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 Implications of Remote Work – Be Aware July 16, 2019
By: Business Losses Were Not Passive Even Though Owner Lived out of State (Fred and Lisa Barbara v. Comm., TCM 2019-50) Fred Barbara sold his trucking business for tens of millions of dollars. Mr. Barbara used the proceeds from the sale to start a money-lending business. The office of the lending business was in Chicago and was staffed by two full-time employees–an accountant and a secretary. During the years 2009 through 2012, Mr. Barbara split his time between Chicago and Florida, living in Florida 60% of the year. IRS thinks losses are passive. The lending business losses were large; Mr. Barbara lived …
Tax Implications of Remote Work – Be Aware July 16, 2019 Read More »
Missing Entry on Appraisal Summary Nixes Charitable Deduction July 10, 2019
Missing Entry on Appraisal Summary Nixes Charitable Deduction (RERI Holdings I, LLC v. Comm., US Court of Appeals for the District of Columbia, No. 17-1266 (5-24-2019) RERI I, LLC paid $2.95 million in Mar. 2002 to acquire a remainder interest in a data center leased to AT&T and located in Hawthorne, California. On Aug. 27, 2003, RERI assigned the remainder interest to the University of Michigan. On its 2003 Form 1065, RERI claimed a charitable deduction of $33,019,000. Tax practitioner point. A quick look at the facts shows that the taxpayer paid a little less than $3 million for the remainder …
Missing Entry on Appraisal Summary Nixes Charitable Deduction July 10, 2019 Read More »
Electric Vehicle Credit Starts to Phase Out for Tesla and General Motors (IR-2019-57) June 13, 2019
Electric Vehicle Credit Starts to Phase Out for Tesla and General Motors (IR-2019-57) Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks. For vehicles acquired after Dec. 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500. The credit begins to phase …
Taxpayer Will Remember 2019 Memorial Day – from Behind Bars June 4, 2019
Taxpayer Will Remember 2019 Memorial Day — from Behind Bars Richard Spencer owns RS Sewing, a company that makes American flags and sells them to veterans’ groups and large retailers throughout the country. Spencer was convicted of failing to withhold taxes from workers he knowingly and willfully misclassified as independent contractors. For workers classified as W-2 employees, Spencer failed to pay over to the IRS taxes the company withheld from its employees’ wages. Judge Patricia Gaughan of the US District Court in Cleveland sentenced Spencer to two years in prison and three years of supervised release. In addition Spencer must …
Taxpayer Will Remember 2019 Memorial Day – from Behind Bars June 4, 2019 Read More »
Sixteen Points of Interest from the Final §199A Regulations May 20, 2019
The final §199A regulations are 247 pages. There are many points of interest in these newly released regulations. Here is a brief summary of a few that were clarified or changed between the August proposed regulations and the final January regulations: Treatment of other deductions. Deductions for items such as ½ of self-employment tax,self-employed health insurance, and retirement contributions reduce QBI to the extent the income from the business was taken into account to determine those deductions (pages 43-44).Note. All references to page numbers refer to pages in the final regulations linked above for your convenience.Example. Mark’s Net Schedule C income …
Sixteen Points of Interest from the Final §199A Regulations May 20, 2019 Read More »
IRS Expands 2018 Estimated Tax Penalty Waiver March 22, 2019
Because of changes to the withholding tables, the IRS is generally waiving the penalty for anytaxpayer who paid at least 80% of their 2018 total tax liability during the year through federalincome tax withholding, quarterly estimated tax payments or a combination of the two. Torequest the waiver, an individual must file a Form 2210, complete Part I, and check the waiverbox (Part II, Box A). If the client already paid an estimated tax penalty based on the prior IRS notice allowing a waiverif 85% of taxes had been prepaid, a refund can be claimed on Form 843. Include the statement”80% …
IRS Expands 2018 Estimated Tax Penalty Waiver March 22, 2019 Read More »
Final §199A Regs Help Clarify the De Minimis Rule for a Business with SSTB Income January 28, 2019
Final §199A Regs Help Clarify the De Minimis Rule for a Business with SSTB Income (REG-107892-18) Individuals with taxable income above $157,5001 ($315,000 MFJ) are not entitled to a QBI deduction if their business income is from a specified service trade or business (SSTB). But wonder if your client has two sources of income in her LLC – income from a specified service business and income from a non specified service business. Does the LLC have all specified service income and, thus, the pass-through owner has no QBI deduction? Or can you report two business activities and qualify the LLC owner …
