Reproduced with permission from Tax Management Memorandum, 61 TMM 19, 09/14/2023. Copyright R 2024 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com Three Important Areas in 2024 Year-End Tax Planning By Robert L. Rojas and J. Michael Pusey* Rojas & Associates CPAs Los Angeles, CA The tax planning environment in the latter half of 2024 presents new challenges. There are new tax laws and government programs generally aimed at helping taxpayers. Yet there are also prospects of both federal and state tax increases, particularly on the wealthy. In this rapidly changing environment, it is particularly important that we remember ‘‘other taxes’’ in our year-end planning, such as gift and estate taxes, even property taxes. This article encourages the practitioner to remember some ‘‘old favorites’’ of estate planning, family limited partnerships, and GRATs, and the importance of property tax planning. While we stress considering all the taxes … [Read more...] about Three Important Areas For 2024 Year-End Tax Planning
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Incorporating Your Business – A Planning Opportunity and a Puzzle
Robert L. Rojas, CPA, M.S. – Taxation, CExP, Rojas & Associates, CPAsLos Angeles, Newport Beach, Sacramento, rojascpa.com J. Michael Pusey, CPA, National Tax Director Introduction This article is to help entrepreneurs, owners and their advisers understand the tax implications which follow the choice of setting up your business operations. We offer a detailed look at the C corporation. We cover ownership by the individual (the sole proprietorship), the S corporation, and the partnership. A C corporation is simply one which hasn’t elected S corporation status for a particular year. It is possible for a corporation to have a history that includes C corporation status for some periods and S corporation status for other periods. A single individual cannot be a partnership, although spouses can operate as a partnership. Thus it is possible for a single individual to operate a business as a C corporation or S corporation. The limited liability … [Read more...] about Incorporating Your Business – A Planning Opportunity and a Puzzle
Why you shouldn’t do an Employee Stock Ownership Plan (ESOP)
There are several reasons that come up for why you shouldn’t do an ESOP: They cost too muchThey are too complicatedMy employees don’t have enough cash for the buyoutThere has been some litigation with ESOPsMy current advisor is advising against using an ESOP. However, let’s examine each reason. You didn’t get this far in your business without doing your own research and looking into the facts and contrary opinions. REASON #1: ESOPs cost too much ESOPs do cost some money to setup and maintain. An ESOP might cost around 100k-300k to setup with annual costs of around 20k-30k. However this cost is minuscule compared to the typical costs of selling your business. Consider this: You’ve worked hard to build up your company and it is now worth 60 million dollars. The taxes to eventually sell this business are an estimated 20 million dollars. In reality, ESOPs are one of the most cost effective ways to pass on your business. You spend a … [Read more...] about Why you shouldn’t do an Employee Stock Ownership Plan (ESOP)
Economic Downturn Gives Owners Time to Prepare for the Recovery of the M&A Market
Economic downturns give all business owners, quite literally, pause:pause in growth, pause in hiring, pause to reconsider exactly where our companies are heading — or need to head — if we are to meet our owner-based goals. There are many benefits of using the time afforded by an economic downturn to create and enhance the value drivers in your company. The fundamental questions owners must ask are: Am I using this precious commodity — time — to prepare my company and myself for sale on the day that the economy revives?Or, on that day, will I be where I am today: wishing to sell, but buried in the everyday details of my business and doing little to chart a course toward my ultimate goal? In addition to using your time to install and energize your company’s value drivers to prepare for sale, an economic recession may also has give owners time to evaluate if their current business advisors are equipped to help them prepare their companies to sell. When times are good, … [Read more...] about Economic Downturn Gives Owners Time to Prepare for the Recovery of the M&A Market
Paycheck Protection Program
Your business has successfully applied for and have been approved for a loan under the Paycheck Protection Program. You have received your loan proceeds and now are trying to navigate the uncertain waters of what comes next. Here is what we know: What must the loan proceeds be spent on to ensure loan forgiveness? Payroll costs (compensation, group health benefits, retirement benefits, and state unemployment taxes) RentMortgage InterestInterest on other loansUtilities Are there any other conditions to ensure full forgiveness? At least 75% of the proceeds must be spent on payroll costs, with 25% or less allocated to the other allowable costs noted above.An employee’s salary or wages must remain at 75% or more of their base salary or wage during the last full quarter before you received your loan.Full time equivalent employees must not be reduced in comparison to the base period (which is February 15, 2019 through June 30, 2019 or January 1, 2020 through … [Read more...] about Paycheck Protection Program
