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Lee B

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  1. Lee B

    Alimony

    "TCJA changes alimony tax treatment only for alimony orders pursuant to an instrument of divorce entered after December 31, 2018. Couples planning to divorce may want to hasten their proceedings — or at least their drafting and signing of divorce instruments to take advantage of pre-TCJA alimony tax treatment. An instrument of divorce must specify periodic payments and the parties must reside in separate households. Experts believe an instrument signed before December 31, 2018, will qualify for pre-TCJA tax treatment, even if the divorce is not yet final. If the parties sign their divorce instrument before the end of this year, they can also agree to pre-TCJA tax treatment for any subsequent modification of their alimony arrangement. In that way, couples who sign an alimony instrument of divorce before December 31, 2018, can preserve the deductibility of alimony far into the future."
  2. If the company is performing services in Am Samoa for the local govt then then the company has nexus in AM Samoa and has to file the relevant tax returns. It's no different than a SD company performing work in ND for a ND local govt ? As far as the employees go it would seem to me to be no different than a NBA player who has to file returns in every state that he plays in.
  3. Released by the IRS: "The Tax Cuts and Jobs Act ("TCJA") changed deductions, depreciation, expensing, tax credits and other tax items that affect businesses. This side-by-side comparison can help businesses understand the changes and plan accordingly. Some provisions of the TCJA that affect individual taxpayers can also affect business taxes. Businesses and self-employed individuals should review tax reform changes for individuals and determine how these provisions work with their business situation. Visit IRS.gov/taxreform regularly for tax reform updates. Businesses can find details and the latest resources on the provisions below at Tax Reform Provisions that Affect Businesses. Deductions, depreciation and expensing Changes to deductions, depreciation and expensing may affect a taxpayer’s business taxes. Publication 535, Business Expenses, and Publication 946, How to Depreciate Property, explain many of these topics in detail. Deductions Deductions 2017 Law What changed under TCJA New deduction for qualified business income of pass-through entities No previous law for comparison. This is a new provision. This new provision, also known as Section 199A, allows a deduction of up to 20% of qualified business income for owners of some businesses. Limits apply based on income and type of business." Limits on deduction for meals and entertainment expenses A business can deduct up to 50% of entertainment expenses directly related to the active conduct of a trade or business or incurred immediately before or after a substantial and bona fide business discussion. The TCJA generally eliminated the deduction for any expenses related to activities considered entertainment, amusement or recreation. However, under the new law, taxpayers can continue to deduct 50% of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact. If provided during or at an entertainment activity, the food and beverages must be purchased separately from the entertainment, or the cost of the food or beverages must be stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. Notice 2018-76 provides additional information on these changes. New limits on deduction for business interest expenses The deduction for net interest is limited to 50% of adjusted taxable income for firms with a debt-equity ratio above 1.5. Interest above the limit can be carried forward indefinitely. The change limits deductions for business interest incurred by certain businesses. Generally, for businesses with 25 million or less in average annual gross receipts, business interest expense is limited to business interest income plus 30% of the business’s adjusted taxable income and floor-plan financing interest There are some exceptions to the limit, and some businesses can elect out of this limit. Disallowed interest above the limit may be carried forward indefinitely, with special rules for partnerships. Changes to rules for like-kind exchanges Like-kind exchange treatment applies to certain exchanges of real, personal or intangible property. Like-kind exchange treatment now applies only to certain exchanges of real property. For more information, see Form 8824, Like-Kind Exchanges, and its instructions, as well as Publication 544, Sales and Other Disposition of Assets. Payments made in sexual harassment or sexual abuse cases No previous law for comparison. This is a new provision. No deduction is allowed for certain payments made in sexual harassment or sexual abuse cases. Changes to deductions for local lobbying expenses Although lobbying and political expenditures are generally not deductible, a taxpayer can deduct payments related to lobbying local councils or similar governing bodies. TCJA repealed the exception for local lobbying expenses. The general disallowance rules for lobbying and political expenses now apply to payments related to local legislation as well. Depreciation Depreciation 2017 Law What changed