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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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April 1, 2022

ASU 2016-13: Accounting for Current Expected Credit Loss (CECL)

By Deepa Bhat, CPA, CFE, ACA, Principal

Starting in January 2023, businesses must conform to a new accounting standard for measuring expected credit loss. It’s perhaps one of the biggest accounting changes for financial institutions in a decade – but they’re not the only ones affected. Nonfinancial institutions may still have financial instruments and other assets that will require a different accounting approach and new internal controls. Implementing the current expected credit loss (CECL) accounting methodology takes a forward-looking approach to risk modeling and will be a significant undertaking for many. (more…)

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Categories: Audit & Accounting Errors, Myths & Guidelines, Updates & Alerts
Tags: CECL, Deepa Bhat,
February 25, 2022

Recent California Tax Law Changes Can Benefit Business Owners and Employees

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…)

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Categories: Business Taxation, COVID-19, Updates & Alerts
Tags: Pass-Through Entity Elective Tax,
November 18, 2021

Deductible Business Expenses - IRS Issues Guidance on Meals and Entertainment

With so many pandemic-driven changes to tax rules over the past 18 months, it’s easy to have overlooked some revisions. For example, recent changes to the deduction for business-related meal and entertainment (M&E) expenses may have slipped below the radar.

Earlier this year, the IRS issued Notice 2021-25 to provide updated guidance on M&E deductions. While you should always consult with your tax advisor for specific advice, it can be helpful to have a general understanding of what the current limits are and how they came about. (more…)

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Categories: Updates & Alerts
Tags: Deductible Business Expenses, Entertainment-related expenses, Meals and Entertainment,
October 28, 2021

California Main Street Small Business Tax Credit Round 2

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…)

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Categories: Business Taxation, Updates & Alerts
Tags: California Department of Tax and Fee Administration, California Employers, California Main Street Small Business Tax Credit,
By ASL Guest
•
October 12, 2021

Are You Ready for the New Lease Accounting Standard?

By Steve Carter, CPA, Principal

The COVID-19 pandemic created unique conditions for businesses in the Bay Area and across California. The combination of forced business closures and stay-at-home orders left many companies in uncharted waters. Some were forced to close while others had to find new ways to deliver products and services to customers. At the same time, many were searching for new lines of credit, business loans, or other ways to access working capital. It was against this backdrop that FASB made the decision to delay the implementation of ASC 842 (new lease accounting rules) by one year, starting with reporting periods after December 15, 2021. Although early adoption was permitted, many decided to delay implementation to focus on pandemic-related issues. As the recovery continues and year-end is just a few months away, businesses need to re-examine the new lease accounting rules to ensure compliance.

On November 10, 2021, the FASB Board decided not to provide a third effective date deferral of Topic 842 for entities within the scope of paragraph 842-10-65-1(b) (generally private companies and certain not-for-profit organizations). (more…)

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Categories: Updates & Alerts
Tags: ASC 842, Finance lease, Lease Accounting, Operating lease, Steve Carter,
September 23, 2021

The House Ways and Means Committee Releases Proposed Tax Changes

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…)

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Categories: Business Taxation, Updates & Alerts
Tags: Build Back Better act, Net Investment Income Tax, Qualified Small Business Stock, Tax Provisions,
August 24, 2021

California Enacts a Pass-Through Entity Tax

Good News for Business Owners – California Assembly Bill 150

By Rob Trammell, Principal

For those of us living in California, or other high tax states, there was a nasty section of the Tax Cuts and Jobs Act (TCJA) that has been causing some pain since 2018.  That was the $10,000 limitation on the amount of state and local taxes that could be deducted for federal purposes.  Even though your state income and property taxes could well exceed that amount, the maximum deduction on your federal return was limited to $10,000. (more…)

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Categories: Execs & Owners, Updates & Alerts
Tags: AB 150, pass-through entity tax, Rob Trammell, Small Business Relief Act,
August 24, 2021

PPP Update for Borrowers of $150,000 or Less

The SBA announced that PPP borrowers of $150,000 or less (for either first draw or second draw loans) have access to a simplified loan forgiveness process:

  • SBA Loan Forgiveness Portal – Borrowers are able to submit their loan forgiveness application directly to the SBA through a streamlined portal as of August 4, 2021, rather than to their lender/bank.
    • The lender/bank must opt-in to participate in this program. Therefore, check with your lender to see if you can utilize the SBA Portal. Currently, nearly 900 banks representing over 2 million borrowers have agreed to participate, however, it is expected that most large financial institutions will not participate and continue to use their proprietary portals. The SBA has provided a list of participating lenders.
    • The Portal will allow borrowers to complete Form 3508S which was recently revised.
    • The SBA set up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. The customer service team is available by calling (877) 552-2692, Monday – Friday, 5:00 AM – 5:00 PM PDT.

(more…)

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Categories: COVID-19, Updates & Alerts
Tags: California PPP, COVID-19 Revenue Reduction Score, Paycheck Protection Program, SBA Loan,
April 20, 2021

Home Office Deduction - How Business Owners Can Benefit

With working remotely more common now, many business owners are looking closely at how they might deduct some of the costs associated with maintaining their home offices.

Although the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the home office expense deduction for most employees until 2026, business owners may still be able to deduct such expenses—but only if they meet a number of conditions. These conditions vary depending on how the business entity is structured. (more…)

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Categories: Updates & Alerts
Tags: Home Office Deduction, Self-employed taxpayers, Work from home,
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