When the 2017 Tax Cuts and Jobs Act (TCJA) went into effect, there were a lot of benefits for businesses and individuals in the area of corporate and personal taxes. Many new deductions were created for S-Corps and owners of pass-through entities. Along with the benefits, there is still a layer of complexity to the new tax laws that many privately held organizations are still working to understand and navigate. To complicate matters, this tax ... more
Tax Laws
‘Creative’ Estate Planning Requires Caution with Section 199A Reform
Entrepreneurs and closely held family businesses that have established multiple trusts, or plan to create trusts based on tax reform, should pay attention to certain opportunities and dangers for new tax compliance, especially regarding Section 199A. You have probably heard that a new 20 percent federal income tax deduction is available for Qualified Business Income, applicable to a married couple with taxable income of no more than $315,000 and ... more
LIHTC Partnerships Impacted by Limitations on Business Interest
Due to the changes in the federal tax law resulting from the passage of the 2017 Tax Cuts and Jobs Act, the deduction for business interest can be severely limited for many taxpayers for tax years beginning after December 31, 2017. The interest deduction cannot exceed the sum of: Business interest income for the tax year 30% of the taxpayer’s adjusted taxable income Taxpayer’s floor plan financing interest (applicable to auto ... more
Tax Deferral ‘Opportunity Zones’ Approved for California
As part of the Tax Cuts and Jobs Act of 2017, the Governors of each state spent the first few months of 2018 requesting public comment and nominating certain census tracts as Opportunity Zones. Out of 3,516 census tracts in the state, 879 were designated by the Governor and all were certified by the U.S. Department of the Treasury in April 2018. Video: Understanding Opportunity Zones Within these designated Opportunity Zones, investments made ... more
Important Tax Update for Qualified Transportation Fringe Benefits
by Stanley Woo, CPA Due to the changes in the Federal tax law brought on by the 2017 Tax Cuts and Jobs Act, the transportation fringe benefits provided by an employer to employees are no longer deductible by the employer. This change in the law will impact employers in the for-profit sector and surprisingly, employers in the not-for-profit sector. For non-profit organizations, the transportation fringe benefits provided to employees are now ... more
Are We Destined for Four Interest Rate Hikes in 2018?
Economists globally are paying close attention to the Federal Reserve’s focus on “further gradual increases in the federal funds rate” in 2018. According to Bloomberg reports, Fed officials announced three tentative interest rate increases for the year as part of quarterly projections in December. They reiterated that plan at the end of January. However, Bloomberg’s survey of 29 respondents watching the global market estimated an upper-bound ... more
Repeal of Partnership Technical Termination
The 2017 Tax Cuts and Jobs Act passed by Congress and signed by President Trump on December 22, 2017 has repealed the “technical termination” of partnerships. When there is a sale or exchange of 50% or more of a partnership interest, such event will no longer cause the partnership to be treated as terminated. Hence, such event will no longer trigger stub period returns. This new rule is effective for partnerships whose tax years begin after ... more
Tax Reform Updates 12/22/2017
Congress is enacting the biggest tax reform law in thirty years, one that will make fundamental changes in the way you, your family and your business calculate your federal income tax bill, and the amount of federal tax you will pay. Since most of the changes will go into effect next year, there's still a narrow window of time before year-end to soften or avoid the impact of crackdowns and to best position yourself for the tax breaks that may be ... more
Repealing the Federal Estate Tax Can Be Bad for Giving
Two bills introduced in Congress in January 2017 called for elimination of the federal estate tax. One was introduced by a Republican Representative from South Dakota and another was introduced by a Republican Representative from Texas. Both bills were introduced to the House Ways and Means Committee, and that is all the action that has been taken to date. Now, President Trump’s “Unified Framework for Fixing Our Broken Tax Code” includes a ... more
Reporting Collaborative Activities: A Complex Issue for Not-For-Profits
More and more not-for-profits are joining forces to better serve their clients and cut costs. But such relationships can come with complicated financial reporting obligations. Starting with the simplest For accounting purposes, the simplest relationship between nonprofits may be a collaborative arrangement. These are typically contractual agreements in which two or more organizations are active participants in a joint operating activity — for ... more
Universal Charitable Deduction Could Reduce Taxes, Boost Giving
Itemizing your charitable giving on your tax return has always been a great incentive to give — along with the warm feeling of supporting good causes. However, tax reform proposals by Republican lawmakers and the Trump administration that would increase the standard deduction for individuals and families may take away that incentive. After all, it’s easier to take a nice standard deduction than to spend time — or pay someone to — track and ... more
What Really Motivates Not-For-Profit Donors
What do charitable donors want? The classic answer is: Go ask each one individually. However, research provides some insight into donor motivation that can help your not-for-profit grow its financial support. Taxing matters The biennial U.S. Trust® Study of High Net Worth Philanthropy, conducted in partnership with the Indiana University Lilly Family School of Philanthropy, regularly finds that wealthy donors are primarily motivated by ... more