Thursday, December 15, 2011
Mantyla McReynolds Among Top 25 Best Companies to Work For
Yesterday Kim McReynolds accepted the award at Utah Business Magazine's Best Companies Event at Little America.
Friday, December 9, 2011
IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
Thursday, November 17, 2011
Social Security and Medicare Figures for 2012
COLA will be paid in 2012; Medicare costs rise less than predicted
If you receive Social Security or SSI benefits, here's some good news--the Social Security Administration has announced that for the first time since 2009, a cost-of-living adjustment (COLA) will be paid. Monthly benefits will increase 3.6% starting in January 2012 for Social Security beneficiaries and starting on December 30, 2011, for SSI recipients. According to the Social Security Administration, the average increase in monthly benefits will be approximately $43.
If you're covered by Medicare, you won't be seeing a large premium increase next year. Despite media reports predicting that the COLA increase would be offset by higher Medicare Part B premiums, the Centers for Medicare & Medicaid Services (CMS) has announced that the standard monthly Medicare Part B premium will be $99.90 in 2012, $15.50 less than in 2011. However, because the premium for most Medicare beneficiaries has been frozen for the past three years at $96.40 (the premium rate in 2008), most beneficiaries will pay $3.50 more per month in 2012. Beneficiaries with higher incomes (individuals with taxable incomes of more than $85,000 and couples with taxable incomes of more than $170,000) will pay more than $99.90 per month because they must pay an income-related surcharge.
While costs vary, the average monthly premium for a Medicare Part D prescription drug plan in 2012 is estimated at around $30, approximately the same as in 2011. And Medicare Advantage premiums will be 4% lower, on average, in 2012 than in 2011, according to CMS.
Other important Social Security figures
The amount of taxable earnings subject to the Social Security tax (called the maximum taxable earnings limit) will increase to $110,100 from $106,800 in 2011.
The retirement earnings test exempt amount for beneficiaries under full retirement age will increase to $14,640 per year from $14,160 per year in 2011. If earnings exceed this amount, $1 in benefits will be withheld for every $2 in earnings above this limit.
The retirement earnings test exempt amount that applies during the year a beneficiary reaches full retirement age will increase to $38,880 from $37,680 per year in 2011. If earnings exceed this amount, $1 will be withheld for every $3 in earnings above this limit.
The amount of earnings needed to earn one Social Security credit will increase to $1,130 from $1,120.
Note also that the OASDI payroll tax that was reduced by 2% for wages and salaries paid in 2011 and for self-employment income in 2011 will revert to its normal rate of 6.2% for 2012.
Other important Medicare figures
The Medicare Part B deductible will be $140, down from $162 in 2011.
The monthly Medicare Part A premium for those with fewer than 30 quarters of coverage will be $451, up from $450 in 2011 (most people do not pay a premium for Medicare Part A).
The monthly Medicare Part A premium for those who have between 30 and 39 quarters of coverage will be $248, the same as in 2011.
The Medicare Part A deductible for inpatient hospitalization will be $1,156, up from $1,132 in 2011. Beneficiaries will pay an additional $289 per day for days 61 through 90, up from $283 in 2011, and $578 per day for stays beyond 90 days, up from $566 in 2011.
Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $144.50 for days 21 through 100 in a benefit period, up from $141.50 in 2011.
Information provided by Broadridge Investor Communications Solutions, Inc. IMPORTANT DISCLOSURES - Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable--we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
If you receive Social Security or SSI benefits, here's some good news--the Social Security Administration has announced that for the first time since 2009, a cost-of-living adjustment (COLA) will be paid. Monthly benefits will increase 3.6% starting in January 2012 for Social Security beneficiaries and starting on December 30, 2011, for SSI recipients. According to the Social Security Administration, the average increase in monthly benefits will be approximately $43.
If you're covered by Medicare, you won't be seeing a large premium increase next year. Despite media reports predicting that the COLA increase would be offset by higher Medicare Part B premiums, the Centers for Medicare & Medicaid Services (CMS) has announced that the standard monthly Medicare Part B premium will be $99.90 in 2012, $15.50 less than in 2011. However, because the premium for most Medicare beneficiaries has been frozen for the past three years at $96.40 (the premium rate in 2008), most beneficiaries will pay $3.50 more per month in 2012. Beneficiaries with higher incomes (individuals with taxable incomes of more than $85,000 and couples with taxable incomes of more than $170,000) will pay more than $99.90 per month because they must pay an income-related surcharge.
While costs vary, the average monthly premium for a Medicare Part D prescription drug plan in 2012 is estimated at around $30, approximately the same as in 2011. And Medicare Advantage premiums will be 4% lower, on average, in 2012 than in 2011, according to CMS.
Other important Social Security figures
The amount of taxable earnings subject to the Social Security tax (called the maximum taxable earnings limit) will increase to $110,100 from $106,800 in 2011.
The retirement earnings test exempt amount for beneficiaries under full retirement age will increase to $14,640 per year from $14,160 per year in 2011. If earnings exceed this amount, $1 in benefits will be withheld for every $2 in earnings above this limit.
The retirement earnings test exempt amount that applies during the year a beneficiary reaches full retirement age will increase to $38,880 from $37,680 per year in 2011. If earnings exceed this amount, $1 will be withheld for every $3 in earnings above this limit.
The amount of earnings needed to earn one Social Security credit will increase to $1,130 from $1,120.
Note also that the OASDI payroll tax that was reduced by 2% for wages and salaries paid in 2011 and for self-employment income in 2011 will revert to its normal rate of 6.2% for 2012.
Other important Medicare figures
The Medicare Part B deductible will be $140, down from $162 in 2011.
The monthly Medicare Part A premium for those with fewer than 30 quarters of coverage will be $451, up from $450 in 2011 (most people do not pay a premium for Medicare Part A).
The monthly Medicare Part A premium for those who have between 30 and 39 quarters of coverage will be $248, the same as in 2011.
The Medicare Part A deductible for inpatient hospitalization will be $1,156, up from $1,132 in 2011. Beneficiaries will pay an additional $289 per day for days 61 through 90, up from $283 in 2011, and $578 per day for stays beyond 90 days, up from $566 in 2011.
Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $144.50 for days 21 through 100 in a benefit period, up from $141.50 in 2011.
Information provided by Broadridge Investor Communications Solutions, Inc. IMPORTANT DISCLOSURES - Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable--we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Wednesday, October 26, 2011
New Guidance for Cell Phones and Other Tax Updates
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.
Personal use of employer-provided cell phones generally nontaxable under new guidance. Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F , the IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons, neither the business nor personal use of the phone results in income to the employee, and no recordkeeping of usage is required. And, in most instances, an employer's reimbursement to employees for their providing a cell phone for bona fide employment-related business use won't be taxable. The guidance applies for all tax years after Dec. 31, 2009.
Simplified per-diem rates increase slightly for post-Sept. 30 business travel. An employer may pay a per-diem amount to an employee on business-travel status instead of reimbursing actual substantiated expenses for away-from-home lodging, meal and incidental expenses (M&IE). If the rate paid doesn't exceed IRS-approved maximums, and the employee provides simplified substantiation, the reimbursement isn't subject to income- or payroll-tax withholding and isn't reported on the employee's Form W-2. In general, the IRS-approved per-diem maximum is the GSA per-diem rate paid by the federal government to its workers on travel status. This rate varies from locality to locality. Instead of using actual per-diems, employers may use a simplified “high-low” per-diem, under which there is one uniform per-diem rate for all “high-cost” areas within the continental U.S. (CONUS), and another per-diem rate for all other areas within CONUS. The IRS has issued a new notice carrying the “high-low” simplified per-diem rates for post-Sept. 30, 2011 travel. The high-cost area per-diem increases by $9 to $242, and the low-cost area per-diem increases by $3 to $163. The IRS also has issued a revenue procedure providing rules for using per diem rates to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
Guidance on electing zero estate tax for 2010 decedents. Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, estates of decedents who died in 2010 can choose zero estate tax, but at the price of beneficiaries being limited to the decedents' basis plus certain increases under Code Sec. 1022 . In early August, the IRS issued detailed guidance on how this election is made. The guidance revealed that the election is made by filing a Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Specifically, Form 8939 is an information return used by the executor of a decedent who died in 2010: (1) to make the Section 1022 Election; (2) to report information about property acquired from a decedent; and (3) to allocate Basis Increase to certain property acquired from a decedent. In general, Form 8939 is due by Jan. 17, 2012.
Time for executors to make portability election for 2011 decedents. In a new notice and accompanying news release, the IRS reminded executors of the estates of married decedents dying after 2010 that they must file an estate tax return in order to pass along the unused estate and gift tax exclusion amount, available for the first time this year, to their surviving spouse. The first estate tax returns for estates eligible to make the portability election started becoming due on Oct. 3, 2011 (i.e., nine months after a post-2010 date of death). Because the IRS believes that most married couples will want the surviving spouse to be able to take advantage of the unused exclusion amount of the first spouse to die, the election is deemed made if a Form 706 (estate tax return) is properly and timely filed. No affirmative statement or other indication is necessary. Even if the estate isn't required to file a Form 706 (e.g., because the value of the gross estate is less than the exclusion amount), the Form 706 must be filed in ordered to make the election. For estates that choose not to make a portability election, if that estate is otherwise required to file a Form 706, the executor must follow the instructions for Form 706 describing the necessary steps to avoid making the election. For estates that aren't required to file a Form 706, simply not filing the form will effectively prevent the making of the election.
Foreign financial assets disclosure. For tax years beginning after Mar. 18, 2010, the Hiring Incentives to Restore Employment Act of 2010 provides that individuals with an interest in a “specified foreign financial asset” during the tax year must attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a U.S. person, and (c) any interest in a foreign entity. Disclosure is made by filing Form 8938 (Statement of Specified Foreign Financial Assets) with the taxpayer's appropriate return (e.g., with Form 1040 in the case of an individual). In September, the IRS released a draft version of the 2011 Instructions to Form 8938. The instructions indicate that under a transitional rule, most taxpayers won't have to file the form until 2012.
Equitable innocent spouse relief eased. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. Previously, the IRS took the position that a request for equitable innocent spouse relief had to be made no later than two years from the first collection activity against the spouse. After being pressured by legislators and the National Taxpayer Advocate, the IRS has now eliminated the two-year period for equitable relief. Elimination of the two-year period is reflected on Form 8857, which is used to request innocent spouse relief.
Supreme Court to decide whether basis overstatements can trigger six-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the six-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The six-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. However, some courts have upheld the regulations and others have rejected them. As a result, the Supreme Court has now decided to resolve the dispute.