Is my rental property a qualified trade or business? IRS provides a few answers January 21, 2019
The 20% QBI deduction is only allowed for qualified trade or business income. The bothersome question in the whole year since §199A was enacted was if and when a rental activity is a trade or business. In Notice 2019-7, the IRS proposes a revenue procedure (now designated as Rev. Proc. 2019-xx) that will provide a safe harbor for determining if a rental activity is a trade or business for purposes of the §199A deduction. Safe harbor. To use the safe harbor the taxpayer is required to: Maintain separate books and records for each rental activity (or the combined enterprise if aggregated together),Demonstrate …
2019 Tax Season Staff Meeting Agenda January 4, 2019
A staff meeting to begin another tax season is a good idea whether your staff is just your spouse or an admin or it includes partners, preparers, reviewers and bookkeepers. More than 100 changes from the Tax Cuts and Jobs Act (TCJA) take affect for 2018 tax returns. Communicating them to all workers who deal with returns is crucial. The year I discovered that my most valuable person didn’t know what I thought was a simple “everyone-knows- that” change, and we had errors because of my assumptions, was the year I discovered the necessity of starting out right with staff. …
2019 Tax Season Staff Meeting Agenda January 4, 2019 Read More »
Client Letter for Year End Planning December 7, 2018
One of our Tax Update attendees generously provided a client letter for you to use. Use it as-is or change it to fit your own client base. We hope sharing this with you will make your next few weeks easier. Dear Clients,I am writing to briefly review some of the main points in the new tax law, in an effort to do year‑end planning to minimize your 2018 taxes. In the past many clients did not benefit from a year end review as things were set when we prepared the previous year’s tax return and the Alternative Minimum Tax nullified many of …
Client Letter for Year End Planning December 7, 2018 Read More »
Stay Ahead of the Game November 30, 2018
There are more than 100 changes in the Tax Cuts and Jobs Act taking affect for the 2018 tax return. When talking to your clients before year-end, here are a few items to consider in that discussion. A personal casualty loss is not deductible for 2018 to 2025. Remind clients that they should review their insurance coverage with their agent to make sure it is adequate. Federally declared disaster losses remain deductible.The 529 College Savings Plan has been expanded. Qualified distributions now include a withdrawal of up to $10,000 per beneficiary for elementary or secondary public, private or religious school …
Dividing Business Functions to Avoid the Specified Services Limitations for the QBI Deduction November 26, 2018
Dividing Business Functions to Avoid the Specified Services Limitations for the QBI Deduction (PR §1.199A-5) An individual with “specified service” income cannot benefit from the new Qualified Business Income (QBI) deduction if the individual has taxable income in excess of a threshold. Therefore, those in a specified service trade or business who have taxable income above $157,500 ($315,000 MFJ) are subject to a phase-out of their QBI deduction, and at taxable income of $207,500 ($415,000 MFJ), they cannot claim any QBI deduction. Note. Generally a specified service trade or business (SSTB) includes a trade or business involving the performance of services …
Two CPAs in Trouble for Aiding and Abetting the Filing of False Tax Returns November 26, 2018
Two CPAs in Trouble for Aiding and Abetting the Filing of False Tax Returns Marc Berger, CPA. Marc Berger was convicted of three counts of aiding and abetting the filing of false tax returns for his client, Steve Burrill. Burrill1 withdrew $18 million above his authorized management fees from a $283 million venture capital fund that he managed. A jury found that Berger advised and counseled Burrill to classify the withdrawals as loans and to create loan documents accordingly. With income mis-stated, Burrill paid no taxes for the three years under consideration, 2011, 2012, and 2013. The maximum penalty for each …
Marketing for CPAs, Accountants, and Tax Professionals November 21, 2018
