Tax Planning

Meals are not necessarily Entertainment

You may have heard that in the Tax Cuts and Jobs Act (TCJA), passed in December of 2017, there was a prohibition put in place against entertainment expenses. Historically, there was a deduction allowed of up to 50% of those entertainment expenses that were otherwise an ordinary and necessary business expense. However the TCJA removed…

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Discounts on future purchases make for tricky deductions

Today, many retail businesses are running customer loyalty programs that offer customers discounts on future gasoline purchases after they make qualifying purchases. In some cases the discounts are limited to gasoline purchases and customers may end up not using the discount before the expiration date. If your business uses, Generally Accepted Accounting Principals (GAAP), for it’s accounting, you would…

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Is Crowdfunding taxable?

Crowdfunding has become a popular way to raise money for a new venture.  New legislation has created certain exemptions for crowdfunding from SEC registration requirements which has increased the ability of startups to use this option to obtain financing.  However you might be surprised by the tax treatment of crowdfunded contributions to your business.  Since…

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Tricky tax issues with offering gift cards

A recent memorandum from the IRS Chief Counsel contained seemingly good news about the taxation of gift cards.  Unfortunately the IRS couldn’t help but leave themselves a backdoor to challenge business operators, on the subject. When a business receives an advanced payment for the sale of goods, the deferral of taxable income, is by the grace…

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The problem with non qualified deferred compensation plans and FICA

Does your business provide deferred compensation to key employees, aside from qualified retirement plans? If you providing 401K, SEP, SIMPLE type plans for your employees, those are qualified plans. However what if you simply agree to pay a group of executives, future bonuses for their hard work and commitment? Delaying compensation for key players who…

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How to determine if CEO salary is Qualified Research Expense

Qualifying expenses as research for tax purposes is a step toward claiming the Federal Research and Experimentation Credit for your business.  There are a number of criteria to consider when evaluating whether any expenditure qualifies for the credit.  A portion of employee salaries are usually one of the primary costs  that are classified as research.  Can…

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How to defer taxable income with installment sales

If you sell property for a gain, taking a note receivable instead of cash upfront can be a tax deferral opportunity.  The installment method of accounting allows you to report your gain proportionally to the payments received each year.  Thus, you can spread your gain out over the collection period on your note.  Gain on…

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What the IRS considers a reasonable cost

What is reasonable compensation?  That is a common question raised for privately held companies where owners are working in the company as employees.  Legally the owner has the power to control the amount paid to them for compensation but this power comes with additional tax scrutiny.  This is true for both the double taxed Corporation and the…

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Don’t stand out with expenses

I believe in standing out, but not when it comes to your business deductions.  The tax standard for a business is that your deductions should be ordinary and necessary.  That standard can sometimes be subjective and difficult to apply, but when you are paying a related party for service that wasn’t even performed, it’s pretty…

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