Personal use of employer-provided cell phones generally nontaxable under new guidance. Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F , the IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons, neither the business nor personal use of the phone results in income to the employee, and no recordkeeping of usage is required. And, in most instances, an employer's reimbursement to employees for their providing a cell phone for bona fide employment-related business use won't be taxable. The guidance applies for all tax years after Dec. 31, 2009.
Simplified per-diem rates increase slightly for post-Sept. 30 business travel. An employer may pay a per-diem amount to an employee on business-travel status instead of reimbursing actual substantiated expenses for away-from-home lodging, meal and incidental expenses (M&IE). If the rate paid doesn't exceed IRS-approved maximums, and the employee provides simplified substantiation, the reimbursement isn't subject to income- or payroll-tax withholding and isn't reported on the employee's Form W-2. In general, the IRS-approved per-diem maximum is the GSA per-diem rate paid by the federal government to its workers on travel status. This rate varies from locality to locality. Instead of using actual per-diems, employers may use a simplified “high-low” per-diem, under which there is one uniform per-diem rate for all “high-cost” areas within the continental U.S. (CONUS), and another per-diem rate for all other areas within CONUS. The IRS has issued a new notice carrying the “high-low” simplified per-diem rates for post-Sept. 30, 2011 travel. The high-cost area per-diem increases by $9 to $242, and the low-cost area per-diem increases by $3 to $163. The IRS also has issued a revenue procedure providing rules for using per diem rates to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
Guidance on electing zero estate tax for 2010 decedents. Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, estates of decedents who died in 2010 can choose zero estate tax, but at the price of beneficiaries being limited to the decedents' basis plus certain increases under Code Sec. 1022 . In early August, the IRS issued detailed guidance on how this election is made. The guidance revealed that the election is made by filing a Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Specifically, Form 8939 is an information return used by the executor of a decedent who died in 2010: (1) to make the Section 1022 Election; (2) to report information about property acquired from a decedent; and (3) to allocate Basis Increase to certain property acquired from a decedent. In general, Form 8939 is due by Jan. 17, 2012.
Time for executors to make portability election for 2011 decedents. In a new notice and accompanying news release, the IRS reminded executors of the estates of married decedents dying after 2010 that they must file an estate tax return in order to pass along the unused estate and gift tax exclusion amount, available for the first time this year, to their surviving spouse. The first estate tax returns for estates eligible to make the portability election started becoming due on Oct. 3, 2011 (i.e., nine months after a post-2010 date of death). Because the IRS believes that most married couples will want the surviving spouse to be able to take advantage of the unused exclusion amount of the first spouse to die, the election is deemed made if a Form 706 (estate tax return) is properly and timely filed. No affirmative statement or other indication is necessary. Even if the estate isn't required to file a Form 706 (e.g., because the value of the gross estate is less than the exclusion amount), the Form 706 must be filed in ordered to make the election. For estates that choose not to make a portability election, if that estate is otherwise required to file a Form 706, the executor must follow the instructions for Form 706 describing the necessary steps to avoid making the election. For estates that aren't required to file a Form 706, simply not filing the form will effectively prevent the making of the election.
Foreign financial assets disclosure. For tax years beginning after Mar. 18, 2010, the Hiring Incentives to Restore Employment Act of 2010 provides that individuals with an interest in a “specified foreign financial asset” during the tax year must attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a U.S. person, and (c) any interest in a foreign entity. Disclosure is made by filing Form 8938 (Statement of Specified Foreign Financial Assets) with the taxpayer's appropriate return (e.g., with Form 1040 in the case of an individual). In September, the IRS released a draft version of the 2011 Instructions to Form 8938. The instructions indicate that under a transitional rule, most taxpayers won't have to file the form until 2012.
Equitable innocent spouse relief eased. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. Previously, the IRS took the position that a request for equitable innocent spouse relief had to be made no later than two years from the first collection activity against the spouse. After being pressured by legislators and the National Taxpayer Advocate, the IRS has now eliminated the two-year period for equitable relief. Elimination of the two-year period is reflected on Form 8857, which is used to request innocent spouse relief.
Supreme Court to decide whether basis overstatements can trigger six-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the six-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The six-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. However, some courts have upheld the regulations and others have rejected them. As a result, the Supreme Court has now decided to resolve the dispute.
Monday, October 3, 2011
Mantyla McReynolds Selected as 2011 Best Accounting Firms to Work For
Mantyla McReynolds was recently named as one of the 2011 Best Accounting Firms to Work For. The annual list of “Best Accounting Firms” was created by Accounting Today and Best Companies Group.
This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting industry, benefiting the nation's economy, its workforce and businesses. The Best Accounting Firms to Work For list is made up of a total of 100 companies throughout the nation.
Accounting firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience.
The ranking of the 4th annual Best Accounting Firms to Work for will be unveiled at an awards ceremony sponsored by ADP during Accounting Today’s 2nd Annual Growth & Profitability Summit on October 25th – October 27th at the Bellagio Hotel & Casino in Las Vegas. The list-making firms will also be published in the December issue of Accounting Today.
For more information on the Best Accounting Firms to Work for program, visit www.BestAccountingFirmstoWorkfor.com.
This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting industry, benefiting the nation's economy, its workforce and businesses. The Best Accounting Firms to Work For list is made up of a total of 100 companies throughout the nation.
Accounting firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience.
The ranking of the 4th annual Best Accounting Firms to Work for will be unveiled at an awards ceremony sponsored by ADP during Accounting Today’s 2nd Annual Growth & Profitability Summit on October 25th – October 27th at the Bellagio Hotel & Casino in Las Vegas. The list-making firms will also be published in the December issue of Accounting Today.
For more information on the Best Accounting Firms to Work for program, visit www.BestAccountingFirmstoWorkfor.com.
Monday, August 22, 2011
Nine Tips for Charitable Taxpayers
If you make a donation to a charity this year, you may be able to take a deduction for it on your 2011 tax return. Here are the top nine things the IRS wants every taxpayer to know before deducting charitable donations.
1. Make sure the organization qualifies - Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
2. You must itemize - Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. What you can deduct - You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. When you receive something in return - If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Recordkeeping - Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
6. Pledges and payments - Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
7. Donations made near the end of the year - Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. Large donations - For any contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization. It must include the amount of cash and say whether the organization provided any goods or services in exchange for the gift. If you donated property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a deduction for a contribution of noncash property worth more than $5,000, you generally must obtain an appraisal and complete Section B of Form 8283 with your return.
9. Tax Exemption Revoked - Approximately 275,000 organizations automatically lost their tax-exempt status recently because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
For the list of organizations whose tax-exempt status was revoked, visit http://www.irs.gov/. For general information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 526, Charitable Contributions (PDF)
• Publication 561, Determining the Value of Donated Property (PDF)
• Tax Exemptions Revoked
1. Make sure the organization qualifies - Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
2. You must itemize - Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. What you can deduct - You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. When you receive something in return - If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Recordkeeping - Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
6. Pledges and payments - Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
7. Donations made near the end of the year - Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. Large donations - For any contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization. It must include the amount of cash and say whether the organization provided any goods or services in exchange for the gift. If you donated property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a deduction for a contribution of noncash property worth more than $5,000, you generally must obtain an appraisal and complete Section B of Form 8283 with your return.
9. Tax Exemption Revoked - Approximately 275,000 organizations automatically lost their tax-exempt status recently because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
For the list of organizations whose tax-exempt status was revoked, visit http://www.irs.gov/. For general information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 526, Charitable Contributions (PDF)
• Publication 561, Determining the Value of Donated Property (PDF)
• Tax Exemptions Revoked
Monday, August 15, 2011
Wednesday, August 10, 2011
Tax Tips for Individuals Selling Their Home and Moving
Selling Home
The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Moving
Summertime is a popular time for people with children to move since school is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.
1. Move must be closely related to start of work Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.
2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.
3. Time Test You must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.
4. Travel You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.
5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
6. Utilities You can deduct the costs of connecting or disconnecting utilities.
7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.
8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.
9. Reimbursed expenses If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.
10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS.
For more details, review IRS Publication 521, Moving Expenses, and Form 3903, Moving Expenses. IRS publications and forms are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 523, Selling Your Home (PDF)
• Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (PDF)
• Form 8822, Change of Address (PDF)
The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Moving
Summertime is a popular time for people with children to move since school is out. Moving can be expensive, but the IRS offers 10 tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.
1. Move must be closely related to start of work Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.
2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.
3. Time Test You must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.
4. Travel You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.
5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.
6. Utilities You can deduct the costs of connecting or disconnecting utilities.
7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.
8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.
9. Reimbursed expenses If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.
10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS.
For more details, review IRS Publication 521, Moving Expenses, and Form 3903, Moving Expenses. IRS publications and forms are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 523, Selling Your Home (PDF)
• Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (PDF)
• Form 8822, Change of Address (PDF)
Thursday, August 4, 2011
Wednesday, August 3, 2011
Does the IRS Have Money Waiting For You?
If you earned income in the last few years but you didn’t file a tax return because your wages were below the filing requirement, the Internal Revenue Service may have some money for you. The IRS also has millions of dollars in checks that are returned each year as undeliverable.
Here’s what you need to know about these two types of “missing money” and how to claim it:
Unclaimed Refunds
Some people earn income and may have taxes withheld from their wages but are not required to file a tax return because they have too little income. In this case, you can claim a refund for the tax that was withheld from your pay. Other workers may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit, but must file a return to claim it.
• To collect this money a return must be filed with the IRS no later than three years from the due date of the return.
• If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.
• There is no penalty assessed by the IRS for filing a late return qualifying for a refund.
• Current and prior year tax forms and instructions are available on the Forms and Publications page of http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
• Information about the Earned Income Tax Credit and how to claim it is also available on http://www.irs.gov/.
Undeliverable Refunds
Were you expecting a refund check but didn't get it?
• Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service.
• You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.
• You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on http://www.irs.gov/ or can be ordered by calling 800-TAX-FORM (800-829-3676).
• If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.
Here’s what you need to know about these two types of “missing money” and how to claim it:
Unclaimed Refunds
Some people earn income and may have taxes withheld from their wages but are not required to file a tax return because they have too little income. In this case, you can claim a refund for the tax that was withheld from your pay. Other workers may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit, but must file a return to claim it.
• To collect this money a return must be filed with the IRS no later than three years from the due date of the return.
• If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury.
• There is no penalty assessed by the IRS for filing a late return qualifying for a refund.
• Current and prior year tax forms and instructions are available on the Forms and Publications page of http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
• Information about the Earned Income Tax Credit and how to claim it is also available on http://www.irs.gov/.
