital Assets. Then, you report certain
totals from that form on Schedule D (Form 1040). If you had foreign financial
assets in 2011, you may have to file the new Form 8938, Statement of Foreign
Financial Assets, with your return.<o:p></o:p></span><br />
<span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Standard
mileage rates. </span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">The
2011 rates for mileage are different for January 1 through June 30 than for
July 1 through December 31. For business use of your car, you can deduct 51
cents a mile for miles driven the first half of the year and 55 ½ cents for the
second half. Medical and moving mileage are both 19 cents per mile for the
first half of the year and 23 ½ cents in the latter half.<o:p></o:p></span><br />
<span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Standard
deduction and exemptions increased.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><o:p></o:p></span><br />
<ul type="disc">
<li class="MsoNormal">The standard deduction increased for some taxpayers who
do not itemize deductions on IRS Schedule A (Form 1040). The amount
depends on your filing status.<o:p></o:p></li>
<li class="MsoNormal">The amount you can deduct for each exemption has
increased $50 to $3,700 for 2011.<o:p></o:p></li>
</ul>
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Self-employed
health insurance deduction. </span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">This deduction is no longer allowed on
Schedule SE (Form 1040), but you can still take it on Form 1040, line 29.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Alternative
minimum tax (AMT) exemption amount increased.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> The AMT exemption
amount has increased to $48,450 ($74,450 if married filing jointly or a
qualifying widow(er); $37,225 if married filing separately).<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Health
savings accounts (HSAs) and Archer MSAs.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> The additional tax on distributions
from HSAs and Archer MSAs not used for qualified medical expenses increased to
20 percent. Beginning in 2011, only prescribed drugs or insulin are qualified
medical expenses.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Roth
IRAs.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">
If you converted or rolled over an amount from a traditional IRA to a Roth IRA
or designated Roth in 2010 and did not elect to report the taxable amount on
your 2010 return, you generally must report half of it on your 2011 return and
the rest on your 2012 return.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Alternative
motor vehicle credit.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> You can claim the alternative motor vehicle credit for
a 2011 purchase only if the vehicle is a new fuel cell motor vehicle.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">First-time
homebuyer credit.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> The credit is expired for most taxpayers for 2011. Some
military personnel and members of the intelligence community can still claim
the credit in 2011 for qualified purchases.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Health
coverage tax credit.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> Recent legislation changed the amount of this credit,
which pays qualified health insurance premiums for eligible individuals and
their families. Participants who received the 65 percent tax credit in any
month from March to December 2011 may claim an additional 7.5 percent
retroactive credit when they file their 2011 tax return.<o:p></o:p></span><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></strong><br />
<strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Mailing
a return.</span></strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;">
The IRS changed the filing location for several areas. If you're mailing a
paper return, see the Form 1040 instructions for the correct address.<o:p></o:p></span><br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Detailed information on these changes can be found on the
IRS website – <a href="http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTIwMjA5LjU0ODgyOTEmbWVzc2FnZWlkPU1EQi1QUkQtQlVMLTIwMTIwMjA5LjU0ODgyOTEmZGF0YWJhc2VpZD0xMDAxJnNlcmlhbD0xNjg3MTA3MCZlbWFpbGlkPWJyYWRAbWNhcnRodXJjby5jb20mdXNlcmlkPWJyYWRAbWNhcnRodXJjby5jb20mZmw9JmV4dHJhPU11bHRpdmFyaWF0ZUlkPSYmJg==&&&131&&&http://www.irs.gov">www.irs.gov</a>.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p>brad@mcarthurco.com</o:p></div>
<div class="MsoNormal">
<o:p>704.544.8429</o:p></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-33369984605719486852012-01-23T08:06:00.000-08:002012-01-23T08:06:03.390-08:00The S Corp Election<br />
<div class="MsoNormal">
An S Corp is a corporation that elects and is eligible to
choose S Corporation status. There are advantages and disadvantages of
selecting S Corp status for your eligible entity, and those should be
considered carefully with your financial planning team, including your
CPA. Generally, an S Corp is a corporation that does not pay income taxes.
Rather, the income and deductions of the business are passed through to its
shareholders. In return, the shareholders report the income and
deductions on their individual tax returns. There are a number of rules inherent in
this election, but today I want to focus solely on how to make the
election. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<u>Making the Election</u></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The actual election for S Corp status is accomplished by
filing Form 2553, Election by a Small Business Corporation. The election
must be made by the 15<sup>th</sup> day of the 3<sup>rd</sup> month of its tax
year in order for the election to be effective beginning with the year
made. A few simple examples will clarify what that language means.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Example #1 – Entity XYZ was formed on and began operations
on June 1, 2012. In order for their S election to be filed timely and
effective June 1, 2012, Form 2553 should be filed by August 15, 2012.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Example #2 –Entity XYZ was formed on and began operations on
June 1, 2010. They want their S election to be effective on January 1,
2011. In order for their S election to be filed timely and effective
January 1, 2011, Form 2553 should be filed by March 15, 2011.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<u>Did you miss your election timeframe?<o:p></o:p></u></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
There are methods of requesting IRS relief for a late S
election and your CPA should be consulted in order to carry out said late
elections. Most commonly, a late election can be filed with filing of the
tax return and use of the reasonable cause exclusion as detailed in Revenue
Procedure/Private Letter Rulings issued by the IRS. Again, your CPA
should be consulted closely to carry out this late election. </div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
As you analyze your filing status, the decision to file as an S Corp is one that should be weighed carefully with proper consultation.
