Valuation Discounts Considered in Gift and Estate Planning With a look forward to December 31, 2025, when the current lifetime exclusion levels for estate taxes are slated to sunset, wealth planners and their clients have much to discuss. Valuation and estate planning professionals have a key opportunity to strategize and develop the best plans for family businesses and high-net-worth individuals. With a look forward to December 31, 2025, when the current lifetime exclusion levels for estate taxes are slated to sunset, wealth planners and their clients have much to discuss. They have a key opportunity to strategize and develop the…
-
-
How the PTE Tax Can Impact the Valuation of Pass-Through Entities This paper explains how the PTE tax in Massachusetts and several other states affects the valuation of a business and how business owners can account for this tax to avoid double taxation. Introduction Taxes can have a significant impact on the value of a business. Pass-through entities such as S-Corporations and partnerships generally do not pay any taxes since the income is passed through to the individual shareholder or partner. Taxes are then paid on their individual income tax returns. But what if I said that Massachusetts pass-through entities…
-
The law known as the Tax Cuts and Jobs Act of 2017 (TCJA) made many significant changes to the international tax regime. One important change is Sec. 250, which was enacted by Section 14202(a) of the TCJA, and generally provides a domestic C corporation (1) a deduction for its foreign-derived intangible income (FDII) for the tax year, and (2) a deduction for its Sec. 951A global intangible low-taxed income (GILTI) inclusion for the tax year. To read the full article in The Tax Advisor, click: Foreign-Derived Intangible Income Guidance Addresses Many Open Questions.
-
The Tax Cuts and Jobs Act of 2017 H.R.1 There was a flurry of activity within the valuation community following passage of the Tax Cuts and Jobs Act of 2017 (TCJA) and several complicated tax calculation models were unveiled. While we acknowledge the TCJA is beginning to show a noticeable impact on the level of our value conclusions, how much of an impact ought it really have on the way we perform our work? In this article, the author reviews salient features of the TCJA and concludes with some thoughts and suggestions for retaining common sense and applying simplicity to…
-
The Limits Applied to Public and Private Companies The Tax Cuts and Jobs Act (TCJA) made important changes to Section 162(m) of the Internal Revenue Code. That section limits a publicly held corporation’s tax deduction for compensation paid to each covered employee to a maximum of $1,000,000 per year. A corporation is publicly held if it has issued securities required to be registered under Section 12 of the Securities Exchange Act of 1934. Under TCJA, Section 162(m) also applies to private companies that file reports under section 15(d) of the Exchange Act. The Tax Cuts and Jobs Act (TCJA) made…
-
Avoid Traps with a Timely Appraisal New basis-consistency requirements make defensible valuations of inherited property even more important. Informed taxpayers are aware that only the wealthiest individuals should have concerns about the federal estate and gift tax, for gifts given and decedents dying in 2018 through 2025. Thanks to the legislation known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, the basic exclusion amount is more than $11 million per individual ($22 million for married couples), indexed for inflation. Now, estate planners are spending less time and using fewer resources trying to avoid federal estate taxes for clients.…
-
The Internal Revenue Service has announced it is lowering to 80% from 85% the amount taxpayers must have paid to escape an underpayment of estimated income tax penalty for 2018. The usual rule requires at least a 90% payment of tax shown on the return. To read the full article in the Journal of Accountancy, click: IRS Expands Relief from Underpayment Penalty.
-
The Internal Revenue Service has proposed regulations meant to address inconsistent treatment that could arise as a result of the temporary increase in the exclusion amount for estate and gift taxes that was included in the Tax Cuts and Jobs Act. To read the full article in the Journal of Accountancy, click: Estate and Gift Exclusion Clawback Addressed in Proposed Regs.
-
It has been over a year since the law known as the Tax Cuts and Jobs Act (TCJA) was passed. Taxpayers and tax advisers are continuing to peel back its layers of complexity to understand the various provisions. Taxpayers with state tax obligations and state tax practitioners face an additional challenge of understanding the implications of the new or amended federal provisions on state taxation. To read the full article in The Tax Adviser, click: The TCJA and State Considerations for Business.
-
This annual update on recent developments in taxation on S corporations from The Tax Adviser includes cases and rulings on eligible shareholders, electing small business trusts, inadvertent S election terminations, and changes made by the law known as the Tax Cuts and Jobs Act. To read the full article in The Tax Advisor, click: Current Developments in S Corporations.
