Important considerations when engaging in a like-kind exchange
A business or individual might be able to dispose of appreciated real property without being taxed on the gain by exchanging it rather than selling it. You can defer tax on your gain through a “like-kind” or Sec. 1031 exchange. A like-kind exchange is a swap of real property held for investment or for productive use in your trade or business for like-kind investment real property or business real property. Like-kind is very broadly defined and most real property is considered to be like-kind with other real property. However, the real property can’t be held primarily for sale. If you have questions or you’re interested in a tax-deferred like-kind exchange, contact us.
How to keep remote sales on point
One interesting byproduct of the pandemic is that it has created a somewhat involuntary experiment in telework. If your company still has a remote sales staff, don’t assume it will “run itself” or that this tech-based approach is finished evolving. Continue to devise and implement sound sales and marketing strategies. Keep existing customers as happy as possible and target only well-researched prospects. Stay on the lookout for upgrades to video-based solutions, as well as ways to create better presentations and to leverage brandable “microsites.” Last, your remote sales staff must ensure that customers’ experiences with both your technology and people are positive. Contact us for help.
Weathering the storm of rising inflation
Inflation has gone from dark clouds on the horizon to a noticeable downpour. Is it time for business owners to panic? Not at all, but you should confront the problem head on. Although the IRS has increased the mileage rate tax deduction for business travel, major tax relief this year is unlikely. As you’re keeping an eye on rising interest rates, consider strategic moves such as: 1) Adjusting your prices carefully with a close eye on the competition. 2) Taking a hard look at your budget to determine whether you can reduce or eliminate some expenses. 3) Exploring the feasibility of a growth-oriented approach to generate more revenue and outpace inflation. Contact us for help.
Interested in an EV? How to qualify for a powerful tax credit
Electric vehicle (EV) sales have increased in 2022, even though they’re still a small percentage of the market. If you buy one, you may be eligible for a federal tax break. There’s a credit to purchasers of qualifying plug-in EVs including passenger cars and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can’t exceed $5,000. Therefore, the maximum credit is $7,500. There are a number of requirements to qualify and the credit may not be available because of a per-manufacturer cumulative sales limit. (Tesla and GM vehicles are no longer eligible and the credit for Toyota EVs has begun to phase out.) Contact us for more information.
The tax obligations if your business closes its doors
Sadly, many businesses have been forced to shut down due to the pandemic and the economy. If this is your situation, we can assist you, including taking care of various tax obligations. A business must file a final income tax return and some other related forms for the year it closes. If you have employees, you must pay them final wages and compensation owed, make final federal tax deposits and report employment taxes. Failure to withhold or deposit employee income, Social Security and Medicare taxes can result in personal liability with the Trust Fund Recovery Penalty. There may be other responsibilities. Contact us to discuss these issues and to get answers to any questions you may have.
IRS extends relief for physical presence signature requirement
Under IRS regulations, if a signature must be witnessed by a retirement plan representative or notary public, it must be witnessed “in the physical presence” of the rep or notary unless an alternative procedure exists. In Notice 2022-27, the IRS recently extended temporary alternative procedures that allow signatures witnessed via remote technology to satisfy the physical presence requirement through December 31, 2022. Specific technological requirements must be met, and applicable state law should be considered. This extension of relief will likely be appreciated by businesses that sponsor retirement plans, including 401(k)s, and their participants. Contact us for more information.
How disability income benefits are taxed
How is disability income taxed? The answer is: It depends on who paid for the benefit. If the income is paid directly to you by your employer, it’s taxable to you just as ordinary salary would be. Frequently, the payments aren’t made by an employer but by an insurance company under a policy providing disability coverage. In other cases, they’re made under an arrangement having the effect of accident or health insurance. Again, the tax treatment depends on who paid for the insurance coverage. If your employer paid for it, then the income is taxed to you just as if it was paid directly to you by the employer. But if it’s a policy you paid for, the payments you receive under it aren’t taxable.
How do taxes factor into an M&A transaction?
Although M&A activity has been down in 2022, according to various reports, there are still companies being bought and sold. If your company is merging with or acquiring another business, it’s important to understand how the transaction will be taxed. For tax purposes, a transaction can basically be structured in two ways: stock (or ownership interest) or assets. For tax and nontax reasons, buyers usually prefer to purchase assets, while sellers generally prefer stock sales. Buying or selling a business may be the most important deal you’ll ever make, so seek professional tax advice as you negotiate. After a deal is done, it may be too late to get the best tax results. Contact us.
Is your cloud provider still meeting your company’s needs?
Some business owners pay little attention to a cloud computing provider once the service is in place. Given the value of the data and documents that you store in the cloud, it’s a good idea to regularly review your vendor and determine whether you’re still making a good investment. You should still be enjoying benefits such as lower computing costs, scalability (flexible storage capacity) and convenience. Perhaps most important, you should have faith in your provider’s cybersecurity measures. Verify basic features such as firewalls, authorization restrictions and data encryption. And investigate whether the provider has experienced a data breach recently and, if so, how it responded.
Vehicle expenses: Can individual taxpayers deduct them?
Individuals can deduct vehicle-related expenses in certain circumstances. Unfortunately, under current law, you may not be able to deduct as much as you could years ago. For 2018 through 2025, business and moving miles are deductible only in limited circumstances. Fortunately, if you’re eligible to deduct driving costs, the IRS recently increased the standard amounts for the second half of the year. The 2022 rates vary depending on the purpose: business — 62.5 cents for July 1 to Dec. 31, and 58.5 cents for Jan. 1 to June 30; medical for all eligible taxpayers and moving for active-duty military — 22 cents for July 1 to Dec. 31, and 18 cents for Jan. 1 to June 30; and charitable — 14 cents.