There are numerous eligibility requirements that must be met. Lastly,
adhere to the timelines provided above. If you are considering S Corp
status for your entity and need assistance in filing your election or making
the decision, please contact our Firm.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
brad@mcarthurco.com<br />
704.544.8429<br />
<br /></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-11492397800343462172012-01-16T11:10:00.000-08:002012-01-16T11:10:31.173-08:00Happy MLK Day!<br />
<div class="MsoNormal">
From a sermon Dr. King preached at the Temple of Israel of
Hollywood:</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">Each
of us lives in two realms, the "within" and the "without."
The <i>within</i> of our lives is somehow found in the realm of ends, the
without in the realm of means. The within of our [lives], the bottom -- that
realm of spiritual ends expressed in art, literature, morals, and religion for
which at best we live. The <i>without</i> of our lives is that realm of
instrumentalities, techniques, mechanisms by which we live. Now the great
temptation of life and the great tragedy of life is that so often we allow the
without of our lives to absorb the within of our lives. The great tragedy of
life is that too often we allow the means by which we live to outdistance the
ends for which we live.</span><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-left: .5in; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: "Verdana","sans-serif"; font-size: 10.0pt;">And
how much of our modern life can be summarized in that arresting dictum of the<b>
</b>poet<b> </b>Thoreau<b>, </b>"Improved means to an unimproved
end?" We have allowed our civilization to outrun our culture; we have
allowed our technology to outdistance our theology and for this reason we find
ourselves caught up with many problems. Through our scientific genius we made
of the world a neighborhood, but we failed through moral commitment to make of
it a brotherhood, and so we’ve ended up with guided missiles and misguided men.
And the great challenge is to move out of the mountain of practical materialism
and move on to another and higher mountain which recognizes somehow that we
must live by and toward the basic ends of life. We must move on to that
mountain which says in substance, "What doth it profit a man to gain the
whole world of means -- airplanes, televisions, electric lights -- and lose the
end: the soul?"</span><span style="font-family: "Times New Roman","serif"; font-size: 12.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p>brad@mcarthurco.com</o:p></div>
<div class="MsoNormal">
<o:p>704.544.8429</o:p></div>
<div class="MsoNormal">
<o:p><br /></o:p></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-50756232013553585932011-12-27T11:00:00.000-08:002011-12-27T11:03:40.638-08:00Payroll Tax Cut Temporarily Extended into 2012<br />
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="mso-cellspacing: 0in; mso-padding-alt: 0in 0in 0in 0in; mso-yfti-tbllook: 1184; width: 98.0%;">
<tbody>
<tr>
<td style="padding: 0in 4.5pt 0in 0in;"><div class="MsoNormal" style="line-height: 10.5pt;">
<br /></div>
<div class="MsoNormal" style="line-height: 10.5pt;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">As you may know, the much
publicized Payroll Tax Holiday was extended just prior to Christmas
day. With IR-2011-124, the IRS officially made the following release:</span></div>
<div class="MsoNormal" style="line-height: 10.5pt;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
</td></tr>
<tr><td style="padding: 0in 0in 0in 0in;"><div align="center">
<table border="0" cellpadding="0" class="MsoNormalTable"><tbody>
<tr style="height: 4.05in; mso-yfti-firstrow: yes; mso-yfti-irow: 0; mso-yfti-lastrow: yes;"><td style="height: 4.05in; padding: .75pt .75pt .75pt .75pt;"><div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">Nearly 160 million workers will benefit from the extension of
the reduced payroll tax rate that has been in effect for 2011. The
Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the
two percentage point payroll tax cut for employees, continuing the
reduction of their Social Security tax withholding rate from 6.2 percent to
4.2 percent of wages paid through Feb. 29, 2012. This reduced Social
Security withholding will have no effect on employees’ future Social
Security benefits.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">Employers should implement the new payroll tax rate as soon as
possible in 2012 but not later than Jan. 31, 2012. For any Social
Security tax over-withheld during January, employers should make an
offsetting adjustment in workers’ pay as soon as possible but not later
than March 31, 2012.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">Employers and payroll companies will handle the withholding
changes, so workers should not need to take any additional action.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">Under the terms negotiated by Congress, the law also includes
a new “recapture” provision, which applies only to those employees who
receive more than $18,350 in wages during the two-month period (the Social
Security wage base for 2012 is $110,100, and $18,350 represents two months
of the full-year amount). This provision imposes an additional income
tax on these higher-income employees in an amount equal to 2 percent of the
amount of wages they receive during the two-month period in excess of
$18,350 (and not greater than $110,100). <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">This additional recapture tax is an add-on to income tax