Undeliverable Refunds
Were you expecting a refund check but didn't get it?
• Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service.
• You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months.
• You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on http://www.irs.gov/ or can be ordered by calling 800-TAX-FORM (800-829-3676).
• If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.
Friday, July 29, 2011
Seven Tax Tips for Job Seekers
Many taxpayers spend time during the summer months updating their résumé and attending career fairs. The Internal Revenue Service reminds job seekers that you may be able to deduct some of the expenses on your tax return.
Here are seven things the IRS wants you to know about deducting costs related to your job search.
1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
6. You cannot deduct job search expenses if you are looking for a job for the first time.
7. The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov.
Here are seven things the IRS wants you to know about deducting costs related to your job search.
1. To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
2. You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
3. You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
4. If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
5. You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
6. You cannot deduct job search expenses if you are looking for a job for the first time.
7. The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov.
Tuesday, July 26, 2011
Monday, July 18, 2011
Second Quarter 2011 Tax Developments
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.
Standard mileage rates increase for last half of 2011. The IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is increased 4.5¢ from 51¢ to 55.5¢ per mile for business travel from July 1, 2011 to Dec. 31, 2011 to better reflect the real cost of operating an auto in this period of rapidly rising gas prices. This rate can also be used by employers to reimburse tax-free under an accountable plan employees who supply their own autos for business use, and to value personal use of certain low-cost employer-provided vehicles. The rate for using a car to get medical care or in connection with a move that qualifies for the moving expense also increases 4.5¢ for the last half of 2011 from 19¢ to 23.5¢ per mile.
FUTA surtax is no longer in effect. Beginning July 1, 2011, the 0.2% federal unemployment tax (FUTA) surtax is no longer in effect. Thus, the FUTA tax rate, before consideration of state unemployment tax credits, is now 6.0%. Employers need to separately track FUTA taxable wages paid before July 1, 2011, and FUTA taxable wages paid after June 30, 2011, since the FUTA tax rates are different during those two periods. Employers whose FUTA tax is more than $500 for the calendar year need to make quarterly FUTA deposits. The next quarterly payment is due on Aug. 1, 2011, but that payment is based on taxable wages paid through June 30, 2011, so it will be computed using the 6.2% FUTA tax rate. However, the payment after that is due on Oct. 31, 2011, and it will be computed using the 6.0% FUTA tax rate if legislation is not enacted to retroactively reinstate the FUTA surtax beginning July 1, 2011.
Two bonus depreciation deductions for one expenditure. Under IRS regulations, businesses that trade in machinery or equipment for which they claimed bonus depreciation may qualify for another bonus depreciation deduction on the remaining depreciable basis if they swap for like-kind property that also is eligible for bonus depreciation. In effect, the business gets two bonus depreciation deductions for its expenditure on the traded-in property.
Real estate professionals allowed late election to aggregate rental real estate interests. The IRS has provided guidance that allows certain real estate professionals to make a late election under the regulations to treat all interests in rental real estate as a single rental real estate activity for purposes of the passive activity loss (PAL) rules. This election can make it easier to currently deduct losses from real estate activities. As a general rule, the election is made by filing a statement with the taxpayer's original income tax return for the tax year. However, under new guidance, a taxpayer meeting certain conditions can make a late election on an amended return.
More courts treating basis overstatements as triggering 6-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the 6-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The 6-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. Recently, two Courts of Appeals (the Tenth Circuit and the District of Columbia Circuit) have upheld the regulations. While the momentum clearly is in favor of the IRS on this issue, others courts have rejected the regulations. Ultimately, the Supreme Court will have to resolve the dispute.
Regulations would toughen tax rules for owners of bankrupt disregarded entities. A taxpayer whose debts are forgiven generally has cancellation of debt (COD) income subject to exceptions including one for bankruptcy and one for insolvency. Some taxpayers have taken the position that the bankruptcy exception is available if a grantor trust (trust used in family or business planning) or disregarded entity (e.g., a single-member limited liability company taxed directly to owner) is under the jurisdiction of a bankruptcy court, even if its owner is not. Similarly, some taxpayers have contended that the insolvency exception is available to the extent a grantor trust or disregarded entity is insolvent, even if its owner is not. The IRS has issued proposed regulations that would clarify that the bankruptcy exception is available only if the owner of the grantor trust or disregarded entity is subject to the bankruptcy court's jurisdiction, and the insolvency exception is available only to the extent the owner is insolvent. They would apply to COD income occurring on or after the date they are published as final regulations.
Trust's investment advice fees. The Supreme Court has held that investment advisory fees paid by a trust were deductible only to the extent that they exceeded 2% of the trust's adjusted gross income (AGI). Thus, such expenses didn't qualify for the exception to the 2% of AGI limit in the tax law for costs paid or incurred in connection with the administration of a trust or estate that wouldn't have been incurred if the property weren't held in the trust or estate. However, for the sake of administrative convenience, the IRS has provided that, until final regulations are issued, nongrantor trusts and estates will not have to “unbundle” a fiduciary fee (i.e., separate the fee into components that are subject to the deduction limit and those that aren't). As a result, until the regulations are issued, affected taxpayers can deduct the full amount of a bundled fiduciary fee without regard to the 2% floor.
IRA trustees weren't liable for Madoff losses. A district court has dismissed all claims brought by holders of self-directed individual retirement accounts (IRAs) against the IRA trustees for losses incurred by the IRAs for investments with Bernard Madoff's firm. A number of individuals owned self-directed IRAs with IRA agreements that clearly stated that they were solely responsible for making investment decisions in connection with the funds in their IRAs, and that the IRA trustees would not provide any investment advice. Pursuant to instructions given by these IRA owners, the IRA trustees sent IRA funds to Bernard Madoff's brokerage firm, Bernard L. Madoff Investment Securities LLC, for investment in securities. These funds were ultimately lost in Madoff's ponzi scheme. The IRA owners sought to hold the IRA trustees responsible for their role in the losses that the IRAs sustained. The action asserted claims under federal common law based on Internal Revenue Code sections governing IRAs, and state law negligence, contract, and unjust enrichment claims. However, the court rejected all such claims.
Another Appeals Court upholds IRS's time limit on spousal relief requests. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. An IRS regulation states that a request for equitable innocent spouse relief must be no later than two years from the first collection activity against the spouse. The Tax Court had found this regulation invalidly imposed a time limit. However, the Court of Appeals for the Fourth Circuit has reversed the Tax Court and upheld the regulation (as have the Courts of Appeals for the Third and Seventh Circuits).
Nonspouse real estate transfers under scrutiny. A recent court case reveals that the IRS has discovered a pattern of taxpayers failing to file gift tax returns for real property transfers between nonspouse related parties. As a result, it launched a compliance initiative to capture data from states and counties regarding real property transfers taking place between nonspouse family members for little or no consideration during the period of Jan. 1, 2005, through Dec. 31, 2010. While the IRS has faced hurdles in attempting to force California to release the data, a number of states have voluntarily done so. These include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin. Thus, individuals who transferred real property to nonspouse family members should make sure that required gift tax returns were filed and file amended returns if they weren't.
Source: Federal Tax Updates on Checkpoint News tab 7/18/2011
Standard mileage rates increase for last half of 2011. The IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is increased 4.5¢ from 51¢ to 55.5¢ per mile for business travel from July 1, 2011 to Dec. 31, 2011 to better reflect the real cost of operating an auto in this period of rapidly rising gas prices. This rate can also be used by employers to reimburse tax-free under an accountable plan employees who supply their own autos for business use, and to value personal use of certain low-cost employer-provided vehicles. The rate for using a car to get medical care or in connection with a move that qualifies for the moving expense also increases 4.5¢ for the last half of 2011 from 19¢ to 23.5¢ per mile.
FUTA surtax is no longer in effect. Beginning July 1, 2011, the 0.2% federal unemployment tax (FUTA) surtax is no longer in effect. Thus, the FUTA tax rate, before consideration of state unemployment tax credits, is now 6.0%. Employers need to separately track FUTA taxable wages paid before July 1, 2011, and FUTA taxable wages paid after June 30, 2011, since the FUTA tax rates are different during those two periods. Employers whose FUTA tax is more than $500 for the calendar year need to make quarterly FUTA deposits. The next quarterly payment is due on Aug. 1, 2011, but that payment is based on taxable wages paid through June 30, 2011, so it will be computed using the 6.2% FUTA tax rate. However, the payment after that is due on Oct. 31, 2011, and it will be computed using the 6.0% FUTA tax rate if legislation is not enacted to retroactively reinstate the FUTA surtax beginning July 1, 2011.
Two bonus depreciation deductions for one expenditure. Under IRS regulations, businesses that trade in machinery or equipment for which they claimed bonus depreciation may qualify for another bonus depreciation deduction on the remaining depreciable basis if they swap for like-kind property that also is eligible for bonus depreciation. In effect, the business gets two bonus depreciation deductions for its expenditure on the traded-in property.
Real estate professionals allowed late election to aggregate rental real estate interests. The IRS has provided guidance that allows certain real estate professionals to make a late election under the regulations to treat all interests in rental real estate as a single rental real estate activity for purposes of the passive activity loss (PAL) rules. This election can make it easier to currently deduct losses from real estate activities. As a general rule, the election is made by filing a statement with the taxpayer's original income tax return for the tax year. However, under new guidance, a taxpayer meeting certain conditions can make a late election on an amended return.
More courts treating basis overstatements as triggering 6-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the 6-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The 6-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. Recently, two Courts of Appeals (the Tenth Circuit and the District of Columbia Circuit) have upheld the regulations. While the momentum clearly is in favor of the IRS on this issue, others courts have rejected the regulations. Ultimately, the Supreme Court will have to resolve the dispute.
Regulations would toughen tax rules for owners of bankrupt disregarded entities. A taxpayer whose debts are forgiven generally has cancellation of debt (COD) income subject to exceptions including one for bankruptcy and one for insolvency. Some taxpayers have taken the position that the bankruptcy exception is available if a grantor trust (trust used in family or business planning) or disregarded entity (e.g., a single-member limited liability company taxed directly to owner) is under the jurisdiction of a bankruptcy court, even if its owner is not. Similarly, some taxpayers have contended that the insolvency exception is available to the extent a grantor trust or disregarded entity is insolvent, even if its owner is not. The IRS has issued proposed regulations that would clarify that the bankruptcy exception is available only if the owner of the grantor trust or disregarded entity is subject to the bankruptcy court's jurisdiction, and the insolvency exception is available only to the extent the owner is insolvent. They would apply to COD income occurring on or after the date they are published as final regulations.