Stimulus Package for Corona Virus Information
The federal government has made available several financial resources to help businesses survive and employees to continue to receive paychecks. This is our nation’s effort to mitigate the impact of Corona Virus 19 ‘s impacts. These include the Paycheck Protection Program (PPP), Economic Injury Disaster Loan Assistance (EIDL), and Emergency Economic Injury Grant, Employee Retention Credit, and increases in the amount available under SBA Express Loans, among others. The funds available under these various resources are not unlimited, so it is critical to quick analyze your business needs to determine which, if any, of these resources is right for you. Paycheck Protection Program The Paycheck Protection Program was included as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under this program, nearly $350-billion was made available to provide American small businesses with eight weeks of cash-flow … [Read more...] about Stimulus Package for Corona Virus Information
A Planning Introduction to the 2017 Tax Act – Charitable Donations and Exempts
See “A Planning Introduction to the 2017 Tax Act – The Overview” which briefly introduces the new tax law enacted in December. We indicated in that introduction that the new legislation tends to make tax planning more and more mathematical. The remark’s emphasis on alternatives and myriad tax rules is particularly true of planning charitable donations. We’re going to have some emphasis on the new Section 199A that can give owners a 20% of business income deduction. This new provision affects many taxpayers and significantly affects planning for charitable donations whenever the person is active in business, or even a passive investor in an active business. We’ve given a more detailed look at those rules in “A Planning Introduction to the 2017 Tax Act – The 20% of Business Income Deduction.” See generally, Tax Cuts and Jobs Act, Conference Report to Accompany H.R. 1, 115th Cong., 1st Sess., House Report 115-466, December 15, 2017, which includes the text of the Act, the … [Read more...] about A Planning Introduction to the 2017 Tax Act – Charitable Donations and Exempts
A Planning Introduction to the 2017 Tax Act – The 20% of Business Income Deduction
See “A Planning Introduction to the 2017 Tax Act – The Overview” which briefly discusses this topic and helps put it in an overall perspective within many of the major tax changes enacted in December. We indicated in that introduction that the new legislation tends to make tax planning more and more mathematical, and while that remark emphasizes alternatives and myriad tax rules, it is particularly true of the new Section 199A that we discuss here. This new law, this new concept, is effective after 2017. ((The final bill basically followed the Senate approach, with some rather significant modifications. See generally, Tax Cuts and Jobs Act, Conference Report to Accompany H.R. 1, 115th Cong., 1st Sess., House Report 115-466, December 15, 2017, which includes the text of the Act, the legislative histories of the House, Senate and Conference. Hereinafter, the Conf. Rep. For pagination cites see PDF version: … [Read more...] about A Planning Introduction to the 2017 Tax Act – The 20% of Business Income Deduction
Tips on Registering your Charity
This article was first published in December 2016 on the Planned Giving Design Center website. Download the article Watching charities is a necessary government function because, while rare, there's an occasional bad charity, and any number of charities whose activities may deserve occasional scrutiny. The first step in this process is requiring the charities to register with the state's group that monitors charities. Regulatory Scrutiny Grows Our purpose is to put this topic in some general perspective, making every effort to be brief with a topic that is inherently complex. There are about forty jurisdictions that may require registration. We look generally at such questions as when registration is required and the costs. There is soon to be a centralized, electronic place where the charity can register once and this gets sent to myriad jurisdictions. The vehicle is to be launched in upcoming months with some thirteen initial governmental participants. See "Simpler … [Read more...] about Tips on Registering your Charity
David Strathairn at Rojas & Associates
Last week our office was used for a location shoot! Here is a picture of David Strathairn and Bob in our Downtown LA office during the location shooting. … [Read more...] about David Strathairn at Rojas & Associates