liability that the employee would otherwise pay for 2012 and is not subject
to reduction by credits or deductions. The recapture tax would be
payable in 2013 when the employee files his or her income tax return for
the 2012 tax year. With the possibility of a full-year extension of the
payroll tax cut being discussed for 2012, the IRS will closely monitor the
situation in case future legislation changes the recapture provision.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;">The IRS will issue additional guidance as needed to implement
the provisions of this new two-month extension, including revised
employment tax forms and instructions and information for employees who may
be subject to the new “recapture” provision. For most employers, the
quarterly employment tax return for the quarter ending March 31, 2012, is
due April 30, 2012.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: 10.5pt; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;">
<span style="font-family: Arial, sans-serif; font-size: 9pt;"><br /></span></div>
</td>
</tr>
</tbody></table>
</div>
</td>
</tr>
</tbody></table>
brad@mcarthurco.com<br />
704.544.8429McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-7914963635962724472011-12-13T07:11:00.000-08:002011-12-13T07:11:06.931-08:00Traditional Year-End General Business Planning<br />
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: Shruti; font-size: 10pt;">Self-Employed Business Income.</span></u></b><span style="font-family: Shruti; font-size: 10pt;"> If you are
self-employed, it continues to be a good idea to defer as much income into 2012
as possible, if you believe that your marginal tax rate for 2012 will be equal
to or less than your 2011 marginal tax rate. If you think that deferring 2011
income to 2012 will save you overall taxes, and you use the cash method of
accounting, consider delaying year-end billings until 2012. However, if you
have already received the check in 2011, deferring the deposit does not defer
the income. Also, you may not want to defer billing if you believe this will
increase your risk of not getting paid.</span></div>
<b><u><span style="font-family: Shruti; font-size: 10pt;"><br clear="all" style="page-break-before: always;" />
</span></u></b>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: Shruti; font-size: 10pt;">Establishing A New Retirement Plan For
2011.</span></u></b><b><span style="font-family: Shruti; font-size: 10pt;"> </span></b><span style="font-family: Shruti; font-size: 10pt;">Calendar-year taxpayers wishing to establish a qualified
retirement plan for 2011 (e.g. profit-sharing, 401(k), or defined benefit plan)
<i>generally</i> must adopt the plan <b>no later than December 31, 2011.</b>
However, a SEP may be established by the due date of the tax return (including
extensions), and a SIMPLE plan must have been established no later than October
1, 2011.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: Shruti; font-size: 10pt;">Personal Use Of Company Cars.</span></u></b><span style="font-family: Shruti; font-size: 10pt;"> If your company
provides employees with company-owned cars, the company is required to include
the value of the personal use of the car in the employees’ W-2 income. However,
this is not required if the employee reimburses the company for the personal
use. <b><u>Planning Alert!</u></b> If your company does not report the
employee’s personal use as W-2 income and the employee does not reimburse the
company for the personal use, the IRS says the company’s deductions (for
depreciation, gas, tires, insurance, etc.) are lost to the extent of the
personal use. In addition, the IRS will include any unreimbursed personal use
in the employee’s income even if the company is not allowed a deduction for the
personal use portion. <b><u>Tax Tip.</u></b> If the employee chooses to reimburse
the company for personal use of the car, the obligation for reimbursement
should be established <b>on or before December 31<sup>st</sup></b> so the
employee will not have income in one year and a deduction in the next. This can
be accomplished by establishing a published policy for reimbursement of
personal use. Furthermore, your company should obtain signed statements from
employees listing their business and personal mileage for the company car.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify;">
<br /></div>
<div class="MsoNormal" style="text-align: justify;">
<b><u><span style="font-family: Shruti; font-size: 10pt;">Mileage Reimbursement Rates.</span></u></b><span style="font-family: Shruti; font-size: 10pt;"> Each year the IRS
provides an amount per mile that employers may reimburse employees for the
business use of their vehicles rather than reimbursing actual expenses. This
standard mileage reimbursement amount for 2011 is<b> 51 cents‑per‑mile from
January 1, 2011 through June 30, 2011, and 55.5 cents-per-mile from July 1,
2011 through December 31, 2011. </b><o:p></o:p></span></div>
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<b><u><span style="font-family: Shruti; font-size: 10pt;">Children Working In The Family Business
May Reduce The Family’s Taxes!</span></u></b><span style="font-family: Shruti; font-size: 10pt;"> There has long been a tax incentive for
high-income owners of a family business to hire their children to work in the
business. Generally, the parents could deduct their child’s wages against their
business income (which could be taxed as high as 35%), while the child would be
taxed at rates as low as 10% (to the extent of child's unused standard
deduction, the child’s wages may avoid federal income taxes completely).
