Western CPE Blog
Breaking tax and accounting news and analysis from the experts at Western CPE.
Q&A Special: American Rescue Act of 2021
By: Everyone wants more clarity and insight into the American Rescue Act ever since President Biden signed it into law late last week. Especially since the new stimulus payments went out and the IRS extended the filing deadline to May 17th. Sharon Kreider of Western CPE interviews tax expert Robert Keebler in this insightful Q&A discussion about the American Rescue Act. Robert Keebler delves into the impact on high-net-worth clients, the typical family of four, and the business-related tax ramifications. Listen Now to the Q&A Special Click the play button below to listen. https://youtu.be/JjxsPIFavbA Transcript: Sharon: Hi, I’m Sharon Kreider and …
IRS Funding – To Increase or Not to Increase, That is the Question
By: Had you asked William Shakespeare for insight on the importance of well funding a country’s tax administrator, it is unlikely that he, renowned for both sonnets and alleged tax evasion, would have much cared. And if you had over the years consistently asked members of Congress, the answer would have likely varied. Ask a tax practitioner today, however, and you will almost certainly hear: “Fund the IRS.” #FundtheIRS Although not everyone agrees that the IRS needs to be better funded, take one look on “Tax Twitter,” and you will quickly see the call amongst CPEs, EAs, and other tax professionals …
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Advising President Biden on Estate and Gift Tax Proposals
By: My wealthy (and very conservative) client called after the election results were apparent and asked, “What is Biden going to do to me?” He didn’t want a wait-and-see answer. And he didn’t want me to say, “go see your estate attorney.” He wanted my opinion — perhaps to weigh against the attorney’s opinion. I know that you’re facing the same problem with your clients. Here’s an opinion piece for you. https://www.youtube.com/watch?v=lAyrlRq7k8o Two Assumptions There are two basic assumptions applied in the following discussion on President Biden’s estate tax proposals. Our country has run up a big Covid-related deficit, and we …
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Sharon’s First 100 Days: 13 Tax Policy Ideas for America
First, I am a conservative progressive or maybe a progressive conservative. In other words, this isn’t political. It is instead intended to be ideas on “tax reform.” I’m not an economist, and I’m not part of the Congressional Budget Office, so someone needs eventually to tell me that my ideas are pipe dreams or cost too much, or the politics are wrong. A FEW PREMISES: – Tax increases are coming. We have to pay down debt eventually. The government just spent $4 trillion (with more coming) for businesses and individuals hurt by the Covid-19 pandemic. – Nothing should be done …
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Accounting Standards Updates Effective for the 2020 Calendar Year
By: Jeff Sailor, CPA
Article At A Glance: Due to the pandemic, last-minute delays were applied to the effective dates for the Accounting Standards 2014-09 Revenue from Contracts with Customers New updates change the classification of liability or equity financial instruments that include down round features. Topic 718 was expanded for stock compensation to include share-based payments for nonemployees’ goods and services. Updates were made to the Collections definition to align with the industry definition. Effective dates for 2016-02 Leases have been delayed to fiscal years beginning after December 15, 2021. Greetings and Happy New Year! As we all look with anticipation to …
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Tax Season News for Individuals and their 2020 Tax Return
Article Note: The IRS is pushing back the beginning of the 2020 tax season to February 12. The IRS needs more time to prepare after the Covid-19 relief act that took effect in late December. And yes, as of now, the tax filing deadline is still April 15. To speed refunds during the pandemic, the IRS recommends that taxpayers submit their returns electronically and use direct deposit as soon as they’re ready. 1. Economic impact Round one and round two economic impact payments (EIP) are reconciled on the 2020 tax return. The EIPs were an advance. If the client received …
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2nd Draw PPP Loans: SBA Explains Eligibility & Amount
Article At A Glance: The new Economic Aid Act signed into law on December 27, 2020, authorizes the SBA to guarantee PPP 2nd Draw Loans. A borrower is eligible for a Second Draw PPP Loan only if it has 300 or fewer employees and experienced a revenue reduction in 2020 relative to 2019. The borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019. Gross receipts do not include the forgiven amount of the First Draw PPP loan. Second draw loans are forgiven if the loan proceeds are spent on eligible payroll costs and …
