Tax insight: IRS issues new rules on expensing and capitalizing property

Since 2003 the IRS has been working to revamp how businesses should account for money spent on buying, making, improving and repairing tangible property. The final regulations were announced in 2014 with an important update made in 2015.  Why would such a seemingly arcane tax accounting topic take a decade to finalize? The changes affect over $17 trillion in tangible assets owned by U.S. businesses and may require accounting changes for virtually every company in the country. The new … [Read more...]

2015 income “taxmageddon” breakdown

As IRS commissioner John Koskinen has publicly admitted, the 2014 tax year will be one of the most complicated and stressful to process in the history of the IRS. Last-minute changes to tax credits and deductions, new tax rules relating to the Patient Protection and Affordable Care Act (“Obamacare”) and a reduced IRS budget will create a perfect storm of hot tax mess starting in January. Processing delays – even disappearing returns according to National Taxpayer Advocate Nina Olson – can be … [Read more...]

Tax inversion: How incorporating abroad can lower your tax bill

Calculator Finance Accounting

The United States has one of the highest corporate income tax rates in the world. Multiple studies confirm that even if you take into account credits and deductions, the effective rate (what companies actually pay) continues to be among the highest. Corporate profits between $100,000 and $335,000 are taxed at a 39 percent rate, with higher profit levels taxed between 34 and 38 percent. Add state and local income taxes to the mix and a corporation could pay half of its profits in income taxes.  … [Read more...]

Should a small business barter?

small-business-barter

Cash is king but what do you do if your business needs something desperately and can’t afford it? Take a cue from the past and barter your way to what you need. Bartering has existed since the beginning of history, where people exchange goods or services. It predates the existence of money and is still used extensively today with billions of dollars worth of time and products changing hands every week. Should a small business barter to pay for what it wants? Should a small business barter … [Read more...]

Small business tax trap catches entreprenuers

Tax forms lead to trap

Donald and Brenda Fitch learned the hard way that married entrepreneurs have a third partner in their businesses—Uncle Sam. The couple recently lost a tax court battle with the IRS over how much money they owed in self-employment taxes for their respective businesses. Their hard-earned experience provides an important lesson for couples when both spouses are small-business owners. Self-employment taxes are the equivalent of payroll taxes for employed people, with the business owner … [Read more...]