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The Challenge with Closing Tax Loopholes
Posted by Bob Smith on Thu, Dec 12, 2019 @ 04:01 PM

Seemingly every discussion of changes to the tax code includes a plan to “close loopholes.” But often one person’s loophole is another’s incentive.

The discrepancy arises because the term “loophole” is used broadly to describe any tax benefit that accrues to a small group or industry. But in reality, provisions of the tax code that provide a specific benefit to an industry or group are not really loopholes. These are examples of the code working as designed.

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Topics: Bob Smith, Taxes, tax loophole

IRS Provides Guidance to Request Tax Accounting Method Changes for ASC Topic 606
Posted by Bob Smith on Wed, Jun 6, 2018 @ 06:30 PM

The IRS published guidance on May 10 that allows taxpayers to request a change in method of accounting to conform to certain aspects of new financial accounting standards under ASC Topic 606. Rev. Proc. 2018-29 provides taxpayers with flexibility over the manner in which transitions are made to conform income recognition for federal tax purposes with ASC Topic 606, as well as administrative ease in filing procedures needed to make these requests. However, the IRS limited the scope of its highly anticipated guidance to exclude many scenarios affected by ASC Topic 606. Because most taxpayers still need further guidance to conform completely to the new financial accounting standards, the May 10 guidance may be of limited practical use.

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Topics: Bob Smith, ASC Topic 606, Tax Cuts and Jobs Act, TCJA

Capturing the Benefits of Bonus Depreciation and the Section 179 Deduction
Posted by Bob Smith on Tue, Dec 13, 2016 @ 12:40 PM

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) created several benefits for tax planning, not the least of which was taking the uncertainty out of common tax deductions.

Several benefits that help offset the cost of improvements to tangible property had been set to expire in 2014, but the tax extension legislation renewed and in some cases enhanced the tax-saving opportunities. Among the provisions included in the PATH Act were bonus depreciation and the Section 179 expensing election. Both apply to similar types of projects and situations, but each provision has its nuances. As businesses can only take one or the other for the same asset, careful consideration is critical to maximizing their benefits.

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Topics: Bob Smith, Bonus Depreciation, Section 179, PATH Act, Protecting Americans from Tax Hikes Act of 2015

How the Election Could Affect Your Taxes
Posted by Bob Smith on Fri, Sep 16, 2016 @ 01:49 PM

Comprehensive tax reform changes are commonly heard as presidential campaign promises, but the ideas put forth by the nominees provide some approaches to tax reform with which you should be familiar. What we know of Donald Trump’s and Hillary Clinton’s plans for the federal tax code may indicate future areas of IRS focus or updates.

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Topics: individual tax, election year, Bob Smith, Taxes, Hilary Clinton, Donald Trump, Election, Corporate Taxes, Campaign

IRS Increases De Minimis Safe Harbor to $2,500
Posted by Bob Smith on Wed, Dec 2, 2015 @ 09:35 AM

The final tangible property regulations issued in 2013 provide a safe harbor election that allows qualifying businesses to immediately deduct purchases of tangible property below certain dollar thresholds. For taxpayers that do not have an applicable financial statement (typically an audited financial statement) (“AFS”), the dollar threshold was $500.The IRS received many comments suggesting that the $500 threshold was too low to effectively reduce the administrative burden of complying with the capitalization requirement for small businesses. After consideration of these comments, the IRS recently announced that the de minimis safe harbor threshold would be increased to $2,500 beginning with 2016 tax years. The dollar threshold for taxpayers with an AFS remains at $5,000.

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Topics: Tangible Property Regulations, IRS Updates, Bob Smith

Small Taxpayers Get Exemption from Tangible Property Regulation Compliance, but ...
Posted by Bob Smith on Fri, Mar 13, 2015 @ 09:24 AM

There are good reasons why small taxpayers may want to comply.

The IRS released Revenue Procedure 2015-20 on February 13, 2015. 
 
This new Revenue Procedure provides small taxpayers an exemption to comply with the new Tangible Property Regulations for 2014. Small taxpayers are defined as those with total assets of less than $10 million (as of January 1, 2014) or having average annual gross receipts of $10 million or less for the prior three taxable years. It is important to note, however, that small businesses must still implement the regulations and therefore it may still be in their best interest to comply and file the necessary forms unless they have immaterial fixed assets. Filing the forms may protect small companies and provide them with an opportunity to still qualify for the related deductions.
 
