04 May 2025
0

The “Wash Sale” Rule: Don’t Let Losses Circle the Drain

Roger Rossmeisl, CPA
Individual Tax Briefs
The "Wash Sale" Rule: Don't Let Losses Circle the Drain

Stock, mutual fund and ETF prices have bounced around lately. If you make what turns out to be an ill-fated investment in a taxable brokerage firm account, the good news is that you may be able to harvest a tax-saving capital loss by selling the loser security. However, for federal income tax purposes, the wash sale rule could disallow your hoped-for tax loss. Rule basics A loss from selling stock or mutual fund shares is disallowed if, within the 61-day period beginning 30 days before the date of the loss sale and ending 30 days after that date, you buy substantially identical securities. The theory behind the wash sale rule is that the loss from selling securities and acquiring substantially identical securities within the 61-day window adds up...

04 May 2025
0

Business Valuation Plays a Critical Role in Buy-Sell Agreements

Roger Rossmeisl, CPA
Valuation Briefs
Business Valuation Plays a Critical Role in Buy-Sell Agreements

Whether your company is a family-run operation, a partnership among friends or a multi-owner enterprise, a buy-sell agreement helps protect it in potentially disruptive “what if” scenarios, including death, disability, divorce, disputes or simply a change of heart. These events may trigger ownership transitions that, without proper planning, lead to costly conflicts and financial strain. How can you ensure a buy-sell works when it’s needed most? A solid business valuation framework helps an agreement withstand legal scrutiny and supports fair, efficient ownership transitions. An experienced business valuator can provide clarity in five critical areas. Determining the value of the business Knowing your business’s current value helps prevent unpleasant surprises. Whether an owner wants to exit the business or a tragedy occurs, a formal, unbiased valuation sets...

04 May 2025
0

An Education Plan Can Pay Off for Your Employees — And Your Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
An Education Plan Can Pay Off for your Employees -- and your Business

Your business can set up an educational assistance plan that can give each eligible employee up to $5,250 in annual federal-income-tax-free and federal-payroll-tax-free benefits. These tax-favored plans are called §127 plans after the tax code section that allows them. Plan basics §127 plans can cover the cost of almost anything that constitutes education, including graduate coursework. It doesn’t matter if the education is job-related or not. However, you can choose to specify that your §127 plan will only cover job-related education. Your business can deduct payments made under the §127 plan as employee compensation expenses. To qualify for this favorable tax treatment, the education must be for a participating employee — not the employee’s spouse or dependent. Also, the plan generally can’t cover courses involving sports, games or...

04 May 2025
0

Understanding the “Step-up in Basis” When Inheriting Assets

Roger Rossmeisl, CPA
Individual Tax Briefs
Understanding the "Step-up in Basis" when Inheriting Assets

If you inherit assets after a loved one passes away, they often arrive with a valuable — but frequently misunderstood — tax benefit called the step-up in basis. Below is an overview of how the rule works and what planning might need to be done. What “basis” means First, let’s look at a couple definitions. Basis is generally what the owner paid for an asset, adjusted for improvements, depreciation, return of capital, etc. Capital gain (or loss) equals the sale price minus the basis. At death, many capital assets (stocks, real estate, business interests, collectibles, crypto, etc.) are stepped up (or down) to their fair market value (FMV) as of the date of death (or, if elected by the executor, the “alternate valuation date” six months later). The...

04 May 2025
0

Explore SEP and SIMPLE Retirement Plans for Your Small Business

Roger Rossmeisl, CPA
Small Business Tax Briefs
Explore SEP and SIMPLE Retirement Plans for your Small Business

Suppose you’re thinking about setting up a retirement plan for yourself and your employees. However, you’re concerned about the financial commitment and administrative burdens involved. There are a couple of options to consider. Let’s take a look at a Simplified Employee Pension (SEP) and a Savings Incentive Match Plan for Employees (SIMPLE). SEPs offer easy implementation . SEPs are intended to be an attractive alternative to “qualified” retirement plans, particularly for small businesses. The appealing features include the relative ease of administration and the discretion that you, as the employer, are permitted in deciding whether or not to make annual contributions. If you don’t already have a qualified retirement plan, you can set up a SEP just by using the IRS model SEP, Form 5305-SEP. By adopting and implementing this...

