Western CPE Blog
Written by industry professionals on the latest trends and changes in the accounting landscape.
Our CPE courses offer comprehensive instruction taught by the same instructors that author our blog posts.
Tax Ramifications of Missed 401(k) Loan Payments August 15, 2017
By: A few missed payments on a 401(k) loan, even though the delinquency was the employer’s mistake, didn’t stop the IRS from collecting tax and penalty on a deemed distribution. This is “borrower beware” tax law.Missed Payments on 401(k) Loan Result in Deemed Distribution (Louelia Salomon Frias and Mervyngil Salomon v. Comm., TCM 2017-139)Louelia Frias borrowed $40,000 from her 401(k) plan when she went on maternity leave. The loan agreement required biweekly payroll deductions to start on the first billing statement beginning after August 10, 2012. In the event that a payment was missed, the loan agreement allowed Mrs. Frias to pay …
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eTax Alert: Tax Ramifications of Medical Marijuana August 14, 2017
By: Law requires reporting of all income including that from illegal activity. Tax expert Vern Hoven breaks down what the IRS and court cases say about deductions and reporting related to medical marijuana sales. To stay current on topics like this and potential changes from the Trump administration, sign up for the industry’s most comprehensive tax update. Make sure you and your clients are prepared for the changes as they happen. Sign up now to take advantage of early bird pricing. Vern Hoven: What is the tax ramification of selling Marijuana? In this case, it’s medical marijuana. In medical marijuana, the reportable rule 61A says you …
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eTax Alert: Tax Ramifications of Divorce August 10, 2017
Divorce settlement, so what’s the first thing we need to know? In a divorce, if the division of the marital assets is a non-taxable event, that’s what quotation 10-41 says. Now, the problem is when it says it’s a not-taxable event, it’s treated like a gift. Most certainly it isn’t a gift. They like each other and so when we’re talking about a divisional marital asset is treated like a gift that means that the basis goes with whoever gets the property. It’s not a sale. It’s a gift. Why could we have a problem with this? What happens if …
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eTax Alert: Charitable Deductions August 3, 2017
Don’t stop reading this important Tax Court decision because the charity deduction is so big – none of my clients donate that much – or because the taxpayer claimed outrageous FMV on the donated property – I’d never let my client get that greedy. Instead, read to the end to find out that the Tax Court disallowed the entire charitable deduction because there was an omission on the Form 8283. Did I forget to completely fill in the form? The court didn’t care if the omission was intentional or unintentional. The deduction was disallowed.Missing Cost on Appraisal Summary Nixes Charitable Deduction (RERI I, LLC, 149 …
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eTax Alert: Identify Theft and Your Clients July 21, 2017
Vern Hoven addresses top scams aimed at tax preparers including phishing scams, phone scams and identity theft. You’ll learn how to protect yourself and your clients. To stay current on topics like this and potential changes from the Trump administration, sign up for the industry’s most comprehensive tax update. Make sure you and your clients are prepared for the changes as they happen. Sign up now to take advantage of early bird pricing! Vern Hoven: The Internal Revenue Service in your material usually has the top 12 scams. I only had enough room on this slide to put on the top six, so I’ve decided, …
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eTax Alert: Employment Tax July 19, 2017
In a recent decision, the Tax Court provided relief to an employer who misclassified workers as independent contractors. If your client is facing a big employment tax bill, this case may provide help in minimizing the taxes due. Court Says That IRS Can Provide Info on Taxes Paid by Reclassified Workers((Mescalero Apache Tribe v. Comm., 148 TC No. 11 (April 5, 2017)) The IRS reclassified hundreds of Mescalero Apache Tribe workers as employees. Reclassification made the Tribe liable for taxes for its workers whom it improperly labeled as contractors during the 2009-2011 tax years. Form 4669 to the rescue. Section 3402 …
Six Questions To Ask Your Clients Today about Their Estate Planning July 7, 2017
