With unemployment at its lowest level in decades, many businesses are struggling to retain employees and fill vacancies. An attractive retirement or profit-sharing plan can help meet this challenge while also reducing a company’s tax liability. It can also help company owners accumulate wealth for their own retirement. (more…)
As businesses adjust to the post-pandemic economy and private equity firms increase their searches for new acquisitions, a growing number of business owners may find themselves facing intriguing but unnerving questions about whether now is the time to sell—and if so, how to structure the deal. Among the many factors to consider is the tax consequences of the transaction. (more…)
Recently enacted California tax legislation included both good news and bad news for business owners. Senate Bill 113 (SB 113) contained a number of key and favorable changes made retro-active for the 2021 tax year. California Senate Bill 114 (SB 114) reinstated a mandatory COVID-19 supplemental sick leave requirement for employers. (more…)
In response to the COVID-19 pandemic as well as to the ongoing staffing shortage in many parts of the country, more companies are allowing their employees to work from home. While initially concerned with the technology and communication challenges that remote work presented, companies now are realizing that remote employees residing in other states may pose increased income tax liabilities. (more…)
ACTION MAY BE REQUIRED ON NOVEMBER 1, 2021
The California legislature authorized another round of funding for the “Main Street Hiring Credit”. Employers that have increased hiring since the base period (April 1, 2020 to June 30, 2020) may qualify for this credit of $1,000 per additional full-time equivalent employee.
Beginning November 1, 2021, qualified small business employers need to apply for a credit reservation through the California Department of Tax and Fee Administration (CDTFA). The credit reservations will be allocated on a first-come, first-served basis until all available funds are allocated, so it’s important to apply as early as possible. The reservation system will be available November 1, 2021 – November 30, 2021. Qualified small businesses will be able to use the credit to offset their 2021 California income taxes or their 2022 sales and use tax deposits. (more…)
On September 13, 2021, The House Ways and Means Committee released proposed tax changes to pay for and be incorporated in the Build Back Better act (the $3 trillion budget reconciliation bill currently being discussed by Congress). The House proposals modified many of the tax changes on President Biden’s agenda, ignored some of his proposals, and included a few surprises. Here are the highlights of the proposed changes with most being effective in 2022. The themes of the proposed legislation are tax increases for corporations and wealthy taxpayers and the “marriage penalty” is back. We will continue to keep you updated as there will be many changes and modifications to the proposed bill before being approved by the House and Senate. (more…)
When a company is involved in litigation—as either a plaintiff or a defendant—it is essential that the management team and legal counsel consider the potential tax implications of the action as early as possible. Advance planning and consultation can have a major impact on both the tax treatment of any proceeds and the deductibility of attorneys’ fees and other expenses. (more…)
After several rounds of revisions and reversals, the IRS is about to release its final version of instructions for partnerships to use when calculating and reporting their partners’ capital accounts on Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc. The instructions, which the IRS is expected to finalize within a few weeks, will apply to the 2020 tax year—the tax preparation season that is already underway for most organizations.
The IRS says it will provide penalty relief for the 2020 requirement as long as partnerships “take ordinary and prudent business care in following the form instructions”. On January 21, 2021, the IRS issued Notice 2021-13 providing additional penalty relief applicable to the calculation of beginning capital balances. Compliance could require considerable data gathering and complex calculations, so partnerships should begin working on these tasks immediately. (more…)
As this very unusual year comes to a close, we can look forward to the prospects and challenges waiting for us next year. Until then, there are many tax planning opportunities available to individuals and business entities that can be implemented before December 31, 2020.
Congress is currently working on another stimulus package with provisions that will provide assistance to business entities and no significant tax changes for individuals. It is uncertain if this legislation will be enacted before the end of the year. Watch our website for further details.