Trust's investment advice fees. The Supreme Court has held that investment advisory fees paid by a trust were deductible only to the extent that they exceeded 2% of the trust's adjusted gross income (AGI). Thus, such expenses didn't qualify for the exception to the 2% of AGI limit in the tax law for costs paid or incurred in connection with the administration of a trust or estate that wouldn't have been incurred if the property weren't held in the trust or estate. However, for the sake of administrative convenience, the IRS has provided that, until final regulations are issued, nongrantor trusts and estates will not have to “unbundle” a fiduciary fee (i.e., separate the fee into components that are subject to the deduction limit and those that aren't). As a result, until the regulations are issued, affected taxpayers can deduct the full amount of a bundled fiduciary fee without regard to the 2% floor.
IRA trustees weren't liable for Madoff losses. A district court has dismissed all claims brought by holders of self-directed individual retirement accounts (IRAs) against the IRA trustees for losses incurred by the IRAs for investments with Bernard Madoff's firm. A number of individuals owned self-directed IRAs with IRA agreements that clearly stated that they were solely responsible for making investment decisions in connection with the funds in their IRAs, and that the IRA trustees would not provide any investment advice. Pursuant to instructions given by these IRA owners, the IRA trustees sent IRA funds to Bernard Madoff's brokerage firm, Bernard L. Madoff Investment Securities LLC, for investment in securities. These funds were ultimately lost in Madoff's ponzi scheme. The IRA owners sought to hold the IRA trustees responsible for their role in the losses that the IRAs sustained. The action asserted claims under federal common law based on Internal Revenue Code sections governing IRAs, and state law negligence, contract, and unjust enrichment claims. However, the court rejected all such claims.
Another Appeals Court upholds IRS's time limit on spousal relief requests. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. An IRS regulation states that a request for equitable innocent spouse relief must be no later than two years from the first collection activity against the spouse. The Tax Court had found this regulation invalidly imposed a time limit. However, the Court of Appeals for the Fourth Circuit has reversed the Tax Court and upheld the regulation (as have the Courts of Appeals for the Third and Seventh Circuits).
Nonspouse real estate transfers under scrutiny. A recent court case reveals that the IRS has discovered a pattern of taxpayers failing to file gift tax returns for real property transfers between nonspouse related parties. As a result, it launched a compliance initiative to capture data from states and counties regarding real property transfers taking place between nonspouse family members for little or no consideration during the period of Jan. 1, 2005, through Dec. 31, 2010. While the IRS has faced hurdles in attempting to force California to release the data, a number of states have voluntarily done so. These include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin. Thus, individuals who transferred real property to nonspouse family members should make sure that required gift tax returns were filed and file amended returns if they weren't.
Source: Federal Tax Updates on Checkpoint News tab 7/18/2011
Thursday, July 14, 2011
EnShale featured on Fox News
EnShale, Inc. is a subsidiary company of our client Bullion Monarch Mining, Inc.
Click here to view story.
Click here to view story.
Wednesday, July 13, 2011
EnShale’s Oil Plant to be featured tonight on Fox News Channel
EnShale, Inc. is a subsidiary company of our client Bullion Monarch Mining, Inc.
Press Release
Fox News Story
Press Release
Fox News Story
Thursday, July 7, 2011
IRS Caution - Don’t Open That Attachment or Click On That Link
PHOENIX - - The Internal Revenue Service (IRS) wants taxpayers to be aware of unsolicited e-mails. The IRS does not send out unsolicited e-mails to taxpayers, nor will the IRS ask for detailed personal and financial information in an e-mail. The IRS will never ask for the PIN numbers, passwords or similar secret access information regarding a taxpayer's credit card, bank or other financial accounts and the IRS does not discuss tax account matters with taxpayers by e-mail.
Unsolicited e-mail may be a type of tax scam known as Phishing. Phishing (as in "fishing for information" and "hooking" victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information. The information is then used to steal the taxpayer's identity and financial assets. This has resulted in the empting of savings and checking accounts, charges on existing credit cards, applying for loans, credit cards, services or benefits in the victim's name and fraudulent tax returns being filed.
Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:
* Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother's maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
* Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
* Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient's funds.
* Gets the Internal Revenue Service or other federal agency names wrong.
* Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
* Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (www.irs.gov).
If you receive a suspicious e-mail claiming to come from the IRS, take the following steps:
* Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
* Do not click on any links, for the same reason. Also, be aware that the links often connect to a phony IRS Web site that appears authentic and then prompts the victim for personal identifiers, bank or credit card account numbers or PINs. The phony Web sites appear legitimate because the appearance and much of the content are directly copied from an actual page on the IRS Web site and then modified by the scammers for their own purposes.
* Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you.
* Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from your inbox.
The only genuine IRS Web site is IRS.gov. All IRS.gov Web page addresses begin with http://www.irs.gov/. Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail.
Unsolicited e-mail may be a type of tax scam known as Phishing. Phishing (as in "fishing for information" and "hooking" victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information. The information is then used to steal the taxpayer's identity and financial assets. This has resulted in the empting of savings and checking accounts, charges on existing credit cards, applying for loans, credit cards, services or benefits in the victim's name and fraudulent tax returns being filed.
Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:
* Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother's maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
* Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
* Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient's funds.
* Gets the Internal Revenue Service or other federal agency names wrong.
* Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
* Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (www.irs.gov).
If you receive a suspicious e-mail claiming to come from the IRS, take the following steps:
* Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
* Do not click on any links, for the same reason. Also, be aware that the links often connect to a phony IRS Web site that appears authentic and then prompts the victim for personal identifiers, bank or credit card account numbers or PINs. The phony Web sites appear legitimate because the appearance and much of the content are directly copied from an actual page on the IRS Web site and then modified by the scammers for their own purposes.
* Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you.
* Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from your inbox.
The only genuine IRS Web site is IRS.gov. All IRS.gov Web page addresses begin with http://www.irs.gov/. Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail.
Thursday, June 30, 2011
IRS National Research Program Audit
The IRS will be conducting National Research Program (NRP) audits of S-corporations during the fall of 2011. The NRP audits are usually a more in depth audit which looks at almost everything. Whereas a normal IRS audit usually focuses on a few selected items that are large or questionable in nature. Also, normally when a return is audited it is a return that was prepared 2 to 3 years ago. However, on the NRP audits the IRS will be auditing the most recently filed tax return. This could mean that if you filed an S-corporation for 2010 that it will be under audit this fall.
The NRP audits are usually performed so that the IRS can get a better idea of where people are making mistakes or are "cheating" on their tax returns. They use the information gathered to pick who should be audited and to "better" audit the returns. Even though the NRP audits are for research purposes, any adjustments made by the IRS would still be treated as a normal audit adjustment.
If you receive a notice or a telephone call from the IRS indicating that you are going to be audited, please let us know as soon as possible so that we can assist you.
The NRP audits are usually performed so that the IRS can get a better idea of where people are making mistakes or are "cheating" on their tax returns. They use the information gathered to pick who should be audited and to "better" audit the returns. Even though the NRP audits are for research purposes, any adjustments made by the IRS would still be treated as a normal audit adjustment.
If you receive a notice or a telephone call from the IRS indicating that you are going to be audited, please let us know as soon as possible so that we can assist you.
Charitable Organizations’ Losses of Exempt Status
Over 1,000 nonprofit organizations in Utah lost their exempt status at the beginning of June 2011 because they failed to file any sort of form with the IRS. They are no longer included in the list of organizations, contained in Publication 78, that a person can donate to and take a deduction for on their tax return. The IRS has posted a listing of these organizations on their website.
The IRS supposes that many of these are simply organizations that no longer exist and thus never sent in any filing. However, they also recommend that every tax payer check the listing to make sure that, if they are donating to an organization, the organization is on the list.
If you are donating to a "charity" that you are not sure is an exempt organization for IRS purposes, do not simply rely on the letter originally given to the "charity" accepting them as a non-profit organization. That letter may be out of date and if they are no longer an exempt organization for IRS purposes, then any donations made to them are non-deductible on your tax return. Instead, please either refer to publication 78 on the IRS website or contact us and we can find out for you.
The IRS supposes that many of these are simply organizations that no longer exist and thus never sent in any filing. However, they also recommend that every tax payer check the listing to make sure that, if they are donating to an organization, the organization is on the list.
If you are donating to a "charity" that you are not sure is an exempt organization for IRS purposes, do not simply rely on the letter originally given to the "charity" accepting them as a non-profit organization. That letter may be out of date and if they are no longer an exempt organization for IRS purposes, then any donations made to them are non-deductible on your tax return. Instead, please either refer to publication 78 on the IRS website or contact us and we can find out for you.
Thursday, June 23, 2011
IRS Increases Milage Rate
WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."
While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.
The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Mileage Rate Changes
Business
Rates 1/1 through 6/30/11 - 51
Rates 7/1 through 12/31/11 - 55.5
Medical/Moving
Rates 1/1 through 6/30/11 - 19
Rates 7/1 through 12/31/11 - 23.5
Charitable
Rates 1/1 through 6/30/11 - 14
Rates 7/1 through 12/31/11 - 14
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."
While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.
The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Mileage Rate Changes
Business
Rates 1/1 through 6/30/11 - 51
Rates 7/1 through 12/31/11 - 55.5
Medical/Moving
Rates 1/1 through 6/30/11 - 19
Rates 7/1 through 12/31/11 - 23.5
Charitable
Rates 1/1 through 6/30/11 - 14
Rates 7/1 through 12/31/11 - 14
Tuesday, June 21, 2011
Travel Tax Breaks
The following article is from RIA Daily Tax Alert (06/21/2011).
Tax Breaks are Available for Travelers Who mix a bit of pleasure with their business travel
Although video conferencing has made inroads in the ranks of business travelers, there still are many situations where it's necessary to travel away-from-home overnight for face-to-face meetings with staff, management, or customers. Businesspeople or professional who must travel for work reasons should keep in mind that they may be able to qualify for a travel bargain by piggybacking a vacation onto an out-of-town business trip. In effect, the business traveler gets free vacation airfare if the trip is set up the right way. And if the travel is undertaken for an employer, a properly set up reimbursement arrangement for the business portion of the trip will be income- and payroll-tax-free. This Practice Alert takes a closer look at how this combination works for domestic travel, along with a review of other business travel strategies that may yield personal savings. It doesn't cover some of the more specialized rules, such as those that apply to travelers in the transportation industry, or the per diem reimbursement rules.