Are you looking for solutions for marketing and growing your tax and accounting firm? Read on. We live in a digital era. Did you know 30% of mobile searches are related to a location? If someone searches for “cpa firms near me” on Google and you are not in the top results, you just lost a potential customer. For example, when I search for that keyword, Google shows me 12.7 Million results. Massive competition, isn’t it? I am sure you will agree that positioning yourself online is perhaps imperative for your business growth. In this article, I will talk about …
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Specified Services and the QBI Deduction October 3, 2018
IRS NEWS — on Specified Services and the QBI Deduction (PR §1.199A-5) An individual with “specified service” income cannot benefit from the new Qualified Business Income (QBI) deduction if the individual has taxable income in excess of a threshold. Therefore, those in a specified service trade or business who have taxable income above $157,500 ($315,000 MFJ) are subject to a phase-out of their QBI deduction and at taxable income of $207,500 ($415,000 MFJ), they cannot claim any QBI deduction. Example. Mary, a single taxpayer with taxable income below the threshold, has net schedule C income from her specified service business of …
Specified Services and the QBI Deduction October 3, 2018 Read More »
ACA Employer Penalty Letter 226-J Needs Response Within 30 Days August 1, 2018
The IRS has begun enforcement of the ACA employer mandate. Applicable Large Employers (ALEs) must provide affordable, minimum essential health insurance coverage to their full time employees or be subject to a §4980H penalty. The letter generally applies to the tax year 2015. Although 2016 notices are expected by year end. Tax practitioner planning. The IRS identified 32,240 ALEs with potential 2015 penalties of $4.37 billion. Because of “limited resources” the IRS has contacted only 6,000 of the potential 32,000 problem businesses. (TIGTA ACA Report 2018-43-022) Letter 226-J is the initial letter issued to Applicable Large Employers (ALEs) to notify them that …
ACA Employer Penalty Letter 226-J Needs Response Within 30 Days August 1, 2018 Read More »
IRS Releases Draft of 2019 Form W-4 August 1, 2018
The IRS has released a redesigned Form W-4 for 2019. The draft Form W-4 is only two pages (the 2018 Form W-4 is four pages.) The “Personal Allowances Worksheet,” the “Deductions, Adjustments and Additional Income Worksheet,” and the “Two-Earners/Multiple JobsWorksheet” have all been eliminated. There is no place on the form to report the number of allowances claimed. Instead, the form has added lines for the optional reporting of non-wage income that isn’t subject to withholding, expected bonuses, itemized deductions and expected credits, and the wages of other members ofthe taxpayer’s household. Query. Will employees want to provide this information …
IRS Releases Draft of 2019 Form W-4 August 1, 2018 Read More »
2018 Tax Postcard July 2, 2018
The IRS is about to officially release a draft of a postcard Form 1040. The smaller size is meant to convey that taxes are simpler after the enactment of the Tax Cut and Jobs Act. Take a look at the draft Form 1040 postcard and see for yourself if the 1040 postcard is the answer to the public’s need for simple tax. The form is not really a postcard as it must be submitted in an envelope (and it has no pretty pictures with “wish you were here” sentiments). The 1040 postcard does have fewer lines, but their are six …
Instructor Spotlight: Jeff Sailor, CPA February 22, 2018
“Fun,” “creative,” and “outside-the-box” are not terms that often come to mind when one thinks of CPE education. Most of us envision long hours in brightly-lit conference rooms, surviving from cup-to-cup of dark coffee. Some choose to study at home, parking in front of the laptop for a webcast or delving through pages of a written course. But more than 20 years ago, Jeff Sailor, CPA, realized CPE didn’t have to equate boredom. The BeginningIn 1992, Jeff was sitting in a CPE seminar, fulfilling his annual requirements for his accounting practice. “It was horrid,” he said honestly. “Some speakers were …
Instructor Spotlight: Jeff Sailor, CPA February 22, 2018 Read More »
The Bipartisan Budget Act of 2018 February 9, 2018
By: Bipartisan Budget Act of 2018, signed February 9, 2018, makes changes you need to know about for 2017 tax returns. In addition to keeping the government open, the bill retroactively extended 30 tax provisions that expired December 31, 2016. In most cases, the new expiration date for those provisions is December 31, 2017 View a comprehensive list of extended items. (PDF) Learn more at 2018 Tax Reform at Western CPE Tax Reform Seminars.