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FinCEN Tells Cryptocurrency Traders That It’s a New Year
Article At A Glance: FinCEN Notice 2020-2 announced cryptocurrency accounts held outside of the US as a reportable account for FBAR filings. The notice does not provide an effective date for the reporting change. Watch for further developments. Cryptocurrency exchanges make it simple to move from US dollars (or whatever) into a cryptocurrency and vice versa. New regulations will make cryptocurrency exchanges act more like banks. These regulations may signal that cryptocurrency’s wild west days are numbered. In Notice 2020-2, the Financial Crimes Enforcement Network (FinCEN) announced that the regulations implementing the Bank Secrecy Act (BSA) would be amended to add cryptocurrency …
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9 IRS Reminders for Individuals & their 2020 Tax Returns
Article Note: IRS Resources: COVID Tax Tip 2025-172, Getting Ready for Taxes, Steps to Take Now to Get a Jump on Your Taxes Recovery Rebate The economic rebate received in 2020 was an advance. The advance needs to be reconciled on the 2020 tax If the client received less as an advance than he or she should have, they might be able to claim the recovery rebate credit on their 2020 return if one of the following applies to them: They didn’t receive an Economic Impact Payment in They are single, and their payment was less than $1,200. They …
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The President Signed the Covid-19 Relief Bill & 2nd Round of Stimulus Checks Coming
Article at a Glance: President Trump has now signed the new Consolidated Appropriations Act, 2021 into law. The new law includes a second round of recovery stimulus payments for individuals. Individuals and children (under age 17) are entitled to a $600 rebate if income is below a threshold amount. The phaseout thresholds are the same as those in the CARES Act for the first round of payments. The income thresholds are based on the AGI shown on the 2019 tax return. The recovery rebate payments should start to come about mid-January. This second round of recovery rebates will be …
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Six Key Tax Provisions in the very long Stimulus Bill released by Congress
Article at a Glance: Congress leadership recently released the 5,593-page Consolidated Appropriations Act, 2021. The bill proposes a $2.3 trillion spending bill that combines $900 billion in stimulus relief for the COVID-19 pandemic in the United States with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year. The bill included a proposed second round of recovery check for $600 for each adult tax filer and each child. The bill places no limits on any business’s ability to deduct expenses associated with forgiven PPP loans. Congress is now set to allow businesses to deduct 100% of the …
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URGENT News for Your Client with a PPP Loan
Article at a Glance: The CARES Act spelled out that PPP Loan forgiveness was not taxable cancellation of debt income. Where does that leave expenses paid with the PPP Loan proceeds? According to IRS Notice in Section 265, business expenses paid with tax-free money shouldn’t be deductible. The Emergency Coronavirus Relief Act of 2020 provides deductions of eligible business expenses paid with the PPP loan. This change is (maybe an efficient) way to give PPP loan borrowers another bit of Coronavirus stimulus through tax savings. The CARES Act specifically said that the forgiveness of the PPP Loan was not …
Proposition 19 Impacts Property Tax Transfers
By: Article at a Glance: Proposition 19 adds new provisions for a base year value transfer of a primary residence for persons meeting several criteria. The new law changes provisions of the parent-child and grandparent-child exclusions. The new provisions are subject to “applicable procedures and definitions as provided by statute”. We anticipate that the California Legislature will clarify these procedures and definitions through future legislation. The base year value transfer provisions become operative on April 1, 2021. The parent-child and grandparent-grandchild exclusion provisions become operative on February 16, 2021. On November 3, 2020, California voters approved Proposition 19. The new law …
New CARES Act Guidance Targets SBA Payments