04 May 2025
0

Beyond the Fraud Risk Assessment: Managing Nuanced Threats

Roger Rossmeisl, CPA
Fraud Briefs
Beyond the Fraud Risk Assessment: Managing Nuanced Threats

Annual fraud risk assessments can be very effective in finding obvious fraud threats and documenting internal controls that are in place to minimize them. However, these assessments can overlook evolving and behavioral risks that could cause significant financial losses if bad actors exploit them. You can help boost the power of your risk-reduction program by actively looking for potential blind spots. Here are several examples of possible threats and how you can mitigate them: Performance pressure. Unrealistic performance targets that employees can’t achieve legitimately may create a “win at all costs” culture that encourages cheating. This is particularly true if you tie compensation to overly aggressive goals. You can reduce this risk by ensuring performance metrics include integrity-related measures. In addition, performance outliers should be analyzed, and...

04 May 2025
0

What Tax Documents Can Your Safely Shred? And Which Ones Should You Keep?

Roger Rossmeisl, CPA
Individual Tax Briefs
What Tax Documents Can You Safely Shred? And Which Ones Should You Keep

Once your 2024 tax return is in the hands of the IRS, you may be tempted to clear out file cabinets and delete digital folders. But before reaching for the shredder or delete button, remember that some paperwork still has two important purposes: Protecting you if the IRS comes calling for an audit, and Helping you prove the tax basis of assets you’ll sell in the future. . Keep the return itself — indefinitely Your filed tax returns are the cornerstone of your records. But what about supporting records such as receipts and canceled checks? In general, except in cases of fraud or substantial understatement of income, the IRS can only assess tax within three years after the return for that year was filed (or three years after...

04 May 2025
0

Divorcing Business Owners Can’t Afford to Skimp on Valuation Expertise

Roger Rossmeisl, CPA
Valuation Briefs
Divorcing Business Owners Can't Afford to Skimp on Valuation Expertise

Dividing marital assets can be a long, complicated process, especially if a divorce case involves a private business interest. Failure to hire a business valuation professional — whether to try to save money or time — can prove disastrous in court. Complex valuation matters Business valuators can provide answers to five critical financial questions in a divorce: 1. How much is my business interest worth? There are three ways to value a business: the cost, market and income approaches. All these techniques start with the company’s financial statements. But discovery shouldn’t stop there, particularly for spouses not involved in day-to-day business operations. Valuation experts should be given equal access to financial records and opportunities to tour the company’s facilities and interview management. Inadequate discovery can cause an expert...

04 May 2025
0

Turn a Summer Job into Tax Savings: Hire Your Child and Reap the Rewards

Roger Rossmeisl, CPA
Small Business Tax Briefs
Turn a Summer Job into Tax Savings: Hire Your Child and Reap the Rewards

With summer fast approaching, you might be considering hiring young people at your small business. If your children are also looking to earn some extra money, why not put them on the payroll? This move can help you save on family income and payroll taxes, making it a win-win situation for everyone! Here are three tax benefits. You can transfer business earnings Turn some of your high-taxed income into tax-free or low-taxed income by shifting some business earnings to a child as wages for services performed. For your business to deduct the wages as a business expense, the work done by the child must be legitimate. In addition, the child’s salary must be reasonable. (Keep detailed records to substantiate the hours worked and the duties performed.) For...

04 May 2025
0

In the News: 3 Updated Fraud Risks

Roger Rossmeisl, CPA
Fraud Briefs
In the News: 3 Updated Fraud Risks

Fraud schemes are always evolving. Once frauds are widely publicized and consumers and businesses learn to spot common scams, enterprising criminals change their tactics. So even if you were able to recognize the red flags of fraud a couple of years ago, you may be vulnerable to new or tweaked scams in 2025. For the health of your business, it’s essential to stay on top of fraud developments. From phone to text . Although the phone used to be fraudsters’ preferred device, perpetrators are now more likely to scam victims via email or text. According to credit bureau Experian, imposter scams (where a crook often pretends to be someone the victim already knows) perpetrated via phone calls have decreased, from 67% in 2020 to 32% in...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

RECENT BLOG ENTRIES

JOIN OUR E-NEWS

LET’S GET SOCIAL

Twitter
Facebook
LinkedIn
logo ©2019 Roger Rossmeisl | Effusion