Deductions for trip undertaken primarily for business. A taxpayer who mixes a bit of pleasure with business while away from home nonetheless may deduct all of the round-trip transportation costs as long as the trip was undertaken primarily for business reasons. ( Reg. 1.162-2(b)(1) ) The cost of lodging plus 50% of meals while on business status is deductible. Additionally, if the traveler is an employee reimbursed for all expenses under an accountable plan that requires a timely accounting of the time, place, and business purpose of the travel, plus receipts, the reimbursement is tax-free to the traveler (but the personal portion of the trip yields no tax benefit to the traveler).
RIA observation: In effect, the 100% deduction for the round-trip travel costs works as a kind of tax subsidy for a personal vacation, or as a partially tax-free perk.
RIA illustration 1: Jane, a self-employed information technology specialist, flies from the East Coast to Los Angeles for a 5-day business trip. She takes in three days of vacation and sight-seeing after the business part of the trip is over.
Result: Because Jane can deduct the entire air fare, part of her mini-vacation is, in effect, subsidized by the tax break.
RIA illustration 2: The facts are the same as in illustration (1), except that Jane is employed by a corporation that reimburses her for the business portion of the trip after she submits detailed records and receipts. She pays for the personal portion of the trip (meals and lodging during the three personal days).
Result: Under the accountable plan rules, the reimbursement for the round-trip airfare (as well as for meals and lodging while on business status) is tax-free to Jane, and is not subject to FICA or income tax withholding. (Reg. 1.62-2(c)(2)(i) , Reg. 1.62-2(d)(1) ) That's true even though she took a mini-vacation after her business trip ended. The corporation deducts the travel costs it pays (but only 50% of the cost of meals is deductible).
RIA illustration 3: The facts are the same as in illustration (2), except that the corporation reimburses Jane for the cost of the entire trip, including the 3-day mini-vacation. Result: Her cost for the personal portion of the trip consists of the tax she pays on the personal portion's value (hotel, meals, etc.), which must be treated as compensation income. The corporation's deduction consists of 50% of the meal costs while Jane is on business travel status, 100% of the round-trip air fare, 100% of the lodging costs while she is on travel status, and (assuming that her entire compensation package is "reasonable") 100% of the cost of the mini-vacation since that was treated as compensation paid to Jane.
When is a trip treated as undertaken primarily for business? There is no hard-and-fast rule. It depends on the facts and circumstances of each case. The regs do say, however, that the way travelers split their time between business and personal pursuits is "an important factor." ( Reg. 1.162-2(b)(2) )
RIA illustration 4: Fred works in Atlanta and travels to New Orleans on business. On his way home, he stops in Mobile to visit his parents. During the nine days he is away from home, he spends $1,999 for travel, meals, lodging, and other travel expenses. Had he not stopped in Mobile, Fred would have been away from home for only six days and his trip would have cost only $1,699. Result: Fred can deduct $1,699 for his trip, including the round-trip transportation to and from New Orleans. The 50% deduction limit applies to his meals while on business status. (IRS Pub. 463 (2010), p. 6)
RIA observation: As is evident from illustration (4), the personal part of a trip need not occur at the business destination. It can take place on the way home from the business destination (or, for that matter, en route to the business destination).
RIA caution: Taxpayers who make a stop for personal reasons en route to a business location or on the way home should be sure to keep records of what their round-trip transportation costs would have been without the personal stop.
Saturday night stayovers. Although an employee's out-of-town business chores conclude on Friday, he may extend his business trip to take advantage of a low-priced fare requiring a Saturday night stayover, where the savings in airfare are higher than the costs of the weekend meals and lodging. The employee doesn't pay tax on the reimbursement for his Saturday meal and lodging expenses. ( PLR 9237014 ) In this case, IRS said that under a "common sense test," payments to the employee for the Saturday stay were deductible if a "hardheaded business person would have incurred such expenses under like circumstances."
When a personal day may not be a personal day. An away-from-home business trip may straddle a weekend. For example, a traveler may have to attend business meetings on Thursday, Friday, and Monday. He is too far away to travel home and then come back (and besides, the trip back and forth would cost more than staying put), so he spends the weekend relaxing at the out-of-town location. Because he must remain at the location for business reasons, the weekend days (Saturday and Sunday) should under the "common sense test" be treated as business days the expenses for which are deductible (50% of meal costs, 100% for other expenses) or excludible if the traveler is reimbursed under an accountable plan. Note that in the context of foreign travel, IRS Pub. 463 (2010), p. 8, treats such standby days as business days.
Tax break for weekend travel home. A business traveler on an extended out-of-town assignment may decide to fly home for a weekend to be with family or friends. The cost of the weekend trip home is deductible up to the amount the traveler would have spent on meals and lodging at the out-of-town location. Note, however, that this rule applies only if the traveler checks out of the out-of-town hotel before leaving for the weekend trip home, and then re-registers. If the traveler retains the hotel room, its cost is deductible, but the deduction for the weekend trip home (i.e., the air fare) is limited to what the traveler would have spent on meals during the weekend at the out-of-town location. (IRS Pub. 463 (2010), p. 4)
Tax breaks when spouse or companion comes along. The expenses of a spouse or other companion accompanying a traveler aren't deductible unless (1) the spouse or other companion is an employee of the taxpayer and travels for a bona fide business purpose, and (2) the expenses would otherwise be deductible by the spouse or other companion. (Code Sec. 274(m)(3)) Nevertheless, even if the spouse's or other companion's travel expenses aren't deductible, a tax benefit may still be salvaged from traveling together. That's because the business traveler's deduction isn't based on 50% of the trip expenses. The deduction is based on what it would have cost the taxpayer to travel alone. (Rev Rul 56-168, 1956-1 CB 93 ) This rule can be a money saver on accommodations. For example, where the cost of a hotel room is $200 for one occupant and $149 for two, a taxpayer on business status may deduct $149 per night, not $100, when he gets a room for two. (IRS Pub. 463 (2010), p. 5) Similarly, where the taxpayer travels out of town on business via rental car, and his spouse or other companion accompanies him for non-business purposes, the entire cost of the rental is deductible, because the cost would have been the same for the taxpayer even if his spouse did not join him on the trip. (Pohl, Kenneth, (1990) TC Memo 1990-298 , PH TCM 90298 , IRS Pub. 463 (2010), p. 5)
2011 Thomson Reuters/RIA. All rights reserved.
Tax Breaks are Available for Travelers Who mix a bit of pleasure with their business travel
Although video conferencing has made inroads in the ranks of business travelers, there still are many situations where it's necessary to travel away-from-home overnight for face-to-face meetings with staff, management, or customers. Businesspeople or professional who must travel for work reasons should keep in mind that they may be able to qualify for a travel bargain by piggybacking a vacation onto an out-of-town business trip. In effect, the business traveler gets free vacation airfare if the trip is set up the right way. And if the travel is undertaken for an employer, a properly set up reimbursement arrangement for the business portion of the trip will be income- and payroll-tax-free. This Practice Alert takes a closer look at how this combination works for domestic travel, along with a review of other business travel strategies that may yield personal savings. It doesn't cover some of the more specialized rules, such as those that apply to travelers in the transportation industry, or the per diem reimbursement rules.
Deductions for trip undertaken primarily for business. A taxpayer who mixes a bit of pleasure with business while away from home nonetheless may deduct all of the round-trip transportation costs as long as the trip was undertaken primarily for business reasons. ( Reg. 1.162-2(b)(1) ) The cost of lodging plus 50% of meals while on business status is deductible. Additionally, if the traveler is an employee reimbursed for all expenses under an accountable plan that requires a timely accounting of the time, place, and business purpose of the travel, plus receipts, the reimbursement is tax-free to the traveler (but the personal portion of the trip yields no tax benefit to the traveler).
RIA observation: In effect, the 100% deduction for the round-trip travel costs works as a kind of tax subsidy for a personal vacation, or as a partially tax-free perk.
RIA illustration 1: Jane, a self-employed information technology specialist, flies from the East Coast to Los Angeles for a 5-day business trip. She takes in three days of vacation and sight-seeing after the business part of the trip is over.
Result: Because Jane can deduct the entire air fare, part of her mini-vacation is, in effect, subsidized by the tax break.
RIA illustration 2: The facts are the same as in illustration (1), except that Jane is employed by a corporation that reimburses her for the business portion of the trip after she submits detailed records and receipts. She pays for the personal portion of the trip (meals and lodging during the three personal days).
Result: Under the accountable plan rules, the reimbursement for the round-trip airfare (as well as for meals and lodging while on business status) is tax-free to Jane, and is not subject to FICA or income tax withholding. (Reg. 1.62-2(c)(2)(i) , Reg. 1.62-2(d)(1) ) That's true even though she took a mini-vacation after her business trip ended. The corporation deducts the travel costs it pays (but only 50% of the cost of meals is deductible).
RIA illustration 3: The facts are the same as in illustration (2), except that the corporation reimburses Jane for the cost of the entire trip, including the 3-day mini-vacation. Result: Her cost for the personal portion of the trip consists of the tax she pays on the personal portion's value (hotel, meals, etc.), which must be treated as compensation income. The corporation's deduction consists of 50% of the meal costs while Jane is on business travel status, 100% of the round-trip air fare, 100% of the lodging costs while she is on travel status, and (assuming that her entire compensation package is "reasonable") 100% of the cost of the mini-vacation since that was treated as compensation paid to Jane.
When is a trip treated as undertaken primarily for business? There is no hard-and-fast rule. It depends on the facts and circumstances of each case. The regs do say, however, that the way travelers split their time between business and personal pursuits is "an important factor." ( Reg. 1.162-2(b)(2) )
RIA illustration 4: Fred works in Atlanta and travels to New Orleans on business. On his way home, he stops in Mobile to visit his parents. During the nine days he is away from home, he spends $1,999 for travel, meals, lodging, and other travel expenses. Had he not stopped in Mobile, Fred would have been away from home for only six days and his trip would have cost only $1,699. Result: Fred can deduct $1,699 for his trip, including the round-trip transportation to and from New Orleans. The 50% deduction limit applies to his meals while on business status. (IRS Pub. 463 (2010), p. 6)
RIA observation: As is evident from illustration (4), the personal part of a trip need not occur at the business destination. It can take place on the way home from the business destination (or, for that matter, en route to the business destination).
RIA caution: Taxpayers who make a stop for personal reasons en route to a business location or on the way home should be sure to keep records of what their round-trip transportation costs would have been without the personal stop.
Saturday night stayovers. Although an employee's out-of-town business chores conclude on Friday, he may extend his business trip to take advantage of a low-priced fare requiring a Saturday night stayover, where the savings in airfare are higher than the costs of the weekend meals and lodging. The employee doesn't pay tax on the reimbursement for his Saturday meal and lodging expenses. ( PLR 9237014 ) In this case, IRS said that under a "common sense test," payments to the employee for the Saturday stay were deductible if a "hardheaded business person would have incurred such expenses under like circumstances."