Furthermore, if a child is under age 18 and working for a parent's sole
proprietorship or a partnership where the only partners are the parents, the
child's wages will be exempt from FICA tax while, at the same time, reducing
the parents’ self-employment (SECA) tax.<o:p></o:p></span></div>
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<span style="font-family: Shruti; font-size: 10pt;">Please contact us if you are interested in a
tax topic that we did not discuss. Tax law is constantly changing due to new
legislation, cases, regulations, and IRS rulings. Our firm closely monitors
these changes. In addition, please call us before implementing any planning
ideas discussed in the recent blog posts, or if you need additional
information. <o:p></o:p></span></div>
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<span style="font-family: Shruti; font-size: 10pt;">brad@mcarthurco.com</span></div>
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<span style="font-family: Shruti; font-size: 10pt;">704.544.8429</span></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-37655295853073635172011-12-05T08:56:00.001-08:002011-12-05T09:02:28.506-08:00"Tis the Season - For Tax Planning!December is always a busy month, but please take some time to make some important year-end tax planning decisions. Please see below as we review a few of those decisions for C Corp and S Corp owners:<br />
<br />
Traditional Year-End Planning for Regular "C" Corporations<br />
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<ul>
<li><b><u><span style="font-family: Shruti;">Should A Closely-Held “C” Corporation Pay
Dividends Rather Than Year-End Bonuses To Its Owners?</span></u></b><span style="font-family: Shruti;"> Since a “C”
corporation can generally deduct a bonus, and cannot deduct a dividend, the
advisability of paying a shareholder/employee a dividend in lieu of a year-end
bonus depends largely on the tax rates of both the corporation and the
shareholder. If your corporation is experiencing the effects of the recession
and would receive little or no tax benefit from a year-end bonus deduction,
then a dividend <b>paid in 2011</b> taxed at a maximum rate of 15% may save
overall taxes. On the other hand, if your corporation has significant income
and is currently in a high tax bracket, then a bonus <b>paid in 2011</b> may
save overall taxes. <b><u>Planning Alert!</u></b> If you decide that a year-end
bonus would be more tax beneficial, be sure that you can justify the
reasonableness of the bonus. If your corporation pays compensation to a
shareholder/employee that is considered unreasonably high, the IRS</span><span style="color: blue; font-family: Shruti;"> </span><span style="font-family: Shruti;">may attempt to re-classify
the payment as a dividend payment. Therefore, the corporation should document
the reasonableness of compensation paid to all shareholder/employees.</span></li>
<li><span class="Apple-style-span" style="font-family: Shruti;"><b><u>Properly
Document Loans To Shareholders.</u></b> If you borrow from your closely-held corporation, you should make sure
there is a written agreement to repay your loan, a fair interest rate is
charged, and the loan is authorized by a corporate resolution. Without adequate
interest and proper documentation, the IRS may treat your loans as constructive
distributions which could result in dividend treatment and double taxation. <b style="font-family: 'Times New Roman';"><u><span style="font-family: Shruti;">Planning Alert!</span></u></b> A corporation should
charge interest at least equal to the Applicable Federal Rate (AFR) on loans to
shareholders. Otherwise, subject to certain exceptions, the IRS will impute
interest and the imputed interest (in excess of the interest actually charged)
will result in dividend treatment if the corporation has earnings and profits.</span></li>
</ul>
<div>
Traditional Year-End Planning for "S" Corporations</div>
<div>
<ul>
<li><b><u><span style="font-family: Shruti;">Properly Account For
Health Insurance Premiums For S Corporation Shareholders ‑ Including Medicare
Premiums.</span></u></b><span style="font-family: Shruti;"> Generally, if you own S corporation stock and the S corporation
pays for your health insurance premiums, IRS says you can take an <i>"above‑the‑line"</i>
deduction (i.e., unrestricted by the 7½% subtraction as an itemized medical
expense deduction) for the premiums on your personal tax return if the S
corporation timely reports the cost of the premiums paid on your W‑2 as wages.
However, if the medical insurance policy is your personal policy, the IRS says
that your S corporation must pay the premiums directly, or reimburse you for
the premiums <b><i>before the end of the year</i></b> <b><i><u>and</u></i></b>
timely report the payment (or reimbursement) on your W‑2 as wages for you to
take an <i>"above‑the‑line" </i>deduction on your personal return. <b><u>Planning
Alert!</u> </b>Make sure your S corporation complies with these rules so you
will not be limited to a deduction only for the premiums in excess of 7½% of
your AGI<b>.</b> <b><u>Tax Tip.</u></b> The above rules apply to premiums paid
or reimbursed for you, your spouse, your dependents, and any of your children
under age 27 at the end of the year<b> </b>(even if the child does not qualify
as your dependent). In addition, the IRS has clarified that Medicare premiums
qualify as medical insurance premiums. Therefore, the above rules also apply if
the S corporation reimburses or pays your Medicare premiums.</span></li>
<li><b style="font-family: Shruti;"><u>Check Your Stock And
Debt Basis Before Year End.</u></b><span style="font-family: Shruti;"> If you think your S corporation will have a
taxable loss this year, you should contact us as soon as possible. These losses
will not be deductible on your personal return unless and until you have
adequate “basis” in your S corporation. Any pass-through loss that exceeds your
“basis” in the S corporation will carry over to succeeding years. You have
basis to the extent of the amounts paid for your stock (adjusted for net
pass-through items and distributions), plus any amounts you have personally
loaned to your S corporation. <b><u>Tax Tip.</u></b> It may be possible to
restructure an outside loan to your corporation in a way that will give you
adequate basis. However, this restructuring must occur <b>before the end of the
tax year.</b> <b><u>Planning Alert!</u></b> Making sure that you have
sufficient basis is particularly important <b>in 2011 </b>if your S corporation
anticipates generating losses from the 100% §168(k) bonus depreciation
deduction. The rules for restructuring existing loans to an S corporation to
ensure basis are complicated.<b> Please do not attempt to restructure your
