15 Jun 2021
0

Plan Ahead for the 3.8% Net Investment Income Tax

Roger Rossmeisl, CPA
Individual Tax Briefs
Plan Ahead for the 3.8% Net Investment Income Tax

High-income taxpayers face a 3.8% net investment income tax (NIIT) that’s imposed in addition to regular income tax. Fortunately, there are some steps you may be able to take to reduce its impact. The NIIT applies to you only if modified adjusted gross income (MAGI) exceeds: $250,000 for married taxpayers filing jointly and surviving spouses, $125,000 for married taxpayers filing separately, $200,000 for unmarried taxpayers and heads of household. The amount subject to the tax is the lesser of your net investment income or the amount by which your MAGI exceeds the threshold ($250,000, $200,000, or $125,000) that applies to you. Net investment income includes interest, dividend, annuity, royalty, and rental income, unless those items were derived in the ordinary course of an active trade or business. In...

04 May 2021
0

“Reasonable Compensation” for C Corporation Business Owners

Roger Rossmeisl, CPA
Small Business Tax Briefs
Reasonable Compensation for C Corporation Business Owners

Owners of incorporated businesses know that there’s a tax advantage to taking money out of a C corporation as compensation rather than as dividends. The reason: A corporation can deduct the salaries and bonuses that it pays executives, but not dividend payments. Thus, if funds are paid as dividends, they’re taxed twice, once to the corporation and once to the recipient. Money paid out as compensation is only taxed once — to the employee who receives it. However, there are limits to how much money you can take out of the corporation this way. Under tax law, compensation can be deducted only to the extent that it’s reasonable. Any unreasonable portion isn’t deductible and, if paid to a shareholder, may be taxed as if it were...

17 Apr 2021
0

Update on California Classic Car Smog Exemption Bill AB 220

Roger Rossmeisl, CPA
Automotive
Update on California Classic Car Smog Exemption Bill AB 220

As posted to Mike Frankovich's YouTube Channel on 4/15/2021 (Run time: 8 min, 47 sec) If you're like me, you have trouble understanding why California continues to make it so difficult to engage is what is one of the most quintessential of California pastimes . . . classic car ownership. Since the smog check exemption changed from a 30 year rolling average to a set, 1975 and older cut-off back on 4/1/2005 classic car enthusiasts owning post-1975 vehicles have tirelessly petitioned their elected officials for relief. The latest California Classic Car Smog Exemption Bill, AB220, has just been amended to require collector car insurance to obtain a smog exemption on classic cars built during the years 1976-1982. In this clip Mike Frankovich discusses the assembly bill and what...

17 Apr 2021
0

CDTFA Releases Updated Pub 34, Motor Vehicle Dealers

Roger Rossmeisl, CPA
Automotive
CDFTA Releases Updated Pub 34, Motor Vehicle Dealers

The California Department of Tax and Fee Administration (CDTFA) has updated Publication 34 (Motor Vehicle Dealers), to include 2020 legislation that, effective 1/1/2021, imposes new reporting and payments requirements on certain used vehicle dealers. The new discussion, entitled "Used Vehicle Dealers" (in the section on "Motor Vehicle Sales"), provides in part that effective 1/1/2021, certain used vehicle dealers are required to pay sales tax on their retail sales of vehicles when a vehicle registration application is submitted to the Department of Motor Vehicles (DMV). The CDTFA previously discussed these changes in California Department of Tax and Fee Administration Special Notice L-766, 11/01/2020. The CDTFA also made a number of nonsubstantive changes to the publication. Publication 34 is designed to help motor vehicle dealers understand California’s sales and...

13 Apr 2021
0

How to Ensure Life Insurance Isn’t Part of Your Taxable Estate

Roger Rossmeisl, CPA
Individual Tax Briefs
How to ensure life insurance isn't part of your taxable estate

If you have a life insurance policy, you may want to ensure that the benefits your family will receive after your death won’t be included in your estate. That way, the benefits won’t be subject to federal estate tax. Current exemption amounts For 2021, the federal estate and gift tax exemption is $11.7 million ($23.4 million for married couples). That’s generous by historical standards but in 2026, the exemption is set to fall to about $6 million ($12 million for married couples) after inflation adjustments — unless Congress changes the law. In or out of your estate Under the estate tax rules, insurance on your life will be included in your taxable estate if: Your estate is the beneficiary of the insurance proceeds, or You possessed certain economic ownership...

