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Why Trusts Can Be Residents of More Than One State
By: California has 39 million people, according to the census. (I suspect at least 10 million of those folks are employed by the Franchise Tax Board.) The United States has 335 million people. Doing the math, there is a likelihood that if you have an irrevocable trust on the west coast, someone out there is going to ruin your tax professional’s day. so let me get this straight.you can have a trust established in hawaii, holding hawaii real estate and the sole beneficiary is a resident of hawaii, but because the sole fiduciary is a california resident, the whole trust is …
IRS Announces Beginning of Audits on Business Aircraft
By: The Internal Revenue Service announced this week that it plans to begin dozens of audits on business aircraft involving personal use. The audits will be focused on aircraft usage by large corporations, large partnerships, and high-income taxpayers. They’ll also take into account whether for tax purposes the use of the aircraft is being properly allocated between business and personal reasons. I wonder if the Taylor Swift love story played into the IRS’s tax season announcement?Taylor Swift jetted from Tokyo to Las Vegas to watch her boyfriend, Travis Kelce, play in Super Bowl LVIII. Her jet was parked with 881 other …
Maximum Marginal State Individual Income Tax Rates
Rates are as of Jan 1, 2024. What is a marginal tax rate? In many states, the tax rate you pay escalates with increasing income. As you earn more, you progress into higher brackets, and the income in those brackets is taxed at a higher rate. This taxation approach is called progressive taxation, and it’s designed to tax individuals proportionately to their earnings. In theory, the objective is for lower-income earners to pay a lower tax rate, while higher-income earners pay a higher tax rate.This map illustrates the highest possible individual income tax rate someone might pay for the last dollar …
FinCEN Reporting on All Cash Real Estate Transfers is Coming
Treasury’s Financial Crimes Enforcement Network (FinCEN) estimates that approximately 20 percent of real estate purchases are not financed — they are all cash deals — indicating a vulnerability in the US real estate market for money laundering, particularly when the purchaser is an entity. Therefore, in a February 2024 notice of proposed rulemaking, FinCEN announced its intention to initiate requirements under the Bank Secrecy Act (BSA) for certain persons involved in real estate transactions to collect, report, and retain information on non-financed (cash) purchases of residential real estate by shell companies. See FinCEN’s Fact Sheet for details on the proposed …
New Question on Digital Assets
In case you haven’t noticed. . . the IRS has added a new question about income from digital assets to partnerships, corporations, S corporations, and estates and trusts for 2023 tax returns. Ask your entity client about digital currency transactions. 2023 Form 1065 For example, the 2023 Form 1065, Schedule B, question 30 asks: “At any time during this tax year, did the partnership (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or financial interest in a digital asset)? See instructions.” Digital assets include (but …
Capitol Hill Connection: Werfel Grilled in House Hot Seat
By: Happy Friday, tax pros. In case you thought you couldn’t possibly start your weekend without a Capitol Hill tax update from your friend in D.C. (you did not), I’ve got you covered.Indeed, things got a little heated yesterday in 1100 Longworth as IRS Commissioner Danny Werfel got a good grillin’ from lawmakers while in the proverbial hot seat during a House Ways and Means Committee hearing. But because I haven’t yet figured out how to communicate by way of smoke signals, despite my brief phase with pyromania, all you get is this eTax Alert. 2024 Tax Filing Season The …
IRS Revises Form 1099-K FAQs
The IRS has revised its frequently asked questions (FAQs) for Form 1099-K, Payment Card and Third Party Network Transactions. The FAQ Fact Sheet, FS-2024-03, released this month provides substantial updates to nearly 50 questions. The IRS announced last November in Notice 2023-74 that it would again delay the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023. Following tax community concerns and industry feedback, the IRS is treating 2023 as an additional transition year, which applies to taxes filed this year. Thus, reporting is not required unless the taxpayer receives over $20,000 and has more than …
CALIFORNIA CORNER: FTB Catching Up on Delayed 2022 Business Returns
By: The California Franchise Tax Board (FTB) has fallen significantly behind in processing business income tax returns for 2022. As of January 29, 2024, the FTB website was showing a processing time of 8 months for all business returns. FTB System Delays As a result of necessary system programming changes to accommodate the winter storm disaster extensions, FTB reports experiencing system delays outside its normal operational time frames. The reprogramming was needed to ensure that interest was correctly calculated on payments due and refunds because of the delayed due dates. As of February 1, 2024, FTB announced it expects to be …
Capitol Hill Connection: House-Approved Tax Bill Awaits Senate Action
I know what you’re thinking: if only the Senate would get moving on that House-approved tax bill, the tax world might not be such a bad place after all. Or maybe you’ve already lost all hope, which is probably best, because while the measure might have legs, they ain’t movin’. At least, not yet, anyway. March, Probably In case you missed it, last week the House cleared the bipartisan Tax Relief for American Families and Workers Act of 2024 (HR 7024) by an impressive 357-to-70 vote on January 31. The tax bill, spearheaded by Senate Finance Chair Ron Wyden, D-Ore., …
ERC Voluntary Disclosure Deadline Approaching
By: I hate to drop this on you just as tax season is starting, but…IRS squeezed in another deadline for tax pros – March 22, 2024. Applications to participate in the new Employee Retention Credit Voluntary Disclosure Program (ERC-VDP) must be filed by 11:59 pm on March 22, 2024. ERC-VDP The ERC-VDP will allow certain businesses to pay back ERC money that they were not entitled to claim. Tax pros will need to know whether their client is eligible to participate, wants to participate, and can meet the deadline to be considered. Then we tax pros will need to present advice …
Don’t Wait on Congress to File, Werfel Says
