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CPAs Talk Tech Biz

A blog for the owners, founders, and executives of privately held technology companies.
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By Abraham Livchitz
•
July 24, 2019

California Competes Tax Credit – 2019 Update

The state’s popular California Competes Tax Credit program continues to be available during the 2019-2020 fiscal year. The state has allocated approximately $237 million to be awarded to both small and large business taxpayers. In June, the final award period of last fiscal year, approximately $55 million of tax credits were granted to twenty taxpayers. (more…)

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Categories: The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, California Competes Tax Credit, Expanding operations in California, Tax Credit,
By Abraham Livchitz
•
February 13, 2019

Tax Reform…. Not in California

UPDATED JULY 18, 2019: At Last…Partial Conformity…

In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) which was the most significant tax reform legislation enacted since the 1980s. In July 2019, 18 months later, the California legislature acted and the governor signed Assembly Bill 91 that contained a select number of conformity provisions. These provisions will simplify tax compliance for California taxpayers as differing federal and California tax reporting for certain transactions will no longer be required. Unfortunately, California has yet to conform to most of the changes enacted by the TCJA.

The conformity changes included in AB 91 are highlighted below.

However, in an act of “reverse conformity,” the legislature passed Senate Bill 78. Originally, the federal Affordable Care Act imposed a “penalty tax” on taxpayers who did not have qualifying health insurance coverage. Congress repealed this “tax” effective January 1, 2019. But due to an act of reverse conformity, a “penalty tax” will once again be imposed on California taxpayers that do not have qualifying health insurance, effective January 1, 2020. (more…)

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Categories: Tax Reform, The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, California, Tax Cuts and Jobs Act, Tax Reform,
By Abraham Livchitz
•
December 10, 2018

Year-End Tax Planning Ideas

Now is the time to think about tax saving strategies that can be implemented before the end of the year. The Tax Cuts and Jobs Act passed by Congress in December 2017 will significantly impact year-end tax planning for 2018. Several traditional tax saving ideas are no longer effective and many new opportunities are available. Some our favorite ideas are discussed below. (more…)

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Categories: Tax Reform, The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, Tax saving strategies, year-end planning, Year-end tax planning,
By Abraham Livchitz
•
July 18, 2018

Cryptocurrency Tax Update - Still More Questions Than Answers

There have been a few developments since we last looked at cryptocurrency in April, 2017 (Are Bitcoin Users Cheating on Taxes? (Or Are They Just Confounded by the Rules?)). The IRS has increased tax compliance enforcement but unfortunately, guidance from the Internal Revenue Service has not kept up with the advances in the cryptocurrency world continuing tax reporting challenges.

In 2014 the IRS released their position regarding the taxation of cryptocurrency transactions in Notice 2014-21 (https://www.irs.gov/pub/irs-drop/n-14-21.pdf). The IRS notified taxpayers that: (more…)

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Categories: The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, Bitcoin, Coinbase, Cryptocurrency, Virtual currency,
By Abraham Livchitz
•
January 23, 2018

States Expand Sales Tax Collection Requirements

Historically a taxpayer selling tangible property was not required to collect a state’s sales tax unless the taxpayer had “nexus” within the state. Nexus is generally defined as a “connection to the state”. My prior blog discussed the changing concept of nexus: Do You Meet the Newest Invisible Tax Filing Requirement?. The landmark 1992 Supreme Court case of Quill v. North Dakota established a physical presence standard. For a state to impose an obligation for a taxpayer to collect sales tax, the taxpayer must have a physical presence within the state. In recent years to generate new sources of tax revenue states have sought to expand the concept of nexus far beyond the physical presence test. These new standards look at economic nexus.  (more…)

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Categories: The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, Economic Nexus, Nexus, Taxpayers,
By Abraham Livchitz
•
June 20, 2017

Do You Meet the Newest Invisible Tax Filing Requirement?

The growth of internet based e-commerce sales and companies offering software as a service has been phenomenal in recent years. The U.S. Commerce Department estimates that e-commerce sales increased from $229 billion in 2012 to $390 billion in 2016. This has impacted traditional retail sales which serves as the base for sales tax revenue and is an important factor in apportioning income of multi-state businesses. Unfortunately, tax rules have not kept up with this changing trend. Federal legislation has not addressed many of the issues created by the digital economy so states have been free to adopt their own rules. As states are anxious to find new revenue sources they have adopted some aggressive tax generating rules. (more…)

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Categories: The Musings of our Authors, Updates & Alerts
Tags: Abe Livchitz, e-commerce, Economic Nexus, Jim Sensenbrenner, Nexus, No Regulation Without Representation Act of 2017, tax reporting,
By Abraham Livchitz
•
January 18, 2017

California Competes Tax Credit - Update

In November 2016 the Governor’s Office of Economic Development announced that it had awarded $61 million of California Competes tax credits to 74 taxpayers.

These business entities promised to add over 6,500 jobs and invest $670 million in the California economy.

http://www.business.ca.gov/Portals/0/Files/CCTC%20Meeting%20Agenda%2011-17-16.pdf

The credits granted ranged from $8 million to businesses receiving the minimum credit of $20,000.  The program is required to grant 25% of the credits to small businesses. It is interesting to note that credits were granted to many taxpayers not operating in manufacturing. Taxpayers receiving credits included entities performing: engineering consulting (Roseville), software development (Folsom); dentist (Fresno), day care services (Oakland); financial planning (Irvine),  data analysis (Los Angeles) and architecture (Anaheim). (more…)

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Categories: Business Taxation, Updates & Alerts
Tags: Abe Livchitz, California Competes Tax Credit,
By Abraham Livchitz
•
November 17, 2016

Don’t Be Surprised By New Tax Filing Due Dates

Beginning next year several tax filing due dates will be changing. The existing filing schedule has been in place since I manually prepared tax returns with pencil and paper before the computer age began so these changes are significant. The new filing dates were established under the Protecting Americans from Tax Hikes (PATH) Act of 2015 without much publicity outside of the tax practitioner community. The new filing dates are effective for tax years beginning January 1, 2016, so taxpayers unaware of the new dates may have an unexpected surprise next year.

Fortunately, the traditional April 15th due date for individual tax returns has not changed but the due dates of business returns have been modified. The changes were implemented to help smooth the tax filing process for taxpayers owning interests in pass-through entities such as partnerships and S-Corporations. (more…)

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Categories: Business Taxation, Execs & Owners, Updates & Alerts
Tags: Abe Livchitz, corporations, Due dates, Federal extended due dates, New, partnerships, PATH Act of 2015,
By Abraham Livchitz
•
August 3, 2016

Employer Owned Life Insurance: File a tax form and save $400,000

Business entities use insurance to provide protection against various risks ranging from natural disasters to cyber threats. As our economy has evolved the risks that can be insured against have grown more complex. An introduction to business insurance was the topic of our August, 2015 Emerging Business Group seminar. One traditional use of insurance is to provide funds to compensate a business in the event of the death of a founder or other key employee. For founders and other stockholders, the life insurance proceeds received by the entity can be used to fund the purchase of the founder’s ownership interest in that entity. In the case of key employees, life insurance proceeds can help to offset potential revenue losses or increased costs incurred while the entity determines how to deal with the knowledge and resources lost due to their employee’s death. (more…)

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Categories: Business Taxation, Operations Management, Updates & Alerts
Tags: Abe Livchitz, COLI, Company Owned Life Insurance, Employer Owned Life Insurance, EOLI, Form 8925,
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