08 Apr 2021
0

Consider a Heavy SUV as Your New Business Vehicle

Roger Rossmeisl, CPA
Small Business Tax Briefs
Consider a Heavy SUV as Your New Business Vehicle

Are you thinking about buying or replacing a vehicle that you’ll use in your business? If you consider a heavy SUV, you may be able to benefit from lucrative tax rules for those vehicles. Bonus depreciation  Under current law, 100% first-year bonus depreciation is available for qualified new and used property that’s acquired and placed in service in a calendar year. New and pre-owned heavy SUVs, pickups and vans acquired and put to business use in 2021 are eligible for 100% first-year bonus depreciation. The only requirement is that you must use the vehicle more than 50% for business. If your business usage is between 51% and 99%, you can deduct that percentage of the cost in the first year the vehicle is placed in service. This...

12 Mar 2021
0

Payroll Provisions of the American Rescue Plan Act

Roger Rossmeisl, CPA
Automotive, Current Events, Small Business Tax Briefs
Payroll Provisions of the American Rescue Plan Act

The American Rescue Plan, 2021 (ARPA, 2021) was signed by President Biden on March 11, 2021 to address the continuing economic impact on employers and employees the coronavirus (COVID-19) pandemic has posed.  The legislation extends and expands provisions found in the Families First Coronavirus Relief Act (FFCRA), Coronavirus Aid, Relief and Economic Security (CARES) Act, and the Consolidated Appropriations Act, 2021 (CAA, 2021).  This post reviews the payroll provisions of ARPA.   Paid Sick and Family Leave Credits Changes under ARPA apply to amounts paid with respect to calendar quarters beginning after March 31, 2021. ARPA, 2021: Extends the FFCRA paid sick time and paid family leave credits from March 31, 2021 through September 30, 2021.  Provides that paid sick and paid family leave credits may each be...

25 Jan 2021
0

PPP Loan Tax Consequences

Roger Rossmeisl, CPA
Small Business Tax Briefs
PPP Loan Tax Consequences

The Small Business Administration (SBA) announced that the Paycheck Protection Program (PPP) reopened the week of January 11. If you’re fortunate to get a PPP loan to help during the COVID-19 crisis (or you received one last year), you may wonder about the PPP loan tax consequences. Background on the loans  In March of 2020, the CARES Act became law. It authorized the SBA to make loans to qualified businesses under certain circumstances. The law established the PPP, which provided up to 24 weeks of cash-flow assistance through 100% federally guaranteed loans to eligible recipients. Taxpayers could apply to have the loans forgiven to the extent their proceeds were used to maintain payroll during the COVID-19 pandemic and to cover certain other expenses. At the end of 2020,...

18 Jan 2021
0

Balancing the Rights of Employers and Employees When Fraud is Suspected

Roger Rossmeisl, CPA
Fraud Briefs
Balancing the Rights of Employers and Employees When Fraud is Suspected

Most fraud-prevention guidance advises owners and manager to monitor employees. But what exactly does this mean? Are you legally entitled to monitor employee computer use? What about security cameras in the workspace? Can you search an employee’s desk if you suspect the person is hiding something? The simple answer is that to stay on the right side of the law when fraud is suspected, your business must be careful about invading employee privacy. Their rights Many employment laws apply to employees’ privacy rights. In general, they attempt to balance employers’ interests in minimizing losses and injuries and maximizing production with employees’ interests in being free from intrusion into their private affairs. By adopting and clearly communicating employment policies, your company can, within limits, establish its authority to conduct...

18 Jan 2021
0

Can Your Business Benefit from the Enhanced Employee Retention Tax Credit?

Roger Rossmeisl, CPA
Small Business Tax Briefs
Can Your Business Benefit from the Enhanced Employee Retention Tax Credit?

COVID-19 has shut down many businesses, causing widespread furloughs and layoffs. Fortunately, employers that keep workers on their payrolls are eligible for a refundable Employee Retention Tax Credit (ERTC), which was extended and enhanced in the latest law. Background on the credit  The CARES Act, enacted in March of 2020, created the ERTC. The credit: Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter, Was subject to an overall wage cap of $10,000 per eligible employee, and Was available to eligible large and small employers.   The Consolidated Appropriations Act (CAA), enacted December 27, 2020, extends and greatly enhances the ERTC. Under the CARES Act rules, the credit only covered wages paid between March 13, 2020, and December 31, 2020. 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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