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The following is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable. IRA rollovers to be limited. A law limits the number of IRA rollovers that can be made in any 1-year peri...
May 7, 2014 12:00 am
De Minimis Safe Harbor A beneficial de minimis safe harbor election allows taxpayers to elect to currently deduct their outlays for “lower-cost” business assets that they expense for book purposes under a written policy. To be eligible for this “book tax conformity election,” a unit of property (UOP) can’t cost more than $5,000 if a business has an Applicable Financial Statement (AFS), which is an audited financial statement. All other taxpayers without an AFS, the de minimis threshold for...
January 29, 2014 12:00 am
Materials and Supplies The 2014 repair and capitalization regulations expand the definition of the term "materials and supplies" to include items costing $200 or less, as well as emergency spare parts. As a result, materials and supplies now include tangible property that is used or consumed in the taxpayer's operations, that is not inventory held for sale, and that— Is a component acquired to maintain, repair or improve a “unit of tangible property” (UOP) owned, leased or serviced by the taxpay...
January 29, 2014 12:00 am
Capitalization Requirements Overall, the new final regulations restate in a comprehensive way long-established concepts about which costs must be capitalized in connection with the acquisition or production of real or personal property. Under the new regulations, as a general rule, all costs that facilitate the acquisition or production of such property must be capitalized, with exceptions for employee compensation and overhead costs. Investigatory expenses related to the acquisition of realty g...
January 29, 2014 12:00 am
Small Business Safe Harbor Election A significant change was made by the final regulations through the addition of a safe harbor to allow certain taxpayers to refrain from treating as improvement costs any costs paid or incurred for the repair, maintenance or improvement of building property. Pursuant to Reg. section 1.263(a)-3(h), a qualifying small taxpayer may elect to not apply the improvement rules to an eligible building if the total amount paid during the taxable year for repairs, mainten...
January 29, 2014 12:00 am
Routine Maintenance Safe Harbor The final regulations continue to allow for a routine maintenance safe harbor for non-building property. However, the final regulations favorably expand the safe harbor to building property, with certain modifications to the general safe harbor rules. Under the final regulations, a taxpayer may apply the routine maintenance safe harbor to recurring activities undertaken to keep a building “Unit of Property” (UOP) in ordinarily efficient operating condition if the ...
January 29, 2014 12:00 am
Many small businesses are owned by individuals or families, but tend to operate as a corporate or pass-through entity, which is a separate legal entity from the individual or family. Incorporating as a corporation or limited liability company (“entity”) provides the “entity” with certain advantages, such as certain protections from liability, a perpetual business existence, and eligibility for special treatment under the tax codes. However, the “entity” can only enjoy these advantages if it main...
January 14, 2014 12:00 am
The IRS continues to increase its scrutiny of Form 1099 reporting by individuals and businesses. The IRS uses 1099s submitted to them to be sure Form 1099 recipients report the income on their income tax returns. Failure to comply with 1099 filing requirements may result in substantial penalties.
January 14, 2014 12:00 am
There are many important tax changes taking effect in 2014. They are the result of tax legislation enacted in prior years, or are triggered by effective dates in regulations, rulings and other guidance. Also, a number of important final regulations go into effect in 2014.
January 14, 2014 12:00 am
On January 1, 2013, the fiscal cliff legislation negotiations passed new laws and regulations, which were a combination of expiration of old law, modification of current law and introduction of new law focused on the wealthiest of American taxpayers. Increase #1: Rise in maximum marginal rate from 35% to 39.6%. The U.S.
January 14, 2014 12:00 am
