Taxes Archives - Page 12 of 15 - Roger Rossmeisl, CPA

16 Apr 2018

(#292) Defer Tax with a §1031 Exchange, But New Limits Apply This Year

Normally when appreciated business assets such as real estate are sold, tax is owed on the appreciation. But there’s a way to defer this tax: a §1031 “like kind” exchange. However, the Tax Cuts and Jobs Act (TCJA) reduces the types of property eligible for this favorable tax treatment. What is a like-kind exchange? Section 1031 of the Internal Revenue Code allows you to defer gains on real or personal property used in a business or held for investment if, instead of selling it, you exchange it solely for property of a “like kind.” Thus, the tax benefit of an exchange is that you defer tax and, thereby, have use of the tax savings until you sell the replacement property. This technique is especially flexible for real estate,...

16 Apr 2018

(#291) Haven’t Filed Your 2017 Income Tax Return Yet? Beware of These Pitfalls

Roger Rossmeisl, CPA

Taxes

The federal income tax filing deadline is slightly later than usual this year — April 17 — but it’s now nearly upon us. So, if you haven’t filed your individual return yet, you may be thinking about an extension. Or you may just be concerned about meeting the deadline in the eyes of the IRS. Whatever you do, don’t get tripped up by one of these potential pitfalls. Filing for an extension Filing for an extension allows you to delay filing your return until the applicable extension deadline, which for 2017 individual tax returns is October 15, 2018. While filing for an extension can provide relief from April 17 deadline stress and avoid failure-to-file penalties, there are some possible pitfalls: If you expect to owe tax, to avoid...

11 Apr 2018

(#289) Make Sure Repairs to Tangible Property Were Actually Repairs Before You Deduct the Cost

Roger Rossmeisl, CPA

Taxes

Repairs to tangible property, such as buildings, machinery, equipment or vehicles, can provide businesses a valuable current tax deduction — as long as the so-called repairs weren’t actually “improvements.” The costs of incidental repairs and maintenance can be immediately expensed and deducted on the current year’s income tax return. But costs incurred to improve tangible property must be depreciated over a period of years. So the size of your 2017 deduction depends on whether the expense was a repair or an improvement. Betterment, restoration or adaptation In general, a cost that results in an improvement to a building structure or any of its building systems (for example, the plumbing or electrical system) or to other tangible property must be depreciated. An improvement occurs if there was a betterment,...

10 Apr 2018

(#288) Size of Charitable Deductions Depends on Many Factors

Roger Rossmeisl, CPA

Taxes

Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate. TYPE OF GIFT One of the biggest factors affecting your deduction is what you give: Cash You may deduct 100% gifts made by check, credit card or payroll deduction. Ordinary-income property For stocks and bonds held one year or less, inventory, and property subject to depreciation recapture, you generally may deduct only the lesser of fair market value or your tax basis. Long-term capital gains property You may deduct the current fair market value of appreciated stocks and bonds held for more than one year. Tangible personal property Your deduction depends on the situation: If the property isn’t...

26 Mar 2018

(#286) What’s Your Mileage Deduction?

Roger Rossmeisl, CPA

Taxes

Individuals can deduct some vehicle-related expenses in certain circumstances. Rather than keeping track of the actual costs, you can use a standard mileage rate to compute your deductions. For 2017, you might be able to deduct miles driven for business, medical, moving and charitable purposes. For 2018, there are significant changes to some of these deductions under the Tax Cuts and Jobs Act (TCJA). Mileage rates vary The rates vary depending on the purpose and the year: 2017 2018 Business 53.5¢ 54.5¢ Medical 17¢ 18¢ Moving 17¢ 18¢ Charitable 14¢ 14¢ The business standard mileage rate is considerably higher than the medical, moving and charitable rates because the business rate contains a depreciation component. No depreciation is allowed for the medical, moving or charitable use of a vehicle. The charitable rate is lower than the medical and moving rate because it isn’t...

26 Mar 2018

(#285) The New & Improved §179 Deduction

Roger Rossmeisl, CPA

Taxes

26 Mar 2018

(#284) Tax Deduction for Moving Costs: 2017 vs 2018

Roger Rossmeisl, CPA

Taxes

If you moved for work-related reasons in 2017, you might be able to deduct some of the costs on your 2017 return — even if you don’t itemize deductions. (Or, if your employer reimbursed you for moving expenses, that reimbursement might be excludable from your income.) The bad news is that, if you move in 2018, the costs likely won’t be deductible, and any employer reimbursements will probably be included in your taxable income. Suspension for 2018–2025 The Tax Cuts and Jobs Act (TCJA), signed into law this past December, suspends the moving expense deduction for the same period as when lower individual income tax rates generally apply: 2018 through 2025. For this period it also suspends the exclusion from income of qualified employer reimbursements of moving...

25 Mar 2018

(#282) Impact of TCJA on Business Deductions for Meals & Entertainment

Roger Rossmeisl, CPA

Taxes

As posted by Thomson Reuters on 2/13/18 Before the Tax Cuts and Jobs Act (TCJA), taxpayers could generally deduct 50% of business-related meal and entertainment expenses, and exceptions allowed bigger deductions in certain circumstances. The TCJA shifts the playing field for expenses paid or incurred after 12/31/17. This Tax Planning Letter explains how meal, food and beverage, and entertainment expenses were treated under prior law and how they are treated now. Under prior law, taxpayers could generally deduct 50% of business-related meal and entertainment expenses incurred or paid before 1/1/18 (former §274(n)). Taxpayers had to establish that the expenses were directly related to or associated with the active conduct of a trade or business or income-producing activity. The general 50% deductibility rule applied to all business-related meals...

19 Mar 2018

(#281) A Joint Home Purchase Can Ease Estate Tax Liability

Roger Rossmeisl, CPA

Taxes

If you’re planning on buying a home that you one day wish to pass on to your adult children, a joint purchase can reduce estate tax liability, provided the children have sufficient funds to finance their portion of the purchase. With the gift and estate tax exemption now set at an inflation-adjusted $10 million thanks to the Tax Cuts and Jobs Act (TCJA), federal estate taxes are less of a concern for most families. However, the high exemption amount is only temporary, and there’s potentially state estate tax risk to consider. Current and remainder interests The joint purchase technique is based on the concept that property can be divided not only into pieces, but also over time: One person (typically of an older generation) buys a current interest...

19 Mar 2018