Cutoffs: Don't count your chickens before they hatch

Close-up on cutoffs for reporting revenues and expenses

Under U.S. Generally Accepted Accounting Principles (GAAP), there are strict rules on when to recognize revenues and expenses. Here’s important information about end of period accounting “cutoffs” as companies start to adopt the new revenue recognition standard.

Cutoff games

How closely does your company follow the cutoff rules? The end of the period serves as a “cutoff” for recognizing revenue and expenses. However, some companies may be tempted to play timing games to lower taxes or boost financial results. Read More >

Tax Break for Hiring Veterans

2017 might be your last chance to hire veterans and claim a tax credit

With Veterans Day on November 11, it’s an especially good time to think about the sacrifices veterans have made for us and how we can support them. One way businesses can support veterans is to hire them. The Work Opportunity tax credit (WOTC) can help businesses do just that, but it may not be available for hires made after this year.

As released by the Ways and Means Committee of the U.S. House of Representatives on November 2, the Tax Cuts and Jobs Act would eliminate the WOTC for hires after December 31, 2017. So you may want to consider hiring qualifying veterans before year end. Read More >

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How to maximize deductions for business real estate

Currently, a valuable income tax deduction related to real estate is for depreciation, but the depreciation period for such property is long and land itself isn’t depreciable. Whether real estate is occupied by your business or rented out, here’s how you can maximize your deductions: Read More >

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It’s Time to Revisit the Research & Development Tax Credit

Last year’s Protecting Americans from Tax Hikes (PATH) Act made these critical changes to the Research and Development Tax Credit (R&D Tax Credit):

  • Smaller businesses (those with average gross receipts of $50 million or less over the preceding three years) can claim the credit against Alternative Minimum Tax (AMT)
  • Startup businesses (those in operation for less than five years with less than $5 million in gross receipts) can offset the credit against up to $250,000 in employer-paid payroll taxes.
  • The R&D tax credit is now permanent.

Read More >

business travel

Business Travel Mileage Rates Lowered – 2017

ACCOUNTING TODAY NEWS – The Internal Revenue Service has issued the 2017 optional standard mileage rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

BUSINESS TRAVEL MILEAGE RATES – 2017

Beginning Jan. 1, standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 53.5 cents per mile for business miles driven, down from 54 cents for 2016
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped  2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.

“Factors contributing to the decision on this year’s slight decrease in the Safe Harbor reimbursement rate include declining fuel prices, which were largely offset by rising vehicle insurance and maintenance costs,” said Donna Koppensteiner, senior vice president of business development at Runzheimer, a business vehicle, relocation information and expense management services provider that provided data research and analytics to the IRS.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

The IRS reiterated that taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost recovery System (MACRS), or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements are in Rev. Proc. 201051. Notice 201679 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Questions? Contact Pat Wirth, Tax Partner

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2016 Post-election Tax Update – What Now?

Any change in Presidential Administration brings the possibility, indeed the likelihood, of tax law changes and the election of Donald Trump as the 45th President of the United States is no exception. During the campaign, President-elect Trump outlined a number of tax proposals for individuals and businesses. This letter highlights some of the President-elect’s tax proposals. Keep in mind that a candidate’s proposals can, and often do, change over the course of a campaign and also after taking office. This letter is based on general tax proposals made by the President-elect during the campaign and is intended to give a broad-brush snapshot of those proposals. Read More >

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IRS Alerts Taxpayers To “Be On Guard” Against Fake Emails

Chortek joins the IRS in alerting taxpayers to “be on guard” against fake IRS notices by email:

IRS and Security Summit Partners Warn of Fake Tax Bills 

IR-2016-123, Sept. 22, 2016

IRS ALERTS TAXPAYERS, WASHINGTON, —  The Internal Revenue Service and its Security Summit partners today issued an alert to taxpayers and tax professionals to be on guard against fake emails purporting to contain an IRS tax bill related to the Affordable Care Act. Read More >

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Managing Your IRA in a Declining Market

Whether you are still working or you are enjoying retirement, a declining market is a good time for traditional IRA owners to manage their IRA and consider tax saving strategies.  Overall income tax savings can be achieved by converting your traditional IRA to a Roth IRA when market conditions are favorable to do so. Read More >