Happy opening day of the 2024 tax filing season, tax pros. While it may not be as exciting as Major League Baseball’s Opening Day (slated for March 28), today the IRS began accepting and processing federal individual tax returns. Tax Relief for American Families and Workers Act of 2024 In case you have been thinking about holding off on filing until you know more about that tax bill making its way through the House, don’t. At least that’s the advice from IRS Commissioner Danny Werfel.”We urge and encourage taxpayers to file when they are ready,” Werfel said. “Don’t wait on …
Building Bridges: Transitioning to Western CPE from Global CPE
Note: Western CPE has no affiliation with Global CPE and has not acquired them. We are offering a discount as well as this guide for former Global CPE customers as a means to support the accounting community. Are you curious about what lies beyond your current CPE provider? Perhaps you’re one of the many accounting and financial professionals who were affected by the sudden closure of Global CPE. Whether navigating through the sudden void left by Global CPE or simply seeking a more reliable partner for your professional growth, we’ve got your back. Many are facing uncertain times, and it’s important …
Capitol Hill Connection: Top Taxwriters Unveil Bipartisan Tax Framework
As Congress races the clock in negotiations to keep the government fully funded beyond January 19, top congressional taxwriters have unveiled a much-anticipated framework, which would retroactively enhance the Child Tax Credit and extend certain business tax breaks, among other things. The bipartisan, bicameral tax measure faces a tough road ahead, however, a senior congressional aide told Western CPE on January 16. Tax Relief for American Families and Workers Act of 2024 Although we don’t currently have legislative text to review, the proposal is expected to be introduced as the Tax Relief for American Families and Workers Act of 2024, …
2024 Tax Filing Season Kicks Off January 29, IRS Says
The IRS announced today that the 2024 tax filing season is set to begin on January 29. And what does begin really mean, you ask? (You didn’t.) That’s when the IRS will start accepting and processing 2023 individual tax returns. The IRS will begin accepting business tax returns on January 16, 2024. IRS Transformation Notably, the IRS is promising tax pros that they will continue to see significant improvement within the agency as it anticipates more than 128.7 million individual tax returns to be filed by the April 15, 2024, tax deadline. “As our transformation efforts take hold, taxpayers will …
BOI Reporting Begins
Happy New Year, tax pros. How many of you woke up yesterday with all the hopes and dreams a new year brings and spent some of your first moments in 2024 eagerly filing your first Beneficial Ownership Information (BOI) report? Perhaps you poured a spot of Baileys in your coffee to accompany the big moment. And maybe you were even a little surprised by how tickled you felt inside to see the filing process run so smoothly despite all the naysayers.I did none of those things, but you weren’t alone. And there’s no judgement here. Especially about the Baileys. BOI …
A&A Alert: The FASB Issues ASU 2023-08-Crypto Assets
https://youtu.be/msdPnSGcmN4The Financial Accounting Standards Board (FASB) on December 13 issued a long-awaited Accounting Standard Update on crypto assets. Up until this time, cryptocurrency and similar assets had no guidance under the Generally Accepted Accounting Principles (GAAP). Yesterday’s update aims to improve the accounting for and disclosure of crypto assets.The recent trial of Sam Bankman-Fried, founder of the collapsed cryptocurrency exchange FTX Trading Ltd., brought to light the lack of guidance in accounting standards with respect to crypto assets. Despite the fact that the FTX fiasco had more to do with good old-fashioned theft than cryptocurrency, the lack of certainty in …
Comparing EA vs CPA in Salary, Scope, and Career Paths in Financial Accounting
Navigating the World of Tax Professionals and Certified Public Accountants Are you on the crossroads of choosing between becoming an Enrolled Agent (EA) and a Certified Public Accountant (CPA)? The decision is more than just about comparing EA vs CPA salary. Each career path has its merits and focus, whether it’s financial accounting, tax preparation, or even financial planning. Here, we dive deep into the specifics of these roles, from their educational qualifications to their place in today’s business environment. EA vs CPA Salary: The Financial Implications One of the most compelling factors when choosing between becoming an EA or …
How to Pass the SIE Exam: A Blueprint for Aspiring Securities Professionals
For many aspiring securities professionals, passing the Securities Industry Essentials (SIE) Exam is the first monumental step to gaining a competitive edge in the industry. This essential qualification exam, conducted by the Financial Industry Regulatory Authority (FINRA), covers the foundational aspects of the securities industry, including federal regulatory agencies, capital markets, prohibited practices, and financial concepts. Why is the SIE Exam So Crucial? The SIE Exam serves as an important benchmark for your readiness to excel in the securities industry. This exam has become increasingly essential for professionals and students who aim to specialize in fields like general securities representation, …
Drama in the ERC – IRS Sends Over 20,000 Disallowance Letters
With so much drama in the ERC, it’s kind of hard being denied eligibility. Of course, we’re talking about the Employee Retention Credit, but if “Gin and Juice” also came to mind, we might be friends.The IRS announced yesterday that it has sent more than 20,000 letters notifying taxpayers of their disallowed ERC claim. And that’s just round one. The IRS expects to send additional letters as it continues its increased scrutiny of ERC claims in response to numerous marketing campaigns that have targeted small businesses and other organizations.”With the aggressive marketing we saw with this credit, it’s not surprising …
The Global Tax Surprise
By: Alex M. Parker
With a project as broad and wide-ranging as the Organization for Economic Cooperation and Development’s planned overhaul of the global tax system, many taxpayers who don’t view themselves as involved in significant international tax planning are unexpectedly finding out that they’ll be affected.And they’re also finding out late in the process when their options for response are limited. 15% Global Minimum Tax The project culminated in a 140-country agreement announced in the summer of 2021, including plans for the minimum tax. But it began in 2017 in response to public outrage over alleged tax avoidance in the tech sphere, especially …