Archives for Newsletter and Updates

Do you own a company or are interested in starting a company selling products or services over the Internet? It is extremely important to understand the laws pertaining to the collection of sales taxes. If you run a business with a physical “bricks and mortar” store, collecting sales tax is relatively straightforward. You charge your customers the sales tax required by the jurisdiction where your business is located. For example, if you operate a retail store in Pittsburgh, Pennsylvania, you would collect both state and local sales taxes from customers buying merchandise at your store. But suppose you start selling
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The big advantage of Section 529 college savings plans is that withdrawals used to cover qualified higher education expenses are free from federal income tax (and usually state income taxes too). That part is very easy to understand, but the full story on withdrawals is not so simple. What are qualified expenses? What happens if you take out money for expenses that aren’t qualified? Here are five important facts that you should know about 529 plan withdrawals: Fact #1: You Have Two Basic Payment Options You can direct the plan to make a withdrawal check out in the name of
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Choosing the appropriate legal form for a business is one of the first issues most entrepreneurs face. It is an important decision at the formation stage and also as a business grows. Sole proprietorships are generally the easiest. Corporations offer some different advantages, but often with additional complexity. This article addresses some of the pros and cons of different types of legal structures for businesses. Even if your enterprise has been in existence for a while, it may be time to review your options. There can be many complexities in determining the best legal structure and a qualified attorney may be
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A shareholders agreement drafted for a privately held company details the rights and obligations of the shareholders. It not only provides guiding principles for running the business today, it lays out the ground rules of what to do if one of the shareholders dies, becomes disabled — or one party wants to dissolve the business. In other words, it can resolve issues in the future that you may not even anticipate now. Caution: There are online shareholders agreement templates that can be filled in. But there is no one-size-fits-all shareholders agreement that is applicable to all businesses. Your company is
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Under the right circumstances, an intentionally defective irrevocable trust (IDIT) can be an effective estate tax planning tool. These trusts are set up to purposely fail certain technical tests in the tax law, yet they still have the approval of the IRS and allow individuals to pass more assets on to their heirs. Here are a couple of points to keep in mind: An IDIT is considered to exist as a separate taxable entity for federal estate tax purposes and general state law purposes. However, an IDIT is considered to be a grantor trust for federal income tax purposes. As
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It’s not unusual for commercial property taxes to rise as local governments seek more money for schools, law enforcement, fire protection and other needs. But when you get your tax bill, take a close look. It may have increased too much. Check out these items: Number transpositions – It’s possible for assessors to make errors in the physical descriptions of properties. They might list the property as being 21,000 square feet when it is actually 12,000. Transposition of numbers is one of the more common mistakes when recording data. Improvements – The bill may include assessments for improvements that were
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  Effective July 1, 2014 through June 31, 2022 businesses at least 50% engaged in manufacturing or research and development (R&D) in biotechnology, physical, engineering and life sciences may claim an exemption from the California state sales tax at the current rate of 4.1875% (local/district taxes still must be paid). Sales tax exempt qualified tangible personal property includes: 1. Any stage of the manufacturing, processing, refining, fabricating, or recycling process 2. Research and development 3. To maintain, repair, measure, or test any qualified tangible personal property described in (1) and (2); and 4. For use by a contractor purchasing that property for
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Say an IRA is inherited by multiple individual beneficiaries or by one or more individuals and one or more charities or other beneficiaries that aren’t “natural persons.” How do these scenarios affect the rules for required minimum distributions (RMDs) that apply after the IRA owner dies? And how can you optimize the tax results for individual beneficiaries? Here, we answer these questions and explain the importance of the fast-approaching deadline on September 30, 2016, that must be met to change beneficiaries for IRAs that were owned by individuals who died in 2015. Required Distribution Rules and Penalties for Noncompliance After
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How long do you have to keep records? The answer depends on a number of factors. But in the case of real estate (and other assets) the answer is until the property is ultimately sold and the statute of limitations has expired. One taxpayer learned that lesson in a painful way when he went to U.S. Tax Court over his gain on a real estate investment. Recordkeeping wasn’t the only issue in the case, but it was the one with the greatest impact. Facts of the Case The taxpayer purchased a small residential apartment building in 1991 for $82,500. The building had
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There are two basic ways to sell an incorporated business — sell the assets or sell the stock. For two good tax reasons, sellers usually prefer stock sales: Assuming you’ve owned the shares for more than a year, your profits will generally be taxed at a maximum federal rate of 20 percent.* This applies equally to C and S corporations. Double taxation is avoided when you sell C corporation stock, because the sale won’t trigger any taxable gain at the corporate level. However, there may be an even better alternative. If you can find another corporation to acquire your C or S
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