-
The Qualified Opportunity Zone program has the potential to help investors lower their federal capital gains taxes while contributing to the development of areas that need support. Here is a look at several factors to consider, including which gains are eligible for the program and when a 1031 like-kind exchange may be preferable. Want more tips and resources to help with tax reform topics? PFP Section members can use this toolkit filled with in-depth charts, videos and other information. To read the full article in Accounting Today, click: What You Need to Know About the Federal Opportunity Zone Program.
-
The IRS issued proposed regulations that Sec. 956, which requires an income inclusion by U.S. shareholders of controlled foreign corporations (CFCs) that invest in U.S. property, should not apply to corporate shareholders. To read the full article in Journal of Accountancy, click: Proposed Rules Would Exempt Corporate U.S. Shareholders from Sec. 956.
-
The Tax Cuts and Jobs Act has provided certain advantages for clients, including a 20% deduction for qualified business income and a higher standard deduction. But a cap on deductions for state and local taxes and a different method for determining inflation adjustments could create challenges. “The TCJA has given wealthy taxpayers some interesting changes to their return,” noted Scott Kadrlik, CPA, PFS. To read the full article in Financial Advisor Magazine, click: Potential 2019 Tax Changes Your Wealthy Clients Need to Know About.
-
CPA financial planners name charitable giving, business structure and estate plans as the areas of clients’ financial plans they have had to adjust most frequently after passage of the law known as the Tax Cuts and Jobs Act. Planners can tap into their technical expertise to evaluate how different tax strategies would align with a client’s overall financial picture, said Robert Westley, CPA/PFS. Ultimately, the goal is to ensure that plans “support [clients’] life goals and to keep them and their family secure,” said Andrea Millar, CPA/PFS. To read the full article in the Journal of Accountancy, click: How Tax…
-
for State Income Tax Purposes How will the SALT limits impact growth? Demographic trends? In this article, the author looks at current data, considers these issues and other tax matters that complicate residency choices and options. A few years ago Fox News Channel’s commentator and nationally syndicated radio talk show host (both based in New York), Sean Hannity, threatened that he was going to leave New York, a high personal income tax state, for Florida and Texas, no personal income tax states…and that was when there was a full federal itemized deduction for state and local income taxes, state and…
-
The IRS released guidance Friday on the standard mileage rate for business, medical and certain moving expenses incurred in 2019. To read the full article in Journal of Accountancy, click: 2019 Standard Mileage Rates Announced.
-
The IRS issued guidance clarifying that taxpayers may generally continue to deduct 50% of the food and beverage expenses associated with operating their trade or business, despite changes to the meal and entertainment expense deduction made by the tax law known as the Tax Cuts and Jobs Act. According to the IRS, the amendments specifically deny deductions for expenses for entertainment, amusement, or recreation, but do not address the deductibility of expenses for business meals. To read the full article in the Journal of Accountancy, click: Meals Continue to be Deductible Under New IRS Guidance.
-
The IRS proposed new rules under the global intangible low-taxed income (GILTI) provision (Sec. 951A) added by the Tax Cuts and Jobs Act. Sec. 951A requires U.S. shareholders of controlled foreign corporations (CFCs) to include in their gross income their GILTI income for that tax year (the inclusion amount). The new provision applies to tax years of foreign corporations beginning after Dec. 31, 2017, and to the U.S. shareholders’ tax years within which the foreign corporations’ tax years end. To read the full article in the Journal of Accountancy, click: IRS Issues Proposed Regs for GILTI Inclusions.
-
The proposed rules include a way that taxpayers can group or aggregate separate trades or businesses and an anti-abuse rule designed to prevent taxpayers from separating out parts of an otherwise disqualified business in an attempt to qualify those separated parts for the Sec. 199A deduction. To read the full article in the Journal of Accountancy, click: Qualified Business Income Deduction Regulations Proposed.
-
The legislation known as the Tax Cuts and Jobs Act of 2017 (TCJA), P.L. 115-97, imposes a “toll charge” on the mandatory deemed repatriation of certain deferred foreign earnings. As part of the transition to a territorial tax system, amended Sec. 965 uses the mechanics of the current Subpart F provisions to impose a one-time toll tax on the undistributed, non-previously taxed, post-1986 foreign earnings and profits (E&P) of certain U.S.-owned corporations. New Sec. 965(a) increases Subpart F income of a “deferred foreign income corporation” with positive earnings as of the measurement dates Nov. 2, 2017, or Dec. 31, 2017,…