Archive for the ‘Uncategorized’ Category

Thursday, October 19th, 2017

Canadian Citizen’s Unemployment Compensation Not Exempt under Tax Treaty. http://bit.ly/2yUitbp

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Grants can help firm up your nonprofit’s financial foundation

Thursday, October 19th, 2017

There are more than 87,000 foundations in the United States — including family, corporate and community foundations — according to the Foundation Center. If your not-for-profit isn’t actively seeking grants from these groups, you’re neglecting a potentially significant income source.

Know your target

Probably the most important thing to remember when approaching foundations is that they tend to specialize, making grants to certain types of charities or in specific geographic regions. It’s not enough to be a 501(c)(3) organization — though your exempt status is critical. Your nonprofit’s mission and programs will need to match the interests of the foundation to which you’re applying.

So it’s essential to research foundations before you apply for grants. Review annual reports, tax filings, press releases and any other information you can get your hands on. One place to start is the Foundation Center’s online directory at foundationcenter.org.

Once you have a list of matches, don’t just start sending out long, detailed proposals. Call your target foundations and talk to staff members about the kind of information they need and their communication preferences. Most will be happy to provide insights into their decision-making process and shed light on your chances of securing a grant.

Successful qualities

The most successful foundation grant proposals have several qualities in common. For example, foundations like projects that are well defined and data driven with specific goals. They also want to know that their gifts are effective, so achievement of such goals needs to be measurable.

It’s important to outline a project’s life cycle and how you plan to fund it to completion. Many foundations provide the money to initiate projects but expect nonprofits to use their own funds and other grants to continue them. In fact, if you hope to establish a long-term relationship with a foundation that has given you a grant, you must successfully finish what you started.

If at first …

Keep in mind that a rejected proposal doesn’t have to shut the door on future opportunities. If your request is turned down, ask the foundation to explain its decision and to provide tips on making your proposals stronger. Many organizations are competing for the same foundation funds, so tenacity is crucial. Contact us for more tips on getting the funding your organization needs.

© 2017

Valuation often affects succession plans in hard-to-see ways

Thursday, October 19th, 2017

Any business owner developing a succession plan should rightfully assume that regular business valuations are a must. When envisioning the valuation process, you’re likely to focus on its end result: a reasonable, defensible value estimate of your business as of a certain date. But lurking beneath this number is a variety of often hard-to-see issues.

Estate tax liability

One sometimes blurry issue is the valuation implications of whether you intend to transfer the business to the next generation during your lifetime, at your death or upon your spouse’s death. If, for example, you decide to bequeath the company to your spouse, no estate tax will be due upon your death because of the marital deduction (as long as your spouse is a U.S. citizen). But estate tax may be due on your spouse’s death, depending on the business’s value and estate tax laws at the time.

Speaking of which, President Trump and congressional Republicans have called for an estate tax repeal under the “Unified Framework for Fixing Our Broken Tax Code” issued in late September. But there’s no guarantee such a provision will pass and, even if it does, the repeal might be only temporary.

So an owner may be tempted to minimize the company’s value to reduce the future estate tax liability on the spouse’s death. But be aware that businesses that appear to have been undervalued in an effort to minimize taxes will raise a red flag with the IRS.

Inactive heirs and retirement

Bear in mind, too, that your heirs may have different views of the business’s proper value. This is particularly true of “inactive heirs” ― those who won’t inherit the business and whose share, therefore, may need to be “equalized” with other assets, such as insurance proceeds or real estate. Your appraiser will need to clearly understand the valuation’s purpose and your estate plan.

When (or if) you plan to retire is another major issue to be resolved. If you want your children to take over, but you need to free up cash for retirement, you may be able to sell shares to successors. Several methods (such as using trusts) can provide tax advantages as well as help the children fund a business purchase.

Abundant complexities

Obtaining a valuation in relation to your succession plan involves much more than establishing a sale price, transitioning ownership (or selling the company), and sauntering off to retirement. The details are many and potential conflicts abundant. Let us help you anticipate and manage these complexities to ensure a smooth succession.

© 2017

Tuesday, October 17th, 2017

IRS Adds New Cities to Per Diem Rate Changes http://bit.ly/2iiLA0T

Tuesday, October 17th, 2017

IRS scales back program to go after people who don’t file taxes http://bit.ly/2gL3xS3

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Tuesday, October 17th, 2017

Federal watchdog tells Equifax—no $7.25 million IRS contract for you http://bit.ly/2iipeMU

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Tuesday, October 17th, 2017

PCAOB eyes biggest risks in upcoming inspections http://bit.ly/2igfzqb

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Tuesday, October 17th, 2017

Why Excel is still relevant in 2017 http://bit.ly/2gLVvbw

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Tuesday, October 17th, 2017

Art of Accounting: La vie continue http://bit.ly/2gMQkbn

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2 ACA taxes that may apply to your exec comp

Tuesday, October 17th, 2017

If you’re an executive or other key employee, you might be rewarded for your contributions to your company’s success with compensation such as restricted stock, stock options or nonqualified deferred compensation (NQDC). Tax planning for these forms of “exec comp,” however, is generally more complicated than for salaries, bonuses and traditional employee benefits.

And planning gets even more complicated if you could potentially be subject to two taxes under the Affordable Care Act (ACA): 1) the additional 0.9% Medicare tax, and 2) the net investment income tax (NIIT). These taxes apply when certain income exceeds the applicable threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other taxpayers.

Additional Medicare tax

The following types of exec comp could be subject to the additional 0.9% Medicare tax if your earned income exceeds the applicable threshold:

  • Fair market value (FMV) of restricted stock once the stock is no longer subject to risk of forfeiture or it’s sold,
  • FMV of restricted stock when it’s awarded if you make a Section 83(b) election,
  • Bargain element of nonqualified stock options when exercised, and
  • Nonqualified deferred compensation once the services have been performed and there’s no longer a substantial risk of forfeiture.

NIIT

The following types of gains from stock acquired through exec comp will be included in net investment income and could be subject to the 3.8% NIIT if your modified adjusted gross income (MAGI) exceeds the applicable threshold:

  • Gain on the sale of restricted stock if you’ve made the Sec. 83(b) election, and
  • Gain on the sale of stock from an incentive stock option exercise if you meet the holding requirements.

Keep in mind that the additional Medicare tax and the NIIT could possibly be eliminated under tax reform or ACA-related legislation. If you’re concerned about how your exec comp will be taxed, please contact us. We can help you assess the potential tax impact and implement strategies to reduce it.

© 2017