When a personal day may not be a personal day. An away-from-home business trip may straddle a weekend. For example, a traveler may have to attend business meetings on Thursday, Friday, and Monday. He is too far away to travel home and then come back (and besides, the trip back and forth would cost more than staying put), so he spends the weekend relaxing at the out-of-town location. Because he must remain at the location for business reasons, the weekend days (Saturday and Sunday) should under the "common sense test" be treated as business days the expenses for which are deductible (50% of meal costs, 100% for other expenses) or excludible if the traveler is reimbursed under an accountable plan. Note that in the context of foreign travel, IRS Pub. 463 (2010), p. 8, treats such standby days as business days.
Tax break for weekend travel home. A business traveler on an extended out-of-town assignment may decide to fly home for a weekend to be with family or friends. The cost of the weekend trip home is deductible up to the amount the traveler would have spent on meals and lodging at the out-of-town location. Note, however, that this rule applies only if the traveler checks out of the out-of-town hotel before leaving for the weekend trip home, and then re-registers. If the traveler retains the hotel room, its cost is deductible, but the deduction for the weekend trip home (i.e., the air fare) is limited to what the traveler would have spent on meals during the weekend at the out-of-town location. (IRS Pub. 463 (2010), p. 4)
Tax breaks when spouse or companion comes along. The expenses of a spouse or other companion accompanying a traveler aren't deductible unless (1) the spouse or other companion is an employee of the taxpayer and travels for a bona fide business purpose, and (2) the expenses would otherwise be deductible by the spouse or other companion. (Code Sec. 274(m)(3)) Nevertheless, even if the spouse's or other companion's travel expenses aren't deductible, a tax benefit may still be salvaged from traveling together. That's because the business traveler's deduction isn't based on 50% of the trip expenses. The deduction is based on what it would have cost the taxpayer to travel alone. (Rev Rul 56-168, 1956-1 CB 93 ) This rule can be a money saver on accommodations. For example, where the cost of a hotel room is $200 for one occupant and $149 for two, a taxpayer on business status may deduct $149 per night, not $100, when he gets a room for two. (IRS Pub. 463 (2010), p. 5) Similarly, where the taxpayer travels out of town on business via rental car, and his spouse or other companion accompanies him for non-business purposes, the entire cost of the rental is deductible, because the cost would have been the same for the taxpayer even if his spouse did not join him on the trip. (Pohl, Kenneth, (1990) TC Memo 1990-298 , PH TCM 90298 , IRS Pub. 463 (2010), p. 5)
2011 Thomson Reuters/RIA. All rights reserved.
Monday, June 13, 2011
Two New Partners Announced
Mantyla McReynolds, Certified Public Accountants announced the promotion of two new partners, Matt McReynolds and Brian Cheney.
“It is with excitement that we welcome Matt and Brian to the partnership as they have continually exemplified leadership and success,” said Don Mantyla, co-founder and Partner. “They demonstrate the important skills necessary of a partner as they’ve made significant contributions to our clients, communities and our staff”.
Matt McReynolds, CPA has been with Mantyla McReynolds for approximately 12 years. Matt has been heavily involved with companies going public through initial SEC registrations and reverse acquisitions. This requires strict compliance with rules and regulations and Matt has also applied this high level of attention and care to private entities. He has guided companies through numerous technical issues such as convertible debt and equity transactions. Matt worked for Mantyla McReynolds part-time during his master’s and bachelor’s programs from 1999 through 2003. After the master's program, he was recruited and hired by a Big 4 firm as an Audit and Risk Advisory Services Associate. However, after our audit practice started to grow exponentially, we asked Matt to consider coming back in 2004. He agreed, as long as it meant that he could service some amazing public and private companies, which has definitely been the case. As a result of Mantyla McReynolds joining the BDO Seidman Alliance as an independent member, Matt enjoys being involved with a firm that has direct access to extensive national and international resources, while maintaining our local firm autonomy. Matt services publicly traded issuers and privately held companies throughout the United States as well as companies with international operations. Matt has been a very dedicated manager, and we are confident in the success of Mantyla McReynolds with him as a partner.
Brian Cheney, CPA has been with Mantyla McReynolds since 2008. In a short amount of time we've come to realize that new clients investigate and retain our firm not because of what Brian has said about our service and expertise, but because of what his clients have said about him. It's not every day that the CEO and CFO of large public companies will brag to their peers about their auditor, but that is what we've come to experience from Brian's clients. Brian is widely recognized by clients and peers alike for his personable and dedicated client service and outstanding technical knowledge. Brian's clients know this is his passion, and fortunately he's very good at it. While at Mantyla McReynolds, Brian’s clients have successfully completed secondary public offerings aggregating over $500 million. After graduating from Brigham Young University, Brian excelled at a Big 4 accounting firm for 8 years. He joined us in 2008 as a Senior Audit Manager, with the vision of serving his clients with the streamlined efficiencies only a local firm can provide. With the BDO Alliance, he still has the national and international resources immediately available to efficiently respond to each of his client's unique needs. Whether it's working with attorneys and underwriters through a substantial equity raise or guiding a client through the efficient implementation of a financial reporting internal control system, he has consistently exceeded the needs of his clients.
“It is with excitement that we welcome Matt and Brian to the partnership as they have continually exemplified leadership and success,” said Don Mantyla, co-founder and Partner. “They demonstrate the important skills necessary of a partner as they’ve made significant contributions to our clients, communities and our staff”.
Matt McReynolds, CPA has been with Mantyla McReynolds for approximately 12 years. Matt has been heavily involved with companies going public through initial SEC registrations and reverse acquisitions. This requires strict compliance with rules and regulations and Matt has also applied this high level of attention and care to private entities. He has guided companies through numerous technical issues such as convertible debt and equity transactions. Matt worked for Mantyla McReynolds part-time during his master’s and bachelor’s programs from 1999 through 2003. After the master's program, he was recruited and hired by a Big 4 firm as an Audit and Risk Advisory Services Associate. However, after our audit practice started to grow exponentially, we asked Matt to consider coming back in 2004. He agreed, as long as it meant that he could service some amazing public and private companies, which has definitely been the case. As a result of Mantyla McReynolds joining the BDO Seidman Alliance as an independent member, Matt enjoys being involved with a firm that has direct access to extensive national and international resources, while maintaining our local firm autonomy. Matt services publicly traded issuers and privately held companies throughout the United States as well as companies with international operations. Matt has been a very dedicated manager, and we are confident in the success of Mantyla McReynolds with him as a partner.
Brian Cheney, CPA has been with Mantyla McReynolds since 2008. In a short amount of time we've come to realize that new clients investigate and retain our firm not because of what Brian has said about our service and expertise, but because of what his clients have said about him. It's not every day that the CEO and CFO of large public companies will brag to their peers about their auditor, but that is what we've come to experience from Brian's clients. Brian is widely recognized by clients and peers alike for his personable and dedicated client service and outstanding technical knowledge. Brian's clients know this is his passion, and fortunately he's very good at it. While at Mantyla McReynolds, Brian’s clients have successfully completed secondary public offerings aggregating over $500 million. After graduating from Brigham Young University, Brian excelled at a Big 4 accounting firm for 8 years. He joined us in 2008 as a Senior Audit Manager, with the vision of serving his clients with the streamlined efficiencies only a local firm can provide. With the BDO Alliance, he still has the national and international resources immediately available to efficiently respond to each of his client's unique needs. Whether it's working with attorneys and underwriters through a substantial equity raise or guiding a client through the efficient implementation of a financial reporting internal control system, he has consistently exceeded the needs of his clients.
Thursday, May 19, 2011
Community Commitment
At Mantyla McReynolds we take great pride in taking care of our clients, our professionals, and our communities. Frequently our professionals are involved in multiple service and charitable organizations, and as a firm if an event is important to one of our people it is important to all of us.
Over the last several years it has become an annual tradition for our firm professionals to support and participate in the Buddy Walk as sponsored and organized by the Utah Down Syndrome Foundation (UDSF). The Buddy Walk is a family event that promotes awareness of individuals with Down syndrome within our community, and provides the community an opportunity to interact with these individuals, form friendships, and increase the community’s understanding of the amazing potential each of these individuals have. UDSF is a non-profit organization that is comprised entirely of volunteers, the majority of which are parents of children with Down syndrome.
One of our senior audit managers, Brian Cheney, has a son with Down syndrome, and Brian has been a key organizer of our firm’s annual involvement in this event and with the UDSF. Brian has commented “that you can’t help but feel uplifted and enthusiastic about life after being around some of these special individuals, even for just one day.” One of the Buddy Walk’s many activities includes a 5K run, that firm professionals and friends of the firm have historically placed very well in. As a firm, we look forward to our continued involvement in the Buddy Walk and the continued support of each of our professionals in the various charitable organizations they serve.
Mantyla McReynolds is a PCAOB registered CPA firm and a BDO Seidman Alliance firm with over 20 years experience servicing public companies, from their initial internal control assessment to seasoned filer with the SEC. The firm’s clients range from businesses in the developmental stage to established public companies with market capitalizations exceeding one billion dollars. As a BDO Seidman Alliance firm, they offer experienced and accessible service teams, world-class engagement management and a focus on quality and efficiency.
Over the last several years it has become an annual tradition for our firm professionals to support and participate in the Buddy Walk as sponsored and organized by the Utah Down Syndrome Foundation (UDSF). The Buddy Walk is a family event that promotes awareness of individuals with Down syndrome within our community, and provides the community an opportunity to interact with these individuals, form friendships, and increase the community’s understanding of the amazing potential each of these individuals have. UDSF is a non-profit organization that is comprised entirely of volunteers, the majority of which are parents of children with Down syndrome.
One of our senior audit managers, Brian Cheney, has a son with Down syndrome, and Brian has been a key organizer of our firm’s annual involvement in this event and with the UDSF. Brian has commented “that you can’t help but feel uplifted and enthusiastic about life after being around some of these special individuals, even for just one day.” One of the Buddy Walk’s many activities includes a 5K run, that firm professionals and friends of the firm have historically placed very well in. As a firm, we look forward to our continued involvement in the Buddy Walk and the continued support of each of our professionals in the various charitable organizations they serve.
Mantyla McReynolds is a PCAOB registered CPA firm and a BDO Seidman Alliance firm with over 20 years experience servicing public companies, from their initial internal control assessment to seasoned filer with the SEC. The firm’s clients range from businesses in the developmental stage to established public companies with market capitalizations exceeding one billion dollars. As a BDO Seidman Alliance firm, they offer experienced and accessible service teams, world-class engagement management and a focus on quality and efficiency.