Important:
  • The final Tangible Property Regulations (TPR) have not changed
  • Revenue Procedure 2015-20 only addresses the issues associated with the implementation of the TPRs and only for taxpayers that qualify under the new Revenue Procedure.
Bottom Line:
  • Taxpayers should still comply with the TPRs and file the necessary forms unless they have immaterial fixed assets and TPR issues. 
  • If you are a small taxpayer and elect not to file the appropriate Forms 3115s for Revenue Procedure 2015-20, it is likely that your tax preparer may ask for a statement of indemnification.
  • The indemnification document will likely cover the facts and consequences of not filing and your clear choice that you chose not to file nonetheless.
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Topics: Tangible Property Regulations, compliance, Bob Smith, revenue procedure 2015-20

Tangible Property Regulations Compliance and Tax Savings Checklist
Posted by Bob Smith on Tue, Mar 10, 2015 @ 09:12 AM

Do You Know About the Combination of Tax Savings and Compliance Costs?

The new Tangible Property Regulations are very complex and consist of a number of intricate accounting rules and changes that taxpayers will face during this tax season and beyond.

We’re pleased to offer this checklist that will provide you with points for discussion with your accountant in order to prepare your 2014 tax return in a manner that will get you into compliance as well as for identifying cost savings opportunities:

Tangible Property Regulations Checklist

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Topics: Tangible Property Regulations, compliance, tax savings, Bob Smith

Tax Deduction Opportunities from the New Tangible Property Regulations
Posted by Bob Smith on Thu, Mar 5, 2015 @ 09:33 AM

It’s not just about compliance – it’s about tax savings too!

Tangible Property Regulation Compliance Under the Tangible Property Regulations, taxpayers may be able to deduct greater amounts for repair costs, materials and supplies, routine maintenance for buildings and equipment, maintenance on buildings for smaller taxpayers, and new safe harbor de minimis amounts.
 
There are numerous specific rules and qualifications for many of these opportunities.
 
More importantly, many taxpayers are able to currently deduct the net tax value of certain previously capitalized assets. The following list contains typical potential write-off opportunities:
 
  • Roof or land improvement costs that were previously capitalized may now have their net tax value written off if a roof improvement or new paving is (or was) subsequently made and capitalized.
  • Previously capitalized manufacturer or franchisor-required refreshments.
  • Prior leasehold improvements or portions thereof.
  • Previously capitalized improvements now considered deductible “repairs” in the viewpoint of the new regulations.
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Topics: compliance, new tangible property regulations, tax savings, Bob Smith

The Most Dramatic Change to Tax Law in Nearly 30 Years – The Tangible Property Regulations
Posted by Bob Smith on Mon, Mar 2, 2015 @ 03:29 PM

There may be tax savings opportunities for owners of commercial real estate and other tangible property.

The new tangible property regulations are complex and difficult to implement and comply with. Facts and circumstances of each business situation will need to be analyzed to determine the proper treatment of almost all business expenditures for materials and supplies, repairs and maintenance, and asset purchases and related depreciation deductions.
 
Tangible Property Regulation Compliance Your business should elevate the importance and time restrictions in implementing these rules to assure proper compliance with the regulations and to identify potential tax savings and benefits.
 
These tangible property regulations are the most dramatic changes in tax law to affect businesses since the overhaul of the Internal Revenue Code in 1986. They apply to all forms of business, whether a “C” corporation, an “S” corporation, a partnership, an LLC, a sole proprietorship (Schedule C on individual return), or a rental (Schedule E on individual return). Non-profit organizations and some Trusts may also be affected.

Small taxpayers (defined as total assets of less than $10 million as of January 1, 2014 or average annual gross receipts of $10 million or less for the prior three taxable years) should be aware that they may be exempt from compliance with the new Tangible Property Regulations. It is important to note, however, that small businesses must still implement the regulations and therefore it may still be in their best interest to comply and file the necessary forms unless they have immaterial fixed assets. Filing the forms may protect small companies and provide them with an opportunity to still qualify for the related deductions
 
Your accountant must carefully evaluate the facts and circumstances of your business situation to determine the proper treatment of all business expenditures for materials and supplies, repairs and maintenance, and asset purchases along with the impact on subsequent depreciation.
 
Needless to say, these regulations are quite complex and require timely attention.

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Topics: new tangible property regulations, Bob Smith

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