loans without contacting a CPA first. </b>Also, if you finance losses of an S
corporation with loans from other entities controlled by you, or if you borrow
from another shareholder, the IRS may take the position that these loans do not
give you basis. It is best not to finance S corporation operations with funds
borrowed directly from related entities or from other shareholders</span></li>
<li><b style="font-family: Shruti;"><u>Salaries For S
Corporation Stockholder/Employees.</u></b><span style="font-family: Shruti;"> For 2011, an employer must pay FICA taxes of
7.65% of an employee’s wages up to $106,800 and FICA taxes of 1.45% on wages in
excess of $106,800. In addition, for 2011, an employer must withhold FICA taxes
from an employee’s wages of 5.65% on wages up to $106,800 (normally 7.65%, but
reduced to 5.65% for 2011 only) and 1.45% of wages in excess of $106,800. If
you are a stockholder/employee of an S corporation, this FICA tax is generally
applied only to your W-2 income from your S corporation. Other income that
passes through to you or is distributed on your stock is generally not subject
to FICA taxes or to self-employment taxes. <b><u>Planning Alert!</u> </b>If the
IRS determines that you have taken an unreasonably “low” salary from your S
corporation, the Service will generally argue that other amounts you have
received from your S corporation (e.g., distributions) are disguised
"compensation" and should be subject to FICA taxes. Determining
"reasonable salaries" for S corporation shareholder/employees is a
hot audit issue, and the IRS has a winning record on taking taxpayers to Court
on this issue. The IRS has been particularly successful where S corporation
owners pay themselves no salary even though they provided significant services
to the corporation. <b><u>Caution!</u></b> Determining a "reasonable"
salary for an S corporation shareholder is a case‑by‑case determination, and
there are no rules of thumb for determining whether the compensation is
“reasonable.” However, this case makes it clear that salaries to S corporation
shareholders should be supported by independent data (e.g., comparable industry
compensation studies), and should be properly documented and approved by the
corporation. <b><u>Planning Alert!</u></b> Keeping salaries low and minimizing
your FICA tax could also reduce your Social Security benefits when you retire.
Furthermore, if your S corporation has a qualified retirement plan, reducing
your salary may reduce the amount of contributions made to the plan on your
behalf since contributions to the plan are based upon your “wages.”</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Shruti;">Next week, we'll be back to discuss some final traditional year-end planning tips. In the meantime, if you have any questions, please do not hesitate to contact our Firm.</span></div>
<div>
<span class="Apple-style-span" style="font-family: Shruti;"><br /></span></div>
<div>
<span class="Apple-style-span" style="font-family: Shruti;">brad@mcarthurco.com</span></div>
<div>
<span class="Apple-style-span" style="font-family: Shruti;">704.544.8429</span></div>
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<br /></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-26735990758603470762011-11-30T12:17:00.001-08:002011-11-30T12:20:14.874-08:00Other "Business" Tax Breaks Expiring After 2011<br />
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<span style="font-family: Arial, sans-serif; font-size: 10pt;">In addition to the 100% §168(k)
bonus depreciation deduction and the expanded §179 deduction, there are several
other important business tax breaks currently scheduled to expire at the <b><i>end
of 2011.</i></b> Whether or not Congress ultimately extends these expiring tax
breaks, there are real tax savings to be obtained if you take advantage of
these provisions <b>before the end of 2011.</b></span><span style="font-family: Shruti; font-size: 10pt;"> The following are some of the more
important expiring provisions that your business should consider utilizing <b><i>before
the end of 2011:<o:p></o:p></i></b></span></div>
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<u><span style="font-family: Shruti; font-size: 10pt;">Two Percent Social Security Tax Holiday For
“2011.” <o:p></o:p></span></u></div>
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<span style="font-family: Shruti; font-size: 10pt;">For <b>2011 only,</b> there is <i>a <b>2%</b> </i>reduction
in Social Security taxes for both employees and self-employed individuals.
Therefore, <b>if you are an employee,</b> your take-home pay for 2011 is
generally being increased by 2% of each dollar of compensation that you earn.
However, since Social Security taxes apply only to the first $106,800 of
compensation in 2011, your maximum savings will generally be $2,136 (i.e.,
$106,800 x 2%). Likewise, if you are self-employed, your Social Security taxes
are reduced by 2% of your self-employment income for 2011 (up to $106,800).
Therefore, if your self-employment income is $106,800 or more, your
self-employment taxes will be reduced by $2,136. </span><b><u><span style="font-family: Arial, sans-serif; font-size: 10pt;">Tax Tip!</span></u></b><b><span style="font-family: Arial, sans-serif; font-size: 10pt;"> </span></b><span style="font-family: Arial, sans-serif; font-size: 10pt;">Accelerating
2012 compensation or self-employed income <b><i>into 2011</i></b> will save you
2% on your Social Security tax to the extent the income acceleration does not
cause you to exceed the $106,800 earned income cap. <o:p></o:p></span></div>
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<u><span style="font-family: Shruti; font-size: 10pt;">100% Exclusion For “Qualified Small Business
Stock.”</span></u><span style="font-family: Shruti; font-size: 10pt;">
<o:p></o:p></span></div>
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<span style="font-family: Shruti; font-size: 10pt;">If you sell “qualified small business stock”
(QSBS) <b>acquired after September 27, 2010 and before January 1, 2012,</b> you
may be able to exclude the <b>entire gain </b>from taxable income if you hold
the stock for more than 5 years (the gain will also be exempt from the
alternative minimum tax). QSBS is generally stock of a non-publicly traded
domestic “C” corporation engaged in a qualifying business, purchased directly
from the corporation, and <b>held for more than 5 years;</b> where the issuing
corporation meets certain active business requirements and has assets at the
time the stock is issued of $50 million or less. Businesses engaged in a
professional service, banking, insurance, financing, leasing, investing, hotel,
motel, restaurant, mining, or farming activity generally <i>do not</i> qualify.