under TCJA Temporary 100 percent expensing for certain business assets Certain business assets, such as equipment and buildings, are depreciated over time. Bonus depreciation for equipment, computer software, and certain improvements to nonresidential real property allows an immediate deduction of 50% for equipment placed in service in 2017, 40% in 2018, and 30% in 2019. Long-lived property generally is not eligible. The phase down is delayed for certain property, including property with a long production period. TCJA temporarily allows 100% expensing for business property acquired and placed in service after Sept. 27, 2017 and before Jan. 1, 2023. The 100% allowance generally decreases by 20% per year in taxable years beginning after 2022 and expires Jan. 1, 2027. The law now allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions. For more information, see Tax Reform: Changes to Depreciation Affect Businesses Now and New 100-percent depreciation deduction for businesses. Changes to rules for expensing depreciable business assets (section 179 property) A taxpayer can expense the cost of qualified assets and deduct a maximum of $500,000, with a phaseout threshold of $2 million. Generally, qualified assets consist of machinery, equipment, off-the-shelf computer software and certain improvements to nonresidential real property. TCJA increased the maximum deduction to $1 million and increased the phase-out threshold to $2.5 million. It also modifies the definition of section 179 property to allow the taxpayer to elect to include certain improvements made to nonresidential real property. Publication 946, How to Depreciate Property, and the Additional First Year Depreciation Deduction (Bonus) FAQs provide additional resources on this topic. Changes to depreciation of luxury automobiles There are limits on depreciation deductions for owners of cars, trucks and vans. TCJA increased depreciation limits for passenger vehicles. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is: $10,000 for the first year, $16,000 for the second year, $9,600 for the third year, and $5,760 for each later taxable year in the recovery period. If a taxpayer claims 100% bonus depreciation, the greatest allowable depreciation deduction is $18,000 for the first year, and the same as above for later years. Changes to listed property Computers and peripheral equipment are categorized as listed property. Their deduction and depreciation is subject to strict substantiation requirements. TCJA removes computer or peripheral equipment from the definition of listed property. Changes to the applicable recovery period for real property The General Depreciation System (GDS) and the Alternative Depreciation System (ADS) of the Modified Accelerated Cost Recovery System (MACRS) provide that the capitalized cost of tangible property is recovered over a specified life by annual deductions for depreciation. The general depreciation system recovery periods are still 39 years for nonresidential real property and 27.5 years for residential rental property. The alternative depreciation system recovery period for nonresidential real property is still 40 years. However, TCJA changes the alternative depreciation system recovery period for residential rental property from 40 years to 30 years. Qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property are no longer separately defined and given a special 15-year recovery period under the new law. Businesses with employees: Changes to fringe benefits and new credit For businesses that have employees, there are changes to fringe benefits and a new tax credit that can affect a business’s bottom line. Fringe benefit 2017 law What changed under TCJA Suspension of the exclusion for qualified bicycle commuting reimbursements Up to $20 per month in employer reimbursement for bicycle commuting expense is not subject to income and employment taxes of the employee. Under TCJA, employers can deduct qualified bicycle commuting reimbursements as a business expense. Employers must now include 100% of these reimbursements in the employee’s wages, subject to income and employment taxes. Suspension of exclusion for qualified moving expense reimbursements An employee’s moving expense reimbursements are not subject to income or employment taxes. Under TCJA, employers must include moving expense reimbursements in employees’ wages, subject to income and employment taxes. Generally, members of the U.S. Armed Forces can still exclude qualified moving expense reimbursements from their income. Prohibition on cash, gift cards and other non-tangible personal property as employee achievement award Employers can deduct the cost of certain employee achievement awards. Deductible awards are excludible from employee income. Special rules allow an employee to exclude certain achievement awards from their wages if the awards are tangible personal property. An employer also may deduct awards that are tangible personal property, subject to certain deduction limits. TCJA clarifies that tangible personal property doesn’t include cash, cash equivalents, gift cards, gift coupons, certain gift certificates, tickets to theater or sporting events, vacations, meals, lodging, stocks, bonds, securities, and other similar items. Tax Credit 2017 law What changed under TCJA New employer credit