Article at a Glance: SBA Payments of Principal, Interest, and Associated Fees on 7(a) Loans are Taxable to the Small Business Lender servicing the loan is required to issue a Form 1099-MISC on the SBA payments The notice provides what following amounts are to be reported as income on Form 1099-MISC The notice outlines who should be shown as the payor and recipient on Form 1099-MISC Consider warning your clients with 7(a) loans before they get an unexpected Form 1099-MISC from their bank In April 2020, SBA began making payments under Section 1112 of the CARES Act to cover, …
Client Letter | 2020 Year-End Tax Planning
By: Article Note: Our guest author, Tracy Lasecke at Silicon Valley Wealth Advisors in San Jose, CA, has provided us with a year-end tax planning letter for you to use (or modify) to accommodate your clients December 2020 Dear Client – Welcome to Fall and the changing colors of autumn leaves. This tax letter will bring light tax planning challenges and opportunities brought about by the CARES Act (2019) and SECURE Act (2020). Uncertain economic times provide opportunities in tax planning. We hope that you and your family are safe and looking forward to the holidays that follow. This letter …
Key Business Valuation Issues Addressed by Tax Court Ruling
By: Article at a Glance: Ramifications of the estate of Aaron U. Jones Estate Case impact valuations $89 Million dispute leads to the IRS demanding $45 Million in taxes Three approaches IRS revenue ruling 59-60 suggests the valuator use: income, market, and asset. Prudent Valuators have the most recent income forecast to reflect market reality The marketability discount (DLOM) can impact valuations and adequate documentation matters Practical approach backed by current data eclipses the IRS’s theoretical approach Ramifications: Aaron U. Jones Case Business valuation rules and norms frequently evolve as a consequence of IRS and Tax Court rulings. Every few …
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Coronavirus-Related Distributions Still Available
By: Article at a Glance: Coronavirus-related Distributions Still Available Withdrawals can be paid back to the plan within 3 yrs. and aren’t subject to the 10% penalty for early distribution – special treatment only available for $100,000 or less The person affected by COVID-19 could be the taxpayer, spouse, or someone that resides with them Withdrawing money from a retirement plan at a younger age can severely affect long-term retirement funds The CARES Act allowed individuals affected by COVID-19 to withdraw amounts from their retirement plans at any time during 2020. It even permitted amounts taken before enactment to be …
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IRS Revises RMD Tables for 2022
Article at a Glance: IRS Revises RMD Tables for 2022 What happens if someone uses the 2002 tables for 2021 distributions? The answer is nothing What happens if someone uses the new final regulations effective for 2022 in 2021? This could be a problem Potential penalties on missed RMDs are lurking for many a careless senior SECURE Act expansion proposal would reduce the 50% penalty on missed RMDs The IRS has many guidance projects pending due to CARES and SECURE. Let’s hope we get answers before Christmas. Some may have been surprised that IRS just finalized regulations that revise …
Deadline Approaching on California Small Business Hiring Credit
Article at a Glance: California enacts a Small Business Hiring Tax Credit for 2020 only Qualifying businesses must reserve the credit through the California Department of Tax and Fee Administration (CDTFA) Credit reservations begin December 1, 2020 and run through January 15, 2021 On September 9, 2020, California’s governor signed Senate Bill 1447 (Bradford, Stats. 2020, Ch.41) establishing the Small Business Hiring Tax Credit, sometimes referred to as the “Main Street Hiring Credit.” This bill provides financial relief to qualified small businesses for the economic disruptions in 2020 that have resulted in unprecedented job losses. Taxpayers can use the …
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IRS Approves SALT Workaround for Pass-Through Entity
Article at a Glance: IRS Approves SALT Workaround for Pass-Through Entity (Notice 2020-75; IR-2020-252) Before TCJA, individual taxpayers normally could deduct all state and local taxes (SALT) as itemized deductions. TCJA limited the individual SALT deduction to $10,000 for taxable years 2018 through 2025. Some states have been looking for a workaround to enable their resident taxpayers to avoid the $10,000 deduction limit. The IRS has approved the availability and functionality of this workaround in Notice 2020-75. Watch for legislation in your own state authorizing a PTE election for state taxes to be paid on behalf of the owner …
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