<b><u>Planning Alert!</u></b> If you are considering investing in or starting a
new business, we will gladly help you evaluate whether structuring your
investment as QSBS will work to your overall tax advantage. However, you must
act promptly to take advantage of this narrow window of opportunity to qualify
for the 100% exclusion. Only stock acquired <b>from September 28, 2010 through
December 31, 2011</b> qualifies for the 100% exclusion.<b><u><o:p></o:p></u></b></span></div>
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<u><span style="font-family: Shruti; font-size: 10pt;">Don’t Overlook The “Retention Credit” For
Qualified Unemployed Workers.</span></u><span style="font-family: Shruti; font-size: 10pt;"> <o:p></o:p></span></div>
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<span style="font-family: Shruti; font-size: 10pt;">If your business <b>1) </b>hired a <i>qualified
unemployed worker</i><b> after February 3, 2010 and before January 1, 2011, 2) </b>the
worker signed a <b><i>IRS Form W-11</i></b> (“HIRE Act Employee Affidavit”),
and <b>3) </b>you retained the worker on your payroll for at least 52 <b>consecutive</b>
weeks, you may be entitled to an “income tax” credit of up to $1,000 for each
qualifying worker <b>on your 2011 return.</b> If you think your business
qualifies for this credit, we will gladly help you determine the exact amount
of credit available.</span><b><u><span style="color: blue; font-family: Shruti; font-size: 10.0pt;"><o:p></o:p></span></u></b></div>
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<span class="Apple-style-span" style="font-family: Shruti; font-size: x-small;"><b><u><br /></u></b></span></div>
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<span class="Apple-style-span" style="font-family: Shruti; font-size: x-small;">brad@mcarthurco.com</span></div>
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<span class="Apple-style-span" style="font-family: Shruti; font-size: x-small;">704.544.8429</span></div>
<br />McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0tag:blogger.com,1999:blog-5165023077192652144.post-30503997431874676132011-11-21T12:46:00.001-08:002011-11-21T13:17:52.306-08:00Year-End Tax Planning For Your BusinessWe have reached that time of year when businesses need to consider year-end tax planning. This year is particularly challenging because Congress has enacted a series of tax breaks which are generally scheduled to expire after 2011. Unless Congress enacts to extend these provisions, the following business tax breaks will generally <b>expire (or become less beneficial) after 2011</b>: 100% §168(k) bonus depreciation; larger and expanded §179
deduction; 100% gain exclusion for “qualified small business stock;” and
relaxation of the S corporation built‑in gains tax rules. There have also been
recent IRS releases and court cases that address: the ability of self-employed
individuals, partners, and S corporation shareholders to deduct health
insurance premiums (including Medicare premiums); whether compensation paid to
S corporation shareholders is “reasonable”; and the S/E tax exposure of owners
of a limited liability partnership.<br />
<br />
In the following weeked, we will discuss a number of key areas for business owners to analyze:<br />
<br />
<ul>
<li><b>Taking Maximum Advantage of the 100% <span style="font-family: Calibri, sans-serif; font-size: 11pt;">§168(k) Bonus Depreciation Deduction And §179
Deduction</span></b></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b>Other "Business" Tax Breaks Expiring After 2011</b></span></span></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b>Other Recent Developments Impacting Business Planning</b></span></span></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b>Tradtional Year-End Planning for "S" Corporations</b></span></span></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b>Traditional Year-End General Business Planning</b></span></span></li>
</ul>
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Before going any further, it
should be noted that although this blog contains many
planning ideas, you cannot properly evaluate a particular planning strategy
without calculating the overall tax liability (including the alternative
minimum tax) with and without the strategy. In addition, this letter contains
ideas for Federal income tax planning only. You should also consider any state
income tax consequences of a particular planning strategy. We recommend that <b>you
call either your CPA or our firm before implementing any tax planning technique</b>
discussed in this letter, or if you need more information.<o:p></o:p></div>
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<u><b>Taking Maximum Advantage of the <span style="text-align: -webkit-auto;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">100% §168(k) Bonus Depreciation Deduction And §179
Deduction</span></span> </b></u></div>
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The two
most significant business tax breaks <b><i>expiring after 2011</i></b> are: <b>1)</b>
the 100% §168(k) bonus depreciation deduction, and <b>2</b>) the expanded §179
deduction. These two provisions offer unprecedented up-front deduction
opportunities for businesses considering significant capital expenditures.</div>
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<b><u>The
100% §168(k) Bonus Depreciation Deduction Generally Expires After 2011.</u></b> For <i>qualifying</i> new business property
placed-in-service from <b>2008 through September 8, 2010, </b>businesses were
allowed a 50% first-year §168(k) bonus depreciation deduction. The Tax Relief
Act of 2010 increased this deduction to 100% for “qualifying business property”
<b><i>acquired </i></b>and <b><i>placed‑in‑service </i></b>after<b> September
8, 2010 and through December 31, 2011. </b>In other words, for §168(k) property
acquired and placed-in-service during this period, the <i>entire cost</i> of
the property can be fully deducted. For qualifying §168(k) property placed-in-service
<b><i>during 2012</i>,</b> the §168(k) bonus depreciation deduction reverts
back to <b>50%,</b> and generally<b><i> expires</i></b> altogether for property
placed-in-service <b><i>after 2012.</i></b> <o:p></o:p></div>
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<b><i><br /></i></b></div>
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The following paragraphs summarize the rules for determining if an asset qualifies for the <span style="font-family: Calibri, sans-serif; font-size: 11pt;">§168(k) deduction:</span></div>
