Background Historically, regulations have been unclear with interpreting when an expenditure made with respect to tangible property may be deducted as a repair expense or must be capitalized as an improvement and depreciated over time. In an attempt to clarify the rules, the IRS has finalized mandatory regulations, commonly referred to as the “repair regulations”, […]
Tax
Congress Approves Key Tax Extenders for 2014
Today, the President signed into law the Tax Increase Prevention Act of 2014 (“the extenders bill”), which retroactively extends for one year (through 2014) most but not all of the “tax extenders” that had expired after 2013. The key provisions that were extended through December 31, 2014 include: 50% bonus depreciation on new business assets […]
Year-End Planning for 2014
With the end of 2014 quickly approaching, now is the time to consider actions you can still take to minimize your taxes. There are many options available based on your unique tax situation, but here are a few interesting ones to consider: Donate to the California College Access Tax Credit Fund – A new California […]
Potential Tax Traps for Partnerships and LLCs – Short Years and Late Filing Penalties
When a partnership (or LLC taxed as a partnership) terminates, the taxable year of the partnership ends on the date of termination, and a final income tax return is due within three and a half months from that date. As the PENALTIES FOR LATE FILING CAN BE SEVERE, it is critical for partnerships to recognize […]
CA Nonresident Withholding Requirements for Passthrough Entities
The Franchise Tax Board (“FTB”) requires that California state taxes be withheld at a rate of 7% on payments and distributions of CA-source income to domestic (U.S.) non-CA residents when such payments exceed, or are expected to exceed, $1,500 to any such recipient in a given year. If you are an entity that is doing […]
American Taxpayer Relief Act of 2012
On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (“the 2012 Tax Act”), which affects all taxpayers. The summary below highlights some of the more relevant tax provisions in the 2012 Tax Act: Payroll Tax Holiday The payroll tax holiday, which reduced the employee portion of social security […]
Retroactive CA Income Tax Increase, Effective January 1, 2012
Governor Jerry Brown’s Proposition 30 passed this month, retroactively increasing income taxes effective January 1, 2012. These rates will remain in effect for seven years (through the end of 2018) as follows: New Rates for 2012-2018 10.3% (1% increase) on income of: $250,001–$300,000 for single/MFS; $340,001–$408,000 for HOH; and $500,001–$600,000 for MFJ. 11.3% (2% increase) […]
Internal Revenue Service and Franchise Tax Board Audits on the Rise
Navolio & Tallman LLP and colleagues from other CPA firms have witnessed a large increase in the number of audits of wealthy individuals and small businesses over the past year. In the near future, we also expect a higher rate of gift and estate tax audits due to the recent hiring of IRS auditors and […]
Issuing K-1’s Electronically
Many partnerships are increasingly providing K-1’s to their partners electronically. If you are one of them, please be aware that on February 13, 2012, the IRS issued Revenue Procedure 2012-17, which contains rules that partnerships (including LLCs taxed as partnerships) must now follow when delivering K-1’s exclusively in electronic format. Please note that these new […]
SB 459 – Independent Contractors
Effective January 1, 2012, California has a new law, Senate Bill 459 (SB 459), which significantly increases the penalties that can be assessed against employers who willfully misclassify individuals who should be treated as employees as independent contractors. If your business utilizes independent contractors, it is extremely important that you take the time now to […]