Estate planning is not just for the ultra-rich. But their mistakes, when they have plenty of money to pay for the best advice, make a dramatic starting point for a discussion about transferring family assets to the next generation. Prince died Apr. 21, 2016 without a will, although his estate is valued at as much as $500,000,000. At a probate hearing, 12 attorneys represented the various heirs. Why would a very wealthy and very successful musician, who allegedly kept his music in a vault to protect, fail to safeguard that music through estate planning? Prince’s estate planning might have been …
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Health Care & Tax Planning: Changes are Coming June 29, 2017
How to Begin to Prepare Your Clients for Changes to the Health Care Law.The House of Representatives passed its version of a repeal and replacement of Obamacare. The American Health Care Act is now in the Senate and it will be a long, arduous effort until the Senate passes a replacement bill. And then, it’s on to reconciliation. In other words, it will be several months before the replacement legislation is final. But the expected delay won’t stop clients from asking you questions about their health insurance prospects, as well as about tax planning. Here are six tax changes in the House bill: …
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Nonprofit Schools, Hospitals, and Tribal Casinos Are New Targets of Dangerous W-2 Phishing Scam (IR-2017-20) March 22, 2017
Payroll/HR Department receiving email from CEO/CFO requesting list of all employees’ W-2s probably is new W-2 phishing. Cyber criminals are using various spoofing techniques to disguise an email to make it appear as if it is from an organization executive to an employee in the payroll or human resources department requesting a list of all employees and their Forms W-2. This W-2 scam, which first appeared last year, is circulating to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare providers, and shipping and freight companies. In the latest twist, the cyber criminal follows …
Things to Tell Your Client About the Obamacare Replacement NOW March 16, 2017
The promised repeal and replacement of Obamacare (the Affordable Care Act) is in writing. Paul Ryan, Speaker of the House, introduced the American Health Care Act (AHCA) on March 7, 2017. The bill has a long way to go before it is law. But during our busy tax season, clients will have questions on how the proposal affects them and their family. Here are a few pointers: 1. The individual mandate and the employer mandate are repealed in the proposed legislation effective after 12/31/2015. Thus, there would be no penalties for failure to have health insurance or to provide health …
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How Long Are Corporate Extensions? February 26, 2017
How Long Are Corporate Extensions? The Code Says Five Months, but the IRS Says Six Months! Hurray! The IRS has reassured the public that it knows what it is talking about in the 2016 instructions for Form 7004. Apparently, the IRS has been getting inquiries from preparers who are wondering if the instructions for Form 7004 are correct. The instructions indicate that the automatic extension period for corporations is six months, while §6081(b) states that the extension period for corporations is five months. The IRS explained that they were relying upon §6081(a) for the authority to grant six-month extensions, rather …
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Silent Returns Will Be Processed February 20, 2017
As a result of the President’s executive order on January 20, 2017, the IRS recently confirmed here that “silent” returns will be processed, both electronically and on paper. A silent return is the term the IRS is using to refer to individual returns where: The box on Form 1040, Line 61 indicating full year coverage is not checked, andThere is no Form 8965 attached claiming exemption(s) to health coverage, andNo shared responsibility payment has been computed. The IRS announcement also seems to indicate refunds will not be withheld in these cases. This really gives the IRS two alternatives: Use Exam …
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Forms W-2 & 1099-MISC Corrections February 1, 2017
Were you busy meeting a new IRS deadline for Forms W-2 and 1099- Miscellaneous Income?IRS says making a small mistake on income or withholding doesn’t require a correction. 2016 Forms W-2 and 1099-Miscellaneous Income (if there is an entry on box 7 for Nonemployee compensation) were due to the IRS by January 31, 2017. That’s at least a month earlier than the year before. The problem? What if my client makes a small mistake on the W-2 or 1099 in reporting income or withholding? In prior years, the IRS never saw the mistake if we made the correction prior to …
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2017 Tax Season Staff Meeting Agenda December 31, 2016