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<ul>
<li><b style="font-family: Calibri, sans-serif; font-size: 15px;"><span style="font-size: 11pt;">Qualifying 50%/100% §168(k) Bonus
Depreciation Property. </span></b><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Property qualifying for the §168(k) bonus
depreciation deduction is generally <i>new</i> property that has a depreciable
life for tax purposes of <i>20 years or less;</i> examples include: machinery
and equipment, furniture and fixtures, cars and light general purpose trucks,
sidewalks, roads, landscaping, depreciable computer software,<b> </b>and
“qualified leasehold improvements<i>. </i><b><u>Planning Alert!</u></b> These
are only <i>examples</i> of qualifying property. If you have a question about
property that we have not mentioned, call us and we will help you determine if
it qualifies. </span></li>
<li><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify;"><span style="font-size: 11pt;">Qualified Leasehold Improvement Property.</span></b><span style="font-family: Calibri, sans-serif; font-size: 11pt; text-align: justify;"> Even
though improvements to a commercial building <i>generally</i> do not qualify for
the §168(k) bonus depreciation deduction, "qualified leasehold improvement
property" (QLHIP) does qualify, if it is "acquired QLHIP and
placed-in-service" after <b>September 8, 2010</b> and <b>before 2012.</b><i>
QLHIP </i>is generally any capital improvement to an interior portion of a
building that is used for nonresidential commercial purposes, provided that <b>1)</b>
the improvement is made under or pursuant to a lease either by the lessee,
sublessee or lessor of that interior building portion; <b>2)</b> the interior
building portion is to be occupied exclusively by the lessee or sublessee; <b>and
3)</b> the improvement is placed-in-service <b>more than 3 years </b>after the
date the building was first placed-in-service. <b><u>Planning Alert!</u></b> <i>QLHIP
</i><b>does not include</b> any improvement attributable to: the enlargement of
the building; any elevator or escalator; any structural component benefitting a
common area; or the internal structural framework of the building. <b>Caution!</b>
Leasehold improvements made to property leased between certain <i>related
persons</i> <b>will not qualify.</b></span></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b style="font-weight: bold;"><span style="font-size: 11pt;">Newly‑Constructed Or Renovated Buildings And
Cost Segregation Studies.</span></b><span style="font-size: 11pt;"> Depreciable
components of newly‑constructed or newly‑renovated buildings that are properly
classified as depreciable <i>personal</i> property under a<b> <i>cost
segregation study</i></b><span class="Apple-style-span" style="font-weight: normal;"> are generally depreciated over 5 to 7 years.</span> Since
these non-structural components have a depreciable life of 20 years or less,
they should qualify for the 100% 168(k) bonus depreciation if "acquired
and placed-in-service" <b>after September 8, 2010 and before 2012. </b><b style="font-weight: bold;"><u>Planning
Alert!</u></b><b style="font-weight: bold;"> </b>In certain situations, these components of the building might
qualify for the 100% bonus depreciation deduction even if the construction or
renovation of the building itself began<i> <b>before</b></i><b> <i>September 9,
2010</i></b>, provided you make a timely election to apply the 100% §168(k)
acquisition rules separately to each component.</span></span></span></li>
<li><span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><b><span style="font-size: 11pt;">100% 168(k) Bonus Depreciation Property
Generally Must Be “Placed-In-Service” By December 31, 2011. </span></b>
<span style="font-size: 11pt;">Whether your business has a “calendar” or
“fiscal” tax year, in order to get the <b><i>100% §168(k) </i></b>bonus
depreciation deduction, you must place the property in service <b><i>no later
than December 31, 2011. </i></b></span>Generally, if you are purchasing “personal
property” (equipment, computer, vehicles, etc.) “placed-in-service” means the
property is <b style="text-align: justify; text-indent: -24px;">ready and available for use.</b><span class="Apple-style-span" style="text-align: justify; text-indent: -24px;"> To be safe, qualifying property
should be </span><b style="text-align: justify; text-indent: -24px;"><i>set up and tested </i></b><span class="Apple-style-span" style="text-align: justify; text-indent: -24px;">on or before the</span><b style="text-align: justify; text-indent: -24px;"><i> last day of
2011.</i></b><span class="Apple-style-span" style="text-align: justify; text-indent: -24px;"> On the other hand, if you are dealing with building improvements
(e.g., qualified leasehold improvement property, non-structural components of a
building), a certificate of occupancy will generally constitute placing the
building or improvement in service.</span></span></span></li>
</ul>
<b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"><u><span style="font-size: 11pt;">§168(k) Bonus Depreciation For Passenger
Automobiles, Trucks, And SUVs. </span></u></b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px;">
</span><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">For a
business auto first placed-in-service in </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">calendar year 2011,</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> the maximum
first-year depreciation deduction is generally capped at $3,060 ($3,260 for
trucks and vans not weighing over 6,000 lbs). However, Congress previously
increased the first-year depreciation cap for vehicles qualifying for the
§168(k) up-front bonus depreciation deduction by $8,000 for 2008 and 2009. The
Tax Relief Act of 2010</span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> extended this $8,000 increase through 2012 for new
vehicles otherwise qualifying for the §168(k) bonus depreciation deduction.</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">
</span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"><u>For example,</u></b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> let’s say your business is planning to purchase a</span><i style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">
new</i><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> vehicle weighing 6,000 lbs or less that will be used 100% for business
purposes. If you buy the new car and place it in service during 2011, your
