How Section 1231 gains and losses affect business asset sales
When selling business assets, understanding the tax implications is crucial. One area to focus on is Section 1231 of the tax code, which governs the treatment of gains and losses. Sec. 1231 assets generally include 1) business real property (including land) that’s held for more than one year, 2) other depreciable business property that’s held for more than one year, 3) intangible assets that are amortizable and held for more than one year, and 4) certain livestock, timber, coal, domestic iron ore and unharvested crops. Gains and losses from selling Sec. 1231 assets receive favorable federal income tax treatment. We can help you plan the timing of gains and losses for optimal tax results.
Understanding the Work Opportunity Tax Credit
The unemployment rate was 4.2% in November. With today’s hiring challenges, the Work Opportunity Tax Credit (WOTC) may help employers. The WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is generally worth up to $2,400 for each eligible employee. The maximum credit amounts are different for some employees (certain veterans, long-term family assistance recipients and summer youth employees). The job applicant and the employer must complete a pre-screening notice on or before the day a job offer is made.
Maximize your 401(k) in 2025: Smart strategies for a secure retirement
If your employer offers a 401(k) plan, contributing to it is a smart way to build a nice nest egg. Consider increasing the amount in 2025 if you’re not already contributing the maximum allowed. With a 401(k), an employee elects to have a certain amount of pay deferred and contributed to a plan by an employer on his or her behalf. The 2025 contribution limit is $23,500. Employees age 50 or older by year end are also generally permitted to make additional catch-up contributions of $7,500. However, under a law change that becomes effective in 2025, 401(k) plan participants of certain ages can save more. The catch-up contribution amount for those who are age 60, 61, 62 or 63 in 2025 is $11,250.
Operating as a C corporation: Weigh the benefits and drawbacks
When deciding on the best business structure, one option is a C corporation. There are pros and cons to doing business this way. For example, a C corporation allows a business to be taxed separately from you as the owner. The corporate tax rate is currently 21%, which is lower than the highest 37% noncorporate tax rate. One potential disadvantage: Earnings can be subject to double tax, once at the corporate level and again when distributed to you. One big advantage is the liability protection a C corporation offers. Shareholders aren’t personally liable for the corporation’s debts and liabilities. So personal assets are generally protected if the corporation faces legal issues or bankruptcy.
Growing the business means supporting your managers
Many different shortcomings can hold back the growth of a company. One often overlooked is having disjointed or under-supported managers. Make sure you’re following a collaborative approach to setting strategic goals so everyone is pulling in the same direction. To that end, managers need a robust, accessible and technology-driven knowledge base about your company’s product or service lines, organizational structure, market, customer base and operating environment. If you’re unsure where your management team stands, you may want to engage a consultant to perform a formal assessment. Annual retreats can also be helpful. Contact us for help controlling the costs of developing your managers.
Savings bonds and taxes: What you need to know
When considering U.S. savings bonds, you should understand the tax implications. EE bonds don’t pay interest currently. Instead, accrued interest is reflected in the redemption value. (Owners can elect to have interest taxed annually.) Series I savings bond interest is based on inflation. Owners may either: 1) defer reporting the increase in the redemption value (interest) to the year of maturity, redemption or other disposition (whichever is earlier), or 2) elect to report the increase annually as it accrues. Savings bond interest isn’t subject to state income tax. And using the money for higher education may keep you from paying federal tax on the interest (but income limits apply).
Companies can shine a light on financial uncertainty with flash reports
Your company’s financial statements should provide keen insights into its financial position. However, long amounts of time can elapse between when you generate those statements. Consider creating flash reports to help you and your leadership team stay better informed. These are brief snapshots of your business’s current financial performance based on a few carefully selected metrics. Flash reports should be simple and comparative, noting significant trends or budgetary deviations. Because they provide a rough measure of financial results within a short period, these reports can be misleading and generally shouldn’t be shared externally. Contact us for more information and assistance.
CORPORATE TRANSPARENCY ACT – APPEALS COURT REVERSES ITS OWN DECISION
December 26,2024 – In a surprising move, the Fifth Circuit Court of Appeals reversed its decision made on December 23, 2024, to reinstate a lower court’s nationwide preliminary injunction on Beneficial Owner Information Reporting. In its order, the Fifth Circuit Court of Appeals said “ in order to preserve the constitutional status quo while the […]
CORPORATE TRANSPARENCY ACT – UPDATE ON BOI REPORTING REQUIREMENT
On December 23, 2024, the Fifth Circuit Court of Appeals overturned the preliminary injunction from the U.S District Court for the Eastern District of Texas, in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24) requiring reporting companies to file their Beneficial Owners Information report by the January 1, 2025 deadline (THEN […]
Embrace the future: Sales forecasting for businesses
Your business should be able to estimate its future sales accurately. This practice is called sales forecasting, and doing it well is key to managing your company’s financial performance. Generally, you can use two broad models. Quantitative forecasting involves gathering numerical data and applying statistical methods to generate revenue estimates. In contrast, qualitative forecasting relies more on the input of trusted individuals inside and outside the company. (Many businesses use both.) Best practices for sales forecasting include defining a time frame, choosing the right data points and leveraging technology. Contact us for more information and assistance.
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