CPAs Talk Tech Biz

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August 1, 2017

CA Competes Credit

CA Governor’s Office of Business and Economic Development reminds businesses about upcoming August 21st deadline for applications for California Competes Tax Credit.

The California Competes Tax Credit is an income tax credit available to businesses who want to come, stay, or grow in California.

Tax credit agreements are negotiated by Governor’s Office of Business and Economic Development (GO-Biz) and approved by a statutorily created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, and one appointee each by the Speaker of the Assembly and Senate Committee on Rules.
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Categories: The Musings of our Authors, Updates & Alerts

Tags: CA competes credit, California Competes Tax Credit, Go-Biz, Income Tax, Naila Sharifova, Small Business,

By Naila Sharifova

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November 2, 2016

Important Tax Considerations When You Sell Your Business: An Overview (Part II)

I have previously discussed tax opportunities for selling the business by a C corporation. I would like now to switch our focus to options available to S corporations.

One of the options for an S corporation to sell its business is to sell its underlying assets. This is often a preferred option by a potential buyer as it provides a step up in acquired assets. Unlike a C corporation, the S corporation is a pass-through entity and its federal taxable income is only taxed at a shareholder level. Thus, double taxation is usually avoided with some limited exceptions. (more…)

Categories: Business Taxation, Execs & Owners, Financing & Exit Strategies

Tags: installment sale, S Corporation, sale of stock,

By Naila Sharifova

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October 18, 2016

Important Tax Considerations When You Sell Your Business: An Overview (Part I)

Selling your business may seem like a natural progression for your company and the possibility of early retirement may look closer than ever, but without careful planning and execution and thorough consideration of the tax impact of sale, eventual financial outcome may end up being much smaller than anticipated.

You can structure sale of your business in two primary ways: 1) sale of the stock or interest in the company or 2) sale of underlying assets. Depending on the structure chosen, special elections made and type of underlying assets, composition of gain as ordinary vs capital may differ significantly and so may the tax liability.

Now let’s consider tax consequences of selling your business under two different scenarios. Under the first scenario, you are the owner of a closely held C corporation. Under the second scenario, you are the owner of a pass-through entity, an S corporation or a partnership. (more…)

Categories: Business Taxation, Execs & Owners, Financing & Exit Strategies, Operations Management

Tags: c corporation, early retirement, exit strategy, retirement, sale, sale of assets, sale of stock, Selling your business, tax free reorganization,

By Naila Sharifova

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September 3, 2015

Have an Uncertain Tax Position? Do Not Forget To Disclose.

You may remember when the IRS announced in September 2010 that uncertain tax positions (UTP) of certain corporate taxpayers would have to be disclosed on their respective federal returns. What it meant for those affected taxpayers was that they had to include a UTP schedule in their returns if they had federal uncertain tax position subject to FIN 48 reporting for which either a reserve was recorded in its audited financial statements or the reason for not recording the reserve was that the corporation expected to litigate the position.

Categories: Business Taxation, Updates & Alerts

Tags: Corporate, FIN 48, Tax, Uncertain Tax Positions, UTP, Who Must File,

By Naila Sharifova

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May 22, 2015

Got a foreign business? File a mandatory survey by May 29th, 2015

As if individuals and entities with foreign investments do not have enough reporting to do already, they are now required by the Bureau of Economic Analysis under the US Department of Commerce to fill out mandatory surveys about their foreign affiliates. The key here is that it is mandatory and the only incentive for filling it out is not to incur a penalty that may range from $2,500 to $25,000. Looks more like a stick to me than a carrot…

Categories: International Business Issues, Updates & Alerts

Tags: BEA, Due May 29 2015, Foreign, international, Survey,

By Naila Sharifova

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August 14, 2013

How to Avoid Tax Traps When Paying Foreign Vendors Part 3: Form W-8ECI Overview

If a foreign contractor/vendor (payee) claims that payments are made for income that is effectively connected with a US trade or business, you are required to obtain from him a Form W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States, which effectively exempts him from tax withholding as he is to file his own US tax return. In this case, you are not responsible for withholding US tax from your payments to this foreign contractor/vendor. You need Form W-8ECI in order to…

Categories: Business Taxation

Tags: Foreign Contractors, Foreign Vendors, Form W-8BEN, Form W-8ECI,

By Naila Sharifova

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July 24, 2013

How to Avoid Tax Traps When Paying Foreign Vendors Part 2: Form W-8BEN Overview

Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, is requested from a foreign payee by a U.S. payer to:Establish the payee’s foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished, and; If applicable, claim a reduced rate of, or exemption from withholding under an income tax treaty. This form is used for the following types of payments:
Interest; Dividends; Rents; Royalties; Premiums; Annuities; Compensation for, or in expectation of, services performed (but not for independent personal services performed in the US – use Form 8233 instead); Other fixed or determinable annual or periodical gains (also referred to as FDAP). It is one of the most…

Categories: Business Taxation

Tags: Foreign Contractors, Foreign Vendors, Form W-8BEN,

By Naila Sharifova

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July 10, 2013

How to Avoid Tax Traps When Paying Foreign Vendors Part 1: Overview

In a world where cross-border transactions have become a necessity of life, US companies find they are turning more frequently to foreign-based contractors and vendors to maintain a competitive edge. BUT beware, there are compliance requirements associated with foreign-based contractors and vendors that may be quite costly if not properly addressed from the beginning. In particular…

Categories: Business Taxation, International Business Issues

Tags: Foreign Contractors, Foreign Vendors, W-8BEN, W-8ECI,

By Naila Sharifova

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February 21, 2013

California Apportionment Rules - Let the Confusion Begin

Never a dull moment with California tax rules. Only a little more than a year ago California adopted a rule allowing multi-state businesses to choose between a single sales and a three-factor apportionment method to determine their state tax liability. It actually made California a bit more business friendly for once, but not for long. Statewide Proposition 39 simplified the choice for businesses by making the single sales factor method mandatory effective January 1, 2013…

Categories: Business Taxation, Updates & Alerts

Tags: California Apportionment Rules, Proposition 39, single sales apportionment method, three-part apportionment method,