first‑year depreciation deduction will be $11,060.</span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> <u>Heavy Vehicles.</u> </b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">“Heavy
Vehicles” (i.e., trucks, vans, and SUVs with loaded vehicle weights over 6,000
lbs.) are generally exempt from the passenger auto annual depreciation caps
discussed above. Therefore, if you buy a new “heavy” truck or SUV and use it
100% for business </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">in 2011,</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> you could deduct the “entire cost” </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">for
2011</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> using the §168(k) deduction.</span><br />
<span style="font-family: Calibri, sans-serif; font-size: 11pt; text-align: justify; text-indent: -24px;"><u style="font-weight: bold;">Expanded §179 Deduction.</u> </span><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px;">For the
last several years, Congress has temporarily increased the maximum §179
up-front deduction for the cost of qualifying “new” or “used” depreciable
business property. For </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">property placed-in-service in tax years beginning in
2010 and 2011, </b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">the overall cap was increased from </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">$250,000</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> to </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">$500,000,</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">
and the beginning of the deduction phase-out threshold was increased from </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">$800,000</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">
to </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">$2,000,000. </b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">In addition, for </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">2010 and 2011</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">purchases,</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> a
taxpayer may elect for “qualified real property” to be §179 property. Prior to
this change, real property generally did not qualify for the §179 deduction. </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"><u>Caution!</u></b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">
For tax years</span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> beginning after 2011,</b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;"> the maximum §179 deduction is
currently scheduled to drop </span><b style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">back to $139,000 </b><span class="Apple-style-span" style="font-family: Calibri, sans-serif; font-size: 15px; text-align: justify; text-indent: -24px;">and there will be no §179
deduction for “qualified real property.”</span><br />
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<ul>
<li style="font-family: Calibri, sans-serif; font-size: 15px;"> <b style="text-indent: 0px;"><span style="font-size: 11pt;">Up To $250,000 Of <i>“Qualified Real Property”</i>
Temporarily Qualifies As §179 Property. </span></b>Traditionally, the §179 deduction has been
limited to depreciable, tangible, “personal” property, such as equipment,
computers, vehicles, etc. However, businesses may <b>“elect” </b>to treat
qualified “real” property as §179 property, for property <b>placed-in-service
in tax years beginning in 2010 or 2011. </b>The maximum §179 deduction that is allowed
for <i>qualified real property</i> is $250,000. “Qualified Real Property”
includes property within any of the following three categories: <b>1)</b> <b>Qualified
Leasehold Improvement Property </b>(generally capital improvements to an
interior portion of certain leased buildings that are more than 3 years old and
that are used for nonresidential commercial purposes); <b>2) Qualified Retail
Improvement Property</b> (generally capital improvements made to certain
buildings that are more than 3 years old and which are open to the general
public for the sale of tangible personal property); and<b> 3)</b> <b>Qualified
Restaurant Property </b>(generally capital expenditures for the improvement,
purchase, or construction of a building, if more than 50% of the building's
square footage is devoted to the preparation of, and seating for, the on‑premises
consumption of prepared meals).<b> <u>Caution!</u></b> If you want to take the
§179 write-off <b>for “qualified real property” for your tax year beginning in
2011,</b> you must place the building (or improvements) in service by the <b><i>end
of your 2011 </i></b>tax year. A certificate of occupancy will generally
constitute placing the building or an improvement to a building in service.</li>
<li style="font-family: Calibri, sans-serif; font-size: 15px;"> <b>Planning Alert! </b>The §179 rules for “qualified real property” are extremely
tricky and time sensitive. Furthermore, the depreciation rules become even more
complicated if you are planning to do a cost segregation study where you break
out nonstructural components of a building for depreciation purposes. <b>Please
call our firm if you are improving, acquiring, or constructing a building. We
will help you devise a strategy that will maximize your depreciation
deductions, including the §179 deduction.</b><br /></li>
</ul>
<span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;">Tune in next week as we discuss the additional tax planning topics as listed aboce. If you have any questions the in meantime, please contact our firm at 704.544.8429</span></span><br />
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<span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;">Until then, Happy Turkey Day to you all!</span></span></div>
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<span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;"><br /></span></span></div>
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<span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;">brad@mcarthurco.com</span></span></div>
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<span class="Apple-style-span" style="font-family: Calibri, sans-serif;"><span class="Apple-style-span" style="font-size: 15px;">704.544.8429</span></span></div>
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<o:p></o:p></div>McArthur and Companyhttp://www.blogger.com/profile/02151193245697835097noreply@blogger.com0