31 May 2019
0

College Financing in Your Estate Plan

Roger Rossmeisl, CPA
Estate Planning Briefs
College Plan as Part of Your Estate Plan

The staggering cost of college makes it critical for families to plan carefully for this major expense.  In many cases grandparents want to play a role. As you examine the many financing options for your grandchildren, be sure to consider college financing in your estate plan. Make direct payments A simple, but effective, technique is to make tuition payments on behalf of your grandchild. So long as you make the payments directly to the college, they avoid gift and generation-skipping transfer (GST) tax without using up any of your $11.4 million gift or GST tax exemptions or your $15,000 annual gift tax exclusion. Threr's a disadvantage of direct payments though. If your grandchild is young, you have to wait until the student has tuition bills to pay. So there’s...

31 May 2019
0

Executives: Greatest Occupational Fraud Risk

Roger Rossmeisl, CPA
Fraud Briefs
Executive Occupational Fraud

In its 2018 Report to the Nations on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners (ACFE) reported that owners and executives accounted for only 19% of all fraud cases. Yet they caused a median loss of $850,000, vs. a median of $100,000 for rank-and-file employees.  As such, they post the greatest occupational fraud risk. Executive thieves get away with more because they have greater access to assets and can more easily override internal controls. Their schemes also tend to continue for longer periods before detection — an average of two years vs. one year for non-manager employee schemes. So it’s critical to spot the signs of executive occupational fraud risk and nab these high-placed thieves. Occupational Fraud Risk: Greater authority = greater damage Traditional preventive...

15 May 2019
0

Spendthrift Language Safeguards Trust Assets

Roger Rossmeisl, CPA
Estate Planning Briefs
Spendthrift Language

Protecting assets from creditors is a critical aspect of estate planning.  However, you need to think about more than just your own creditors. You also need to consider your heirs’ creditors. Adding spendthrift language to a trust benefiting your heirs can help safeguard assets. Spendthrift language explained Despite its name, the purpose of a spendthrift trust isn’t just to protect profligate heirs from themselves. True, that’s one use for this trust type.  Even the most financially responsible heirs can be exposed to frivolous lawsuits, dishonest business partners or unscrupulous creditors. A properly designed spendthrift trust can protect assets against such attacks. It can also protect your loved ones in the event of relationship changes. If one of your children divorces, your child’s spouse generally can’t claim a share...

14 May 2019
0

Deducting Business Meals Under TCJA

Roger Rossmeisl, CPA
Small Business Tax Briefs
Deducting Business Meals

In the course of operating your business, you probably spend time and money “wining and dining” current or potential customers, vendors and employees. Is deducting business meals still possible? The rules changed under the Tax Cuts and Jobs Act (TCJA), but you can still claim some valuable write-offs. No more entertainment deductions One of the biggest changes is that you can no longer deduct most business-related entertainment expenses. Beginning in 2018, the TCJA disallows deductions for entertainment expenses, including those for sports events, theater productions, golf outings and fishing trips. Deducting business meals still allowed You can still deduct 50% of the cost of food and beverages for meals conducted with business associates. However, you need to follow three basic rules in order to prove that your expenses are...

13 May 2019
0

Deducting Medicare Premiums to Lower Your Tax

Roger Rossmeisl, CPA
Individual Tax Briefs
Deducting Medicare Premiums

Americans who are 65 and older qualify for basic Medicare insurance.  However, to get the level of coverage they desire, they may need to pay additional premiums. The premiums can be expensive, especially if you’re married and both you and your spouse are paying them. But one aspect of paying premiums might be positive. If you qualify, deducting Medicare premiums may help lower your tax bill. Medicare premium tax deductions Premiums for Medicare health insurance can be combined with other qualifying health care expenses.  Collectively, they allow you to claim an itemized deduction for medical expenses on your individual tax return. This includes amounts for “Medigap” insurance and Medicare Advantage plans. Some people buy Medigap policies because Medicare Parts A and B don’t cover all their health...

10 May 2019
0

1040 Questions After You’ve Filed

Roger Rossmeisl, CPA
Individual Tax Briefs
Questions

Alright . . . you've successfully filed your 2018 return with the IRS.  But now, you find that you've may still have some 1040 questions after you've filed. Here are brief answers to three questions that we’re frequently asked at this time of year. 1040 Questions #1: What tax records can I throw away now? At a minimum, keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. So you can generally get rid of most records related to tax returns for 2015 and earlier years. (If you filed an extension for your 2015 return, hold on to your records until...

09 May 2019
0

Taxation of Divorcing Business Owners

Roger Rossmeisl, CPA
Small Business Tax Briefs
Divorcing Business Owners

Taxation of divorcing business owners add complications to an already stressful time. Your marital property will include all or part of your business ownership interest . . . one of your biggest personal assets. Transferring property tax-free You and your ex-spouse can generally divide most assets, without any federal income or gift tax consequences.  When an asset falls under this tax-free transfer rule, the spouse who receives the asset takes over its existing tax basis (for tax gain or loss purposes).  The receiving spouse also takes over the asset's existing holding period (for short-term or long-term holding period purposes). Example Under the terms of your divorce agreement, you give your house to your spouse in exchange for keeping 100% of the stock in your business. That asset swap would...

05 May 2019
0

401k Hackers: Prevent an Account Wipe-Out

Roger Rossmeisl, CPA
Fraud Briefs
401k Hackers

News of commercial database hackings may seem commonplace in 2019. But while many of these stories focus on hacked bank and credit card accounts, 401k plan sponsors and participants probably don’t realize that their plan assets also are at risk from 401k Hackers. Employers who offer 401k plans to their employees need to take precautions against identity theft. Part of this is educating participants. Role of sponsors If your organization sponsors a 401k plan, it’s essential that you assess plan service providers’ protection systems and policies. Most providers carry cyberfraud insurance that they extend to plan participants. But there may be limits to this protection if, for example, the provider determines that you (the sponsor) or employees (participants) opened the door to a security breach. Your plan’s documents may...

05 May 2019
0

Understanding How Taxes Factor Into M&A Transactions

Roger Rossmeisl, CPA
Small Business Tax Briefs

Merger and acquisition (M&A) activity has been brisk in recent years. Is your business is considering merging with or acquiring another business?  If so, it’s important to understand how the transaction will be taxed under current law. Stocks vs. assets From a tax standpoint, there are basically two ways to structure a transaction: 1. Stock (or ownership interest). A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The now-permanent 21% corporate federal income tax rate under the Tax Cuts and Jobs Act (TCJA) makes buying the stock of a C corporation somewhat more attractive.  Why? The corporation will pay less tax...

18 Apr 2019
0

(#539) Fraud Fun Fact: Crooks Prefer Cash!

Roger Rossmeisl, CPA
Fraud Briefs

It should come as no surprise that cash is the most popular target of fraud perpetrators. After all, once stolen, cash itself is virtually untraceable. But that doesn’t mean forensic accounting professionals can’t unearth cash fraud schemes — and the crooks behind them. 3 Categories of Cash Fraud According to the Association of Certified Fraud Examiners, there are three main categories of cash fraud (which includes checks because they’re easily converted to cash): Theft of cash on hand, Theft of cash receipts, and Fraudulent disbursements. The last category comprises many of the most frequently executed schemes, such as overbilling and “ghost” vendor or employee schemes. For example, overbilling vendors usually submit inflated invoices by overstating the price per unit or the quantity delivered. A dishonest vendor also might...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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