Monday, May 9, 2011
IRS Phishing Email Warning
Phishing (as in “fishing for information” and “hooking” victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.
The IRS does not send out unsolicited e-mails or ask for detailed personal and financial information. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts. The IRS does not discuss tax account matters with taxpayers by e-mail.
With that in mind and the fact that 2010 tax returns have for the most part been filed and taxpayers have received their refunds, beware of UNSOLICITED e-mails such as the following. Don't fall for this scam.
With that in mind and the fact that 2010 tax returns have for the most part been filed and taxpayers have received their refunds, beware of UNSOLICITED e-mails such as the following. Don't fall for this scam.
Sample of a phishing e-mail
From: Internal Revenue Service [mailto:admin@irs.gov]
Sent: Wednesday, March 01, 2006 12:45 PM
To: john.doe@jdoe.com
Subject: IRS Notification - Please Read This .
From: Internal Revenue Service [mailto:admin@irs.gov]
Sent: Wednesday, March 01, 2006 12:45 PM
To: john.doe@jdoe.com
Subject: IRS Notification - Please Read This .
After the last annual calculations of your fiscal activity we have determined that you are eligible to receive a tax refund of $63.80. Please submit the tax refund request and allow us 6-9 days in order to process it.
A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.
To access the form for your tax refund, please click here
Regards,Internal Revenue Service
© Copyright 2006, Internal Revenue Service U.S.A. All rights reserved..
3/13/
[End - Sample of a phishing e-mail]
Refund Scam
The bogus e-mail, which claims to come from the IRS, tells the recipient that he or she is eligible to receive a tax refund for a given amount. It instructs the recipient to click on a link contained in the e-mail to access and complete a form for the tax refund. The form requires the entry of personal and financial information. The refund scam is the most common one seen by the IRS. Taxpayers do not have to complete a special form to obtain a refund. Taxpayer refunds are based on the tax return they submit to the IRS.
A refund can be delayed for a variety of reasons. For example submitting invalid records or applying after the deadline.
To access the form for your tax refund, please click here
Regards,Internal Revenue Service
© Copyright 2006, Internal Revenue Service U.S.A. All rights reserved..
3/13/
[End - Sample of a phishing e-mail]
Refund Scam
The bogus e-mail, which claims to come from the IRS, tells the recipient that he or she is eligible to receive a tax refund for a given amount. It instructs the recipient to click on a link contained in the e-mail to access and complete a form for the tax refund. The form requires the entry of personal and financial information. The refund scam is the most common one seen by the IRS. Taxpayers do not have to complete a special form to obtain a refund. Taxpayer refunds are based on the tax return they submit to the IRS.
How to Spot a Scam
Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:
• Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
• Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
• Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
• Gets the Internal Revenue Service or other federal agency names wrong.
• Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
• Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (www.irs.gov). To see the actual link address, or url, move the mouse over the link included in the text of the e-mail.
Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:
• Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
• Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
• Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
• Gets the Internal Revenue Service or other federal agency names wrong.
• Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
• Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (www.irs.gov). To see the actual link address, or url, move the mouse over the link included in the text of the e-mail.
What to Do
The IRS does not initiate taxpayer contact via unsolicited e-mail or ask for personal identifying or financial information via e-mail. If you receive a suspicious e-mail claiming to come from the IRS, take the following steps:
• Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
• Do not click on any links, for the same reason. Also, be aware that the links often connect to a phony IRS Web site that appears authentic and then prompts the victim for personal identifiers, bank or credit card account numbers or PINs. The phony Web sites appear legitimate because the appearance and much of the content are directly copied from an actual page on the IRS Web site and then modified by the scammers for their own purposes.
• Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you.
• Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from your inbox.
The IRS does not initiate taxpayer contact via unsolicited e-mail or ask for personal identifying or financial information via e-mail. If you receive a suspicious e-mail claiming to come from the IRS, take the following steps:
• Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
• Do not click on any links, for the same reason. Also, be aware that the links often connect to a phony IRS Web site that appears authentic and then prompts the victim for personal identifiers, bank or credit card account numbers or PINs. The phony Web sites appear legitimate because the appearance and much of the content are directly copied from an actual page on the IRS Web site and then modified by the scammers for their own purposes.
• Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you.
• Forward the suspicious e-mail or url address to the IRS mailbox phishing@irs.gov, then delete the e-mail from your inbox.
Genuine IRS Web site
The only genuine IRS Web site is IRS.gov. All IRS.gov Web page addresses begin with http://www.irs.gov/. Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail.
The only genuine IRS Web site is IRS.gov. All IRS.gov Web page addresses begin with http://www.irs.gov/. Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail.
Wednesday, May 4, 2011
International Services
Earlier this year, Matt McReynolds, assurance manager at Mantyla McReynolds LLC watched the snow fall in downtown Salt Lake as he longed for a nice sunny vacation. While the cold, snowy weather can often remind us of more moderate climates, this wish came true by proxy as he worked with other accounting professionals in the Cayman Islands.
Matt and the assurance team at Mantyla McReynolds LLC completed an audit engagement for an investment fund with a master-feeder structure with operations in the U.S. and in the Cayman Islands. The structure consisted of three entities: a domestic U.S. partnership Master Fund, a domestic U.S. partnership Feeder Fund, and a foreign Cayman Islands Feeder Fund.
Cayman Islands’ laws require that a local Cayman Islands accounting firm opine on the audits that are domiciled within their jurisdiction. Because Mantyla McReynolds is in the BDO Seidman Alliance, we were able to seamlessly team up with BDO Cayman to successfully complete this engagement. Mantyla McReynolds provided the assurance services and the audit reports on the two U.S. entities, while BDO Cayman utilized our services and documentation to perform their procedures and report on the foreign Feeder Fund.
Mark Sperry, the engagement partner for Mantyla McReynolds observed, “We were very impressed with the timeliness and professionalism of BDO Cayman, one of the 600 international office relationships available to us through our membership in the BDO Seidman Alliance.”
Matt and the assurance team at Mantyla McReynolds LLC completed an audit engagement for an investment fund with a master-feeder structure with operations in the U.S. and in the Cayman Islands. The structure consisted of three entities: a domestic U.S. partnership Master Fund, a domestic U.S. partnership Feeder Fund, and a foreign Cayman Islands Feeder Fund.
Cayman Islands’ laws require that a local Cayman Islands accounting firm opine on the audits that are domiciled within their jurisdiction. Because Mantyla McReynolds is in the BDO Seidman Alliance, we were able to seamlessly team up with BDO Cayman to successfully complete this engagement. Mantyla McReynolds provided the assurance services and the audit reports on the two U.S. entities, while BDO Cayman utilized our services and documentation to perform their procedures and report on the foreign Feeder Fund.
Mark Sperry, the engagement partner for Mantyla McReynolds observed, “We were very impressed with the timeliness and professionalism of BDO Cayman, one of the 600 international office relationships available to us through our membership in the BDO Seidman Alliance.”
Tuesday, May 3, 2011
Equity Raises
Over the past 18-months Mantyla McReynolds LLC has assisted various public clients in raising more than $500 million in multiple secondary equity offerings. Mantyla McReynolds is pleased to have brought to each of these transactions experienced SEC engagement teams with a comprehensive understanding of the public markets, and specific technical knowledge and experience to the follow-on equity process. As a member of the BDO Seidman Alliance, Mantyla McReynolds has consistently had access to and used the vast technical resources of BDO in issuing comfort letters and performing related regulatory offering procedures.
Mantyla McReynolds understands the increased value that is achieved for all parties when the auditors bring to the equity raise process a deep understanding of the regulatory requirements and an ability to work efficiently and confidently with regulators, underwriters, and attorneys. It’s not often the underwriters and their attorneys express their appreciation in working with an audit firm that clearly understands the IPO and secondary offering process, but Mantyla McReynolds has been the recipient of this praise time and again. Our experience has shown there is a narrow window in completing many of these transactions and our clients have consistently been impressed with our ability to meet critical timelines, while still keeping overall fees in check and thoroughly addressing all legal and regulatory requirements.
With BDO as a strong and resourceful partner, the Mantyla McReynolds’ Public Practice Group continues to be well positioned to build upon the significant results that have been achieved in the past.
Mantyla McReynolds is a PCAOB registered CPA firm and a BDO Seidman Alliance firm with over 20 years experience servicing public companies, from their initial internal control assessment to seasoned filer with the SEC. The firm’s clients range from businesses in the developmental stage to established public companies with market capitalizations exceeding one billion dollars. As a BDO Seidman Alliance firm, they offer experienced and accessible service teams, world-class engagement management and a focus on quality and efficiency.
BDO is a US professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. BDO is the world's fifth largest accountancy network. BDO International and BDO Alliance firms combine for more than $5.2 billion in annual fee income and account for 46,930 professionals worldwide.
Mantyla McReynolds understands the increased value that is achieved for all parties when the auditors bring to the equity raise process a deep understanding of the regulatory requirements and an ability to work efficiently and confidently with regulators, underwriters, and attorneys. It’s not often the underwriters and their attorneys express their appreciation in working with an audit firm that clearly understands the IPO and secondary offering process, but Mantyla McReynolds has been the recipient of this praise time and again. Our experience has shown there is a narrow window in completing many of these transactions and our clients have consistently been impressed with our ability to meet critical timelines, while still keeping overall fees in check and thoroughly addressing all legal and regulatory requirements.
With BDO as a strong and resourceful partner, the Mantyla McReynolds’ Public Practice Group continues to be well positioned to build upon the significant results that have been achieved in the past.
Mantyla McReynolds is a PCAOB registered CPA firm and a BDO Seidman Alliance firm with over 20 years experience servicing public companies, from their initial internal control assessment to seasoned filer with the SEC. The firm’s clients range from businesses in the developmental stage to established public companies with market capitalizations exceeding one billion dollars. As a BDO Seidman Alliance firm, they offer experienced and accessible service teams, world-class engagement management and a focus on quality and efficiency.
BDO is a US professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. BDO is the world's fifth largest accountancy network. BDO International and BDO Alliance firms combine for more than $5.2 billion in annual fee income and account for 46,930 professionals worldwide.
Friday, April 22, 2011
Community Commitment
Matt McReynolds, a Senior Manager at Mantyla McReynolds, LLC, serves as the treasurer for The Friends For Unified Police K9 (“Friends”), a non-profit charitable organization.
Friends’ purpose is to support the local Unified Police K9 Unit by providing increased tools and resources that further enable the K9 Unit to carry out its roles in protecting our community and in fighting crime.