for paid family and medical leave No previous law for comparison. This is a new provision. The TCJA added a new tax credit for employers that offer paid family and medical leave to their employees. The credit applies to wages paid in taxable years beginning after December 31, 2017, and before January 1, 2020. The credit is a percentage of wages (as determined for Federal Unemployment Tax Act (FUTA) purposes and without regard to the $7,000 FUTA wage limitation) paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year. The percentage can range from 12.5% to 25%, depending on the percentage of wages paid during the leave. For more information on the new credit, see Notice 2018-71 and New credit benefits employers who provide paid family and medical leave. Business structure and accounting methods An organization’s business structure is an important consideration when applying tax reform changes. The Tax Cuts and Jobs Act changed some things related to these topics. Business structure topic 2017 law What changed under TCJA Changes to cash method of accounting for some businesses Small business taxpayers with average annual gross receipts of $5 million or less in the prior three-year period may use the cash method of accounting. The TCJA allows small business taxpayers with average annual gross receipts of $25 million or less in the prior three-year period to use the cash method of accounting. The law expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. As a result, more small business taxpayers can change to cash method accounting starting after Dec. 31, 2017. Revenue Procedure 2018-40 provides further details on these changes. Changes regarding conversions from an S corporation to a C corporation In the case of an S corporation that converts to a C corporation: Net adjustments that are needed to prevent amounts from being duplicated or omitted as a result of an accounting method change and attributable to the revocation of the S corporation election (e.g. adjustments required because of a required change from the cash method to an accrual method): net adjustments that decrease taxable income generally were taken into account entirely in the year of change, and net adjustments that increase taxable income generally were taken into account ratably during the four-taxable-year period beginning with the year of change. Distributions of cash by the C corporation to its shareholders during a post-termination transition period (generally one year after the conversion) are, to the extent of stock basis tax-free, then capital gain to the extent of remaining accumulated adjustments account (AAA). Distributions more than AAA are treated as dividends coming from accumulated Earnings and Profits (E&P). Distributions after that period are dividends to the extent of E&P and taxed as dividends. The TCJA makes two modifications to existing law for a C corporation that (1) was an S corporation on Dec. 21, 2017 and revokes its S corporation election after Dec. 21, 2017, but before Dec. 22, 2019, and (2) has the same owners of stock in identical proportions on the date of revocation and on Dec. 22, 2017. The following modifications apply to these entities: The period for including net adjustments that are needed to prevent amounts from being duplicated or omitted as a result of an accounting method change and attributable to the revocation of the S corporation election is changed to six years. This six-year period applies to net adjustments that decrease taxable income as well as net adjustments that increase taxable income. Distributions of cash following the post-termination transition period are treated as coming out of the corporation’s AAA and E&P proportionally. See Revenue Procedure 2018-44 for more detailed information. Businesses or individuals that rehabilitate historical buildings Topic 2017 law What changed under TCJA Changes to the rehabilitation tax credit Owners of certified historic structures were eligible for a tax credit of 20% of qualified rehabilitation expenditures. Owners of pre-1936 buildings were eligible for a tax credit of 10% of qualified rehabilitation expenditures. TCJA keeps the 20% credit for qualified rehabilitation expenditures for certified historic structures but requires that taxpayers take the 20% credit over five years instead of in the year they placed the building into service. The 10% credit for pre-1936 buildings is repealed under TCJA. Opportunity for tax-favored investments Opportunity Zones are a tool designed to spur economic development and job creation in distressed communities. Businesses or individuals can participate. Topic 2017 law What changed under TCJA Opportunity Zones No previous law for comparison. This is a new provision. Investments in Opportunity Zones provide tax benefits to investors. Investors can elect to temporarily defer tax on capital gains that are reinvested in a Qualified Opportunity Fund (QOF). The tax on the gain can be deferred until the earlier of the date on which the QOF investment is sold or exchanged, or Dec. 31, 2026. If the investor holds the investment in the QOF for at least ten years, the investor may be eligible for a permanent exclusion of any capital gain realized by the sale or exchange of the QOF investment."
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  4. Lee B

