05 Jun 2022
0

The Ins and Outs of Series EE Savings Bond Taxation

Roger Rossmeisl, CPA
Individual Tax Briefs
The Ins and Outs of Series EE Savings Bond Taxation

Many people own Series E and Series EE bonds that were bought many years ago. They may rarely look at them or think about them except on occasional trips to a file cabinet or safe deposit box. One of the main reasons for buying U.S. savings bonds (such as Series EE bonds) is the fact that interest can build up without the need to currently report or pay tax on it. The accrued interest is added to the redemption value of the bond and is paid when the bond is eventually cashed in. Unfortunately, the law doesn’t allow for this tax-free buildup to continue indefinitely. The difference between the bond’s purchase price and its redemption value is taxable interest. Series EE bonds, which have a maturity period...

05 Jun 2022
0

6 Tips for Foiling Fake Suppliers in Online Marketplaces

Roger Rossmeisl, CPA
Fraud Briefs
6 Tips for Foiling Fake Suppliers in Online Marketplaces

Supply chain issues continue to hurt many U.S. businesses — possibly in more ways than you think. Not only do supply shortages and delays make it difficult for companies to ramp up business and recover from the pandemic slowdown, but they also make some fraud schemes easier to perpetrate. For example, criminals might advertise hard-to-get goods, then ship defective products — or no products at all — to unsuspecting buyers. Here are six tips to help your company avoid losses from such scams: 1. Evaluate marketplace safety. Many online marketplaces invest heavily in preventing fraud and are willing to reimburse funds stolen from customers. But not all of them are proactive. Before using an online platform to buy goods, review its fraud policy. And if you’re defrauded,...

05 Jun 2022
0

Partners May Have to Report More Income on Tax Returns than they Receive in Cash

Roger Rossmeisl, CPA
Small Business Tax Briefs
Partners May Have to Report More Income on Tax Returns Than They Receive in Cash

Are you a partner in a business? You may have come across a situation that’s puzzling. In a given year, you may be taxed on more partnership income than was distributed to you from the partnership in which you’re a partner. Why does this happen? It’s due to the way partnerships and partners are taxed. Unlike C corporations, partnerships aren’t subject to income tax. Instead, each partner is taxed on the partnership’s earnings — whether or not they’re distributed. Similarly, if a partnership has a loss, the loss is passed through to the partners. (However, various rules may prevent a partner from currently using his or her share of a partnership’s loss to offset other income.) Pass through your share While a partnership isn’t subject to income tax,...

05 Jun 2022
0

IRA Charitable Donations as an Alternative to Taxable Required Distributions

Roger Rossmeisl, CPA
Individual Tax Briefs
IRA Charitable Donations as an Alternative to Taxable Required Distributions

Are you a charitably minded individual who is also taking distributions from a traditional IRA? You may want to consider the tax advantages of making a cash donation to an IRS-approved charity out of your IRA. When distributions are taken directly out of traditional IRAs, federal income tax of up to 37% in 2022 will have to be paid. State income taxes may also be owed. Qualified charitable distributions One popular way to transfer IRA assets to charity is via a tax provision that allows IRA owners who are age 70½ or older to direct up to $100,000 per year of their IRA distributions to charity. These distributions are known as qualified charitable distributions (QCDs). The money given to charity counts toward your required minimum distributions (RMDs) but...

05 Jun 2022
0

3 Approaches to Valuing a Business

Roger Rossmeisl, CPA
Valuation Briefs
3 Approaches to Valuing a Business

Valuing a private business is a complex endeavor. But, when all is said and done, valuation analyses boil down to three general approaches. 1. Market approach Under this approach, valuators derive pricing multiples from public or private comparable transactions. These pricing multiples are then applied to the subject company to derive its value. For example, an expert might calculate a median price-to-earnings multiple of 4.5 based on a sample of six comparable transactions. Then the valuator would multiply the subject company’s earnings by 4.5 to arrive at its value. The expert also must consider whether adjustments are warranted to account for the differences between the subject company and comparable firms. Two popular methods fall under the market approach. First, the guideline public company method uses the prices paid for...

05 Jun 2022
0

Preparing for the Lower 1099-K Filing Threshold

Roger Rossmeisl, CPA
Small Business Tax Briefs
Preparing for the Lower 1099-K Filing Threshold

Businesses should be aware that they may be responsible for issuing more information reporting forms for 2022 because more workers may fall into the required range of income to be reported. Beginning this year, the threshold has dropped significantly for the filing of Form 1099-K, “Payment Card and Third-Party Network Transactions.” Businesses and workers in certain industries may receive more of these forms and some people may even get them based on personal transactions. Background of the change Banks and online payment networks — payment settlement entities (PSEs) or third-party settlement organizations (TPSOs) — must report payments in a trade or business to the IRS and recipients. This is done on Form 1099-K. These entities include Venmo and CashApp, as well as gig economy facilitators such as...

05 Jun 2022
0

Caring for an Elderly Relative? You May Be Eligible for Tax Breaks

Roger Rossmeisl, CPA
Individual Tax Briefs
Caring for an Elderly Relative? You May Be Eligible for Tax Breaks

Taking care of an elderly parent or grandparent may provide more than just personal satisfaction. You could also be eligible for tax breaks. Here’s a rundown of some of them. Medical expenses. If the individual qualifies as your “medical dependent,” and you itemize deductions on your tax return, you can include any medical expenses you incur for the individual along with your own when determining your medical deduction. The test for determining whether an individual qualifies as your “medical dependent” is less stringent than that used to determine whether an individual is your “dependent,” which is discussed below. In general, an individual qualifies as a medical dependent if you provide over 50% of his or her support, including medical costs. However, bear in mind that...

05 Jun 2022
0

Calculating Corporate Estimated Tax

Roger Rossmeisl, CPA
Small Business Tax Briefs
Calculating Corporate Estimated Tax

The next quarterly estimated tax payment deadline is June 15 for individuals and businesses so it’s a good time to review the rules for computing corporate federal estimated payments. You want your business to pay the minimum amount of estimated taxes without triggering the penalty for underpayment of estimated tax. Four methods The required installment of estimated tax that a corporation must pay to avoid a penalty is the lowest amount determined under each of the following four methods: Under the current year method, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the current tax year’s return (or, if no return is filed, 25% of the tax for the current year) by each of four installment due dates. The...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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