Tax

When the Tax Cuts and Jobs Act was passed in late 2017 many significant changes to the tax code were made. These changes were designed to make the U.S. more business-friendly by lowering business taxes and offering new saving opportunities. One such opportunity was the introduction of Qualified Opportunity Zones investment. In late December, the IRS issued final regulations covering a variety of investment details.

Saving for retirement is something that every individual needs to tackle especially during the prime earning years. Ensuring there is enough money available to fund spending in retirement is a necessity since the benefits offered through social security are simply insufficient to the task. While it sounds logical, there are several obstacles that have made it more difficult for retirement savings to occur.

Section 199A, also called the qualified business income (QBI) deduction, gives owners of pass-through entities a deduction on their personal income tax returns for up to 20% of business income. This deduction can significantly reduce income tax burdens for those who qualify. Unfortunately, taxpayers’ deductions will be reduced if their taxable incomes are too high, and those who work in certain service industries may lose their deductions altogether. There is no perfect technique for avoiding this taxable income limitation but making additional charitable contributions may help.

Self-employed physicians, like many other business owners, are well into their second tax season following the principles outlined in the Tax Cuts and Jobs Act (TCJA). The qualified business income deduction (QBI deduction) – also known as Section 199A – continues to play an important role in year-end planning discussions. As the year ends, it is a good time to revise prior year’s QBI deduction strategies.

Virtual currency, cryptocurrency, digital currency – whatever you call it, the government wants to tax it. On October 9, 2019, the IRS released a Revenue Ruling and an FAQ document that provides clarity on how cryptocurrencies should be taxed. The virtual currency landscape has transformed in recent years, and because the most recent guidance was released back in 2014, taxpayers were stuck not knowing what to report. Identifying how to treat these transactions will help taxpayers better understand their filing responsibilities and can help them incorporate cryptocurrencies into their year-end tax plans.

Earlier this month, the Financial Accounting Standards Board (FASB) announced they extended the effective dates for the new lease accounting standard. It had been rumored for months that the FASB would make this adjustment for non-public entities, and the day has finally come. Public entities struggled to overhaul their business processes in time to comply by their effective date of January 1st of this year, and non-public entities implored the FASB to help them avoid a similar result. The FASB heard these requests from industry groups, professional organizations, and private businesses nationwide and agreed to push back the effective date for non-public entities.

One area that many don’t pay much attention to until the end of the year is tax planning. It’s common to think about what steps can be taken to help reduce the company’s overall taxes before year-end. The good news is since the 4th quarter just started, there are many steps companies can now take to ensure they pay the least amount possible. There are some new opportunities courtesy of the Tax Cuts and Jobs Act of 2017 (tax reform) and a bevy of other strategies as well.

On September 24, 2019, the IRS released a final revenue procedure that helps taxpayers with rental real estate activities to understand how to apply Section 199A. Section 199A often referred to as the qualified business income deduction (QBI deduction), lets business owners deduct 20% of the qualified business income they report from pass-through entities or sole proprietorships. When Congress wrote the QBI deduction into law by passing the Tax Cuts and Jobs Act (TCJA), taxpayers participating in rental real estate activities were unsure if they were eligible for the deduction. The law did not specify when a rental real estate activity would be considered a trade or business worthy of the deduction.

Last month the IRS released important regulations designed to help Atlanta business owners understand how to implement the 100% bonus depreciation which was enacted as part of the Tax Cuts and Jobs Act of 2017 (tax reform). Although the proposed rules did allow for certain depreciation to be leveraged under various conditions, the IRS has been in the process of reviewing changes for some time. On September 13, 2019, they issued final regulations that provide much-needed guidance on how and when bonus depreciation rules can be applied.

The Tax Cuts and Jobs Act of 2017 (tax reform) challenged some long-held assumptions many businesses have about how and when to use bonus depreciation. The changes ushered in through tax reform have transformed how to use bonus depreciation allowing for an expansion of benefits in some respects and a contraction in others. Atlanta business owners that rely on bonus depreciation as part of their tax savings strategy need to be aware of the changes and how it will impact their approach. To help clients, prospects, and others, Wilson Lewis has provided a comprehensive summary of the changes and key considerations