By Tony Dai, CPA, Senior Tax Manager
ASL Technology Group
The Social Security Administration announced that the maximum wages in 2018 subject to the 6.2% Social Security tax, or “FICA”, will rise from $127,200 to $128,700, an increase of just over 1%. The FUTA (Federal Unemployment Tax Act) taxable wages ($7,000) is expected to remain unchanged. It is important to calculate both FICA and FUTA taxes correctly when an employee has multiple employers during the year. (more…)
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…)
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…)
A recent survey conducted by the Association of Certified Fraud Examiners (ACFE) estimates that fraud losses for a typical organization amount to 5% of total revenues each year with median losses to the tune of $150,000. More than one‐fifth of such losses hit the million dollar mark. The most common type of fraud: asset misappropriation with median losses of $125,000 comprised 83% of all fraud cases reported while financial statement fraud schemes made up just 10% of the total fraud cases, but caused the greatest median loss at nearly $1 million. The frauds reportedly lasted 18 months before being detected. The most telling fact was that private companies logged the highest median loss of $180,000 in comparison to public companies, government, non-profit and other sectors. (more…)
It is very common for U.S. parent companies to include key non-resident alien employees of their foreign subsidiaries in their stock option plans. What happens when the non-resident exercises the options or sells the options? Is the non-resident subject to withholding tax? Is there a U.S. tax filing requirement?