A Dozen Talking Points 1. Review law changes for 2016 tax returns. Some provisions from 2015 legislation take effect in 2016. 2015 laws with 2016 tax provisions included: • Trade Bill • Highway Bill • Bipartisan Budget Act of 2015 • FAST Act • PATH Act (extender legislation) 2. Review “What’s New for 2016″ section of Forms 1040, 1065, 1120 and 1120S instructions. 3. Review “What’s New for 2016″ section of tax software manual and discuss problem input forms from the prior year. 4. Review required elections and locate software input sheet for each. Important elections include, but are not …
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Tax Changes: Are You Keeping Up? December 20, 2016
Nonprofit Schools, Hospitals, and Tribal Casinos Are New Targets of Dangerous W-2 Phishing Scam (IR-2017-20) Payroll/HR Department receiving email from CEO/CFO requesting list of all employees’ W-2s probably is new W-2 phishing.Cyber criminals are using various spoofing techniques to disguise an email to make it appear as if it is from an organization executive to an employee in the payroll or human resources department requesting a list of all employees and their Forms W-2. This W-2 scam, which first appeared last year, is circulating to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare providers, and shipping and …
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New Law Cures Small Employer Health Insurance Dilemma December 19, 2016
The 21st Century Cure Act has passed Congress and the President has just approved and signed. The legislation provides for an exception from group health plan requirements for qualified small employer health reimbursement arrangements. Beginning in 2017, a small employer may again reimburse employees for individual health insurance premiums without fear of the onerous $100 per day per employee penalty assessed for violation of health care reform.Plan RequirementsTo qualify as “a qualified small employer health reimbursement arrangement,” the plan must meet certain requirements. employees who have not completed 90 days of service,employees who have not attained age 25,part-time (less than 30 hours …
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Overtime Rules Changes – Is Your Client Ready? December 5, 2016
Overtime and the White Collar Exemption – DOL Overtime for White Collar Workers, Overview and Summary of Final Rule Fair Labor Standards Act. The Fair Labor Standards Act (FLSA) provides American workers the right to a minimum wage and time-and-a-half pay for more than 40 hours of work in a week. The FLSA rules apply to hourly and salaried workers, but not to “white collar” workers whose salaries and duties exempt them from the overtime pay requirements. There are two ways in which an employee can be covered by the FLSA: 1. Enterprise Coverage Employees who work for certain businesses …
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Dead-Broke Client and an IRS Audit December 4, 2016
Did your dead-broke client receive an IRS audit letter? If so, ask for a collectability determination. If your client has piled up medical bills or credit card debt or business losses and has no ability to pay additional taxes, an IRS audit can be halted. Throughout an IRS tax examination, examiners are expected to follow Internal Revenue Manual procedures to consider the taxpayer’s ability to pay a potential assessment. The purpose of these “collectability determinations” is to ensure that the IRS’s accounts receivable are collectible. Yet in FY 2015, 50% of all IRS Field Collection closures and 19% of all …
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Last Minute Changes Affect Clients December 3, 2016
Two significant last minute changes will affect your clients: A federal judge enjoined nationwide implementation of the Department of Labor Overtime Regulations.The IRS issued Notice 2016-70 granted a delay for Form 1095 reporting to individuals. Department of Labor Overtime Regulations Delayed Indefinitely. Federal Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas granted a motion temporarily barring the implementation of the December 1, 2016, Fair Labor Standards Act (“FLSA”) new rules on overtime pay from going into effect nationwide. A consolidated lawsuit was filed in September 2016 by 21 states and more than 50 business …
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Estate Planning Questions for Large and Small Estates December 2, 2016
President-elect Donald Trump has proposed eliminating estate taxes. If there is a repeal, or when there is a repeal, will estate planners be out of a job? Of course not—estate planning is not only about tax. It includes how the estate is divided, whether the estate is big or small. Estate planning mistakes by the ultra-rich, when they had plenty of money to pay for the best advice, make a dramatic starting point for a discussion about transferring family assets to the next generation. No will. Prince died April 21, 2016, without a will, even though his estate is valued at …
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