Friends’ mission includes the following important activities:
1. Friends provides specialized training for the canine handlers and canines.
2. Friends provides protective equipment for the canine handlers and canines.
3. Friends assists with purchasing canines for the K9 Unit when they do not have enough canines for the handlers.
Mantyla McReynolds is honored to work with Friends as a result of the positive impact that the organization has on our community. Mantyla McReynolds provides pro bono services to Friends including tax preparation, accounting, and management accounting reports. Mantyla McReynolds is also a donor of funds to help support Friends and we are confident that the organization will continue to be successful under the leadership of its President, Sgt. Randy Thomas.
Friends’ purpose is to support the local Unified Police K9 Unit by providing increased tools and resources that further enable the K9 Unit to carry out its roles in protecting our community and in fighting crime.
Friends’ mission includes the following important activities:
1. Friends provides specialized training for the canine handlers and canines.
2. Friends provides protective equipment for the canine handlers and canines.
3. Friends assists with purchasing canines for the K9 Unit when they do not have enough canines for the handlers.
Mantyla McReynolds is honored to work with Friends as a result of the positive impact that the organization has on our community. Mantyla McReynolds provides pro bono services to Friends including tax preparation, accounting, and management accounting reports. Mantyla McReynolds is also a donor of funds to help support Friends and we are confident that the organization will continue to be successful under the leadership of its President, Sgt. Randy Thomas.
Tuesday, April 12, 2011
Check the Status of Your Refund - IRS2Go app
WASHINGTON — The Internal Revenue Service today reminded taxpayers to use new mobile phone applications launched this filing season to check the status of their refunds and to get other tax information on the go.
To date, there have been more than 250,000 downloads of the IRS2Go app.
In late January, the IRS unveiled IRS2Go, its first smartphone application that lets taxpayers check on the status of their tax refund and obtain helpful tax information. The IRS2Go phone app gives people a convenient way of checking on their federal refund. It also gives people a quick way of obtaining easy-to-understand tax tips. Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app. The mobile app, among a handful in the federal government, offers a number of safe and secure ways to help taxpayers.
Get Your Refund Status
Taxpayers can check the status of their federal refund through the new phone app with a few basic pieces of information. First, taxpayers enter their Social Security number, which is masked and encrypted for security purposes. Next, taxpayers pick the filing status they used on their tax return. Finally, taxpayers enter the amount of the refund they expect from their 2010 tax return. For people who e-file, the refund function of the phone app will work within about 72 hours after taxpayers receive an e-mail acknowledgement saying the IRS received their tax return. For people filing paper tax returns, longer processing times mean they will need to wait three to four weeks before they can check their refund status. About 70 percent of the 142 million individual tax returns filed were filed electronically last year, and that percentage is expected to rise this year.
Get Tax Updates
Phone app users enter their e-mail address to automatically get daily tax tips. Tax Tips are simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the tax filing season and periodically during the rest of the year. The plain English updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits and other topics.
Follow the IRS
Taxpayers can sign up to follow the IRS Twitter news feed, @IRSnews. IRSnews provides the latest federal tax news and information for taxpayers. The IRSnews tweets provide easy-to-use information, including tax law changes and important IRS programs. IRS2Go is the latest IRS effort to provide information to taxpayers beyond traditional channels. The IRS also uses tools such as YouTube and Twitter to share the latest information on tax changes, initiatives, products and services through social media channels. For more information on IRS2Go and other new media products, visit http://www.irs.gov/.
To date, there have been more than 250,000 downloads of the IRS2Go app.
In late January, the IRS unveiled IRS2Go, its first smartphone application that lets taxpayers check on the status of their tax refund and obtain helpful tax information. The IRS2Go phone app gives people a convenient way of checking on their federal refund. It also gives people a quick way of obtaining easy-to-understand tax tips. Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app. The mobile app, among a handful in the federal government, offers a number of safe and secure ways to help taxpayers.
Get Your Refund Status
Taxpayers can check the status of their federal refund through the new phone app with a few basic pieces of information. First, taxpayers enter their Social Security number, which is masked and encrypted for security purposes. Next, taxpayers pick the filing status they used on their tax return. Finally, taxpayers enter the amount of the refund they expect from their 2010 tax return. For people who e-file, the refund function of the phone app will work within about 72 hours after taxpayers receive an e-mail acknowledgement saying the IRS received their tax return. For people filing paper tax returns, longer processing times mean they will need to wait three to four weeks before they can check their refund status. About 70 percent of the 142 million individual tax returns filed were filed electronically last year, and that percentage is expected to rise this year.
Get Tax Updates
Phone app users enter their e-mail address to automatically get daily tax tips. Tax Tips are simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the tax filing season and periodically during the rest of the year. The plain English updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits and other topics.
Follow the IRS
Taxpayers can sign up to follow the IRS Twitter news feed, @IRSnews. IRSnews provides the latest federal tax news and information for taxpayers. The IRSnews tweets provide easy-to-use information, including tax law changes and important IRS programs. IRS2Go is the latest IRS effort to provide information to taxpayers beyond traditional channels. The IRS also uses tools such as YouTube and Twitter to share the latest information on tax changes, initiatives, products and services through social media channels. For more information on IRS2Go and other new media products, visit http://www.irs.gov/.
Do You Need an Extension?
Can't make the April 18 tax filing deadline and need more time to file your tax return? You can get an automatic six month extension of time to file from the IRS. Here are important things you need to know about filing an extension:
- File on time even if you can't pay. If your return is completed but you are unable to pay the full amount of tax due, do not request an extension. File your return on time and pay as much as you can. The IRS will send you a bill or notice for the balance due. To apply online for a payment agreement, go to the IRS website at http://www.irs.gov/ and click "Apply for an Online Payment Agreement (OPA)" at the left side of the home page under Online Services. If you are unable to make payments, call the IRS at 800-829-1040 to discuss your options.
- Extra time to file. An extention will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 18 deadline, plus you may owe penalties.
Please contact us if you need to file an extension.
Friday, April 8, 2011
8 Changes to Know About Before Filing Your 2010 Taxes
Despite calls for simplifing the tax laws, they have actually become more complicated in the last few years. We want you to be aware of the new tax breaks for this filing season so you can take full advantage of them. Please call Mantyla McReynolds for more details.
- Roth IRA conversions - You may now convert a traditional IRA to a Roth IRA, regardless of the amount of your income. In 2010, income from the conversion can be deferred so half is taxable in 2011 and the other half in 2012.
- Small business health insurance credit - If you pay for your employee health insurance, you may qualify for a credit of up to 35% of premiums you pay depending on the number of employees and wages you pay.
- Homebuyer credit - You may qualify for a first time homebuyer credit if you purchased a home by July 31, 2010.
- Adoption credit - The max credit is $13,170 per eligible child and is refundable (you get it even if your tax is zero).
- Gifts to charity - You may donate $100,000 directly from your IRA. A donation in January 2011 can be treated as made in 2010.
- Section 179 expensing - You may expense up to $500,000 of qualified fixed asset purchases made in 2010.
- Bonus depreciation - You may expense from 50% to 100% of never before used qualifying fixed asset purchases made in 2010.
- Luxury auto limits - You may deduct up to $11,000 for luxury auto and light truck or van purchases in 2010. You can deduct up to $25,000 for purchases of SUV's in 2010.
Also, don't forget that the filing deadline is Monday, April 18th. Why?
Tuesday, April 5, 2011
IRS to Examine Rental Losses More Closely
IRS to Examine Rental Losses More Closely
WASHINGTON, D.C. (MARCH 9, 2011) BY MICHAEL COHN The Internal Revenue Service has agreed with recommendations in a newly released government report urging the agency to increase its examinations of individual tax returns that report losses from rental real estate activity. The report, by the Treasury Inspector General for Tax Administration, was conducted because a Government Accountability Office report in August 2008 found that at least 53 percent of individual taxpayers with rental real estate activity for tax year 2001 misreported their rental real estate activity, resulting in an estimated $12.4 billion of net misreported income. The objectives of TIGTA’s review were to evaluate the IRS’s scrutiny of individual tax returns with rental real estate activity and to recommend changes to help identify, select and examine tax returns with rental real estate activity. TIGTA found that during fiscal years 2008 and 2009, the IRS’s rental real estate Compliance Initiative Program examined only a small percentage of the 318,339 examinations conducted by revenue agents and tax compliance officers. TIGTA projected that if the IRS were to increase the percentage of rental real estate CIP tax returns it examined, it could increase potential tax assessments by $27.3 million over a five-year period. “Given the magnitude of underreporting in our voluntary system of tax compliance, even small improvements in the IRS’s examination of tax returns with rental real estate activity could increase taxpayer compliance and generate substantial additional revenue to the federal government, helping reduce the tax gap,” said TIGTA Inspector General J. Russell George in a statement. IRS management agreed with all of TIGTA’s recommendations, disagreeing only with the report’s proposed monetary outcome measures. In its report, TIGTA recommended that IRS officials conduct an analysis to determine the population of tax returns with rental real estate activity that meets the criteria for inclusion in the CIPs. The IRS should also revise the instructions for Form 8582 to require all taxpayers with prior-year unallowed passive activity losses to submit the form with their tax return. The report also recommended that the IRS ensure that the information taxpayers provide to report the net amount of income earned or losses incurred from being a real estate professional is transcribed. IRS management agreed with all three recommendations. The IRS, in connection with the development of compliance strategies, plans to consider whether additional CIP examinations are appropriate. In addition, the IRS plans to revise the 2011 instructions for Form 8582 and transcribe the information taxpayers provide to report the net amount of income earned, or losses incurred, from being a real estate professional. “We will ensure the information taxpayers provide to report the net amount of income earned, or losses incurred, from being a real estate professional is transcribed,” wrote Christopher Wagner, the commissioner of the IRS’s Small Business/Self-Employed Division. “These changes will assist in selection of the most high-risk returns for audit.” However, the IRS disagreed with the proposed monetary outcome measures. “Since the dollars per hour figures were calculated based on actual examinations that were ranked and selected for examination based on their potential yield, the characteristics of these cases are not necessarily an accurate representation of the entire remaining population,” Wagner wrote. “Therefore, because the results of the cases examined do not necessarily represent results from cases not selected, projecting differences in revenues across unexamined cases does not produce accurate revenue estimations.” TIGTA said it computed the outcomes conservatively using historical data from the examination program. TIGTA officials maintained that the potential $27.3 million of increased revenue over a five-year period is reasonable considering the assumptions used to calculate the estimate.
Thursday, March 31, 2011
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