IRS: Bankruptcy Interest on Taxes Paid

December 3, 2019By Smeriglio Associates LLCNews

Court ruling: The IRS can collect interest on taxes paid as part of a bankruptcy plan. If an employer fails to properly pay over payroll taxes, the IRS can collect a “trust fund recovery penalty” equal to 100% of the unpaid taxes. In one case, a taxpayer who owed personal income taxes filed for Chapter … Read More

IRS: 401(k) 2020 Regulations

December 2, 2019By Smeriglio Associates LLCNews

401(k) plans may provide that an employee can receive a distribution of elective contributions from the plan on account of hardship. The IRS has issued final regulations that amend the related rules. Plans that complied with the proposed regs issued in Nov. 2018 will satisfy the final regs. Among other things, the final regs modify … Read More

IRS: Notices and Letters to Taxpayers

December 2, 2019By Smeriglio Associates LLCNews

The IRS sends notices or letters to taxpayers for a variety of reasons. According to the agency, it sends out these communiques because the taxpayer has a balance due or is due a larger or smaller refund, or the agency has a question about a tax return. The IRS also may send a notice or … Read More

IRS 6166: Defer Estate Taxes

December 1, 2019By Smeriglio Associates LLCNews

For families with substantial closely held business interests, an election to defer estate taxes under Internal Revenue Code Section 6166 can help them avoid having to