    941 efile

    I am still using ATX Payroll Compliance for the first 3 quarters of this year before I switch to Drake. The ATX PC program's rollover function has a monthly/quarterly selection which works quite well. Then like Illmas, I name the quarters and clients although I do it so that all the clients for the same quarter are all together: 1Q 2018 ABC 2Q 2018 ABC 3Q 2018 ABC
  5. From page 78 of Pub 225: ( The next to last section addresses Entities ) "Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. However, certain exemptions may apply to wages paid to your child, spouse, or parent. Exemptions for your child.(p78) Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) aren't subject to social security and Medicare taxes. However, see Nonexempt services of a child or spouse, later. Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, also aren't subject to social security or Medicare taxes. Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, aren't subject to FUTA tax. Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. Exemptions for your spouse.(p78) Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, aren't subject to social security, Medicare, or FUTA taxes. Nonexempt services of a child or spouse.(p78) Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. A corporation, even if it is controlled by you. A partnership, even if you’re a partner. This doesn't apply to wages paid to your child if each partner is a parent of the child. An estate or trust, even if it is the estate of a deceased parent. In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. Exemptions for your parent.(p78) Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. Social security and Medicare taxes don't apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. You have a child (including an adopted child or stepchild) living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in the calendar quarter services were performed. You’re a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, can't care for your child for at least 4 continuous weeks in the calendar quarter services were performed. Wages you pay to your parent aren't subject to FUTA tax, regardless of the type of services provided.
  6. A faint and distant memory whispered in my ear, that this exception only applies to sole proprietors.
  7. FWIW, Nozawa is Japanese
  8. You also need to spend some time on Travel, Meals and Entertainment since the IRS recently released new guidelines
  9. I am glad that works for you, but the last time I saw the "reset password" message was back in January !
  10. Yeah, I switched to Drake for 2017 and I can't log into ATX 2016 either. In the past if you forgot your password, you could get back in by using the same initial code used during installation. Frankly, I found it much easier to use my free copy of Drake 2016 since my ATX support came to a screeching halt on November 16th, 2017.
  11. In my opinion, there isn't any way to reimburse her that would be nontaxable. However, you could gross up the taxable stipend to cover the additional taxes so that she isn't penalized.
  12. I hope that everything goes well.
  13. Rather than increasing her salary, give her a taxable health insurance stipend, in lieu of being on the church policy. This is really a matter of managing perceptions. In other words, the explanation has to be framed so that fairness is the objective so that she isn't penalized for turning 65. I would think that a minister would be up to the challenge.
  14. I suspect it will happen eventually, but with TCJA looming, it's probably a low priority. Also the administration of the PTIN was subcontracted out to a third party, so the refunds will be dependent on how long the subcontracting and funding of the refund process takes ? Case in point: My largest client is an ALE under ACA definitions so they are subject to the penalties for not providing health insurance. They did not receive their proposed penalties for 2015 until June 2018. They have yet to receive any correspondence regarding 2016 penalties.
  15. Stop, stop, this thread is out of control
  16. If we are playing PTIN # poker, I have a Full House. I am definitely all in !
  17. I agree, the explanation and terminology used are too fuzzy and imprecise to reach conclusions other than I am glad they aren't my clients.
  18. After rebooting, try turning off your firewall and your antivirus program. See if that makes a difference. If it does you can exclude all ATX files from the scrutiny of your firewall and your antivirus [program. This has been a problem that has popped up from time to time over the last 6 years.
  19. Why wouldn't they? They probably already have you name, address, SSN , DOB and Drivers License info from the Equifax hack last year !
  20. Lee B

    S Corp sale

    I 100 % guarantee you it will not be a sale of stock.
  21. Yawn, much to do about nothing.
  22. Just to clarify, Engineers and Architects, who do not produce a physical product, do qualify, but Accountants don't qualify.
  23. I don't know about Virginia, but in Oregon, if you know the street address, you can find sales, assessment and tax information going back over 20 years at each county assessor's website.
  24. So that you can wave it around and say to your client, "Now you can file your return on a postcard !
  25. Not really, you just have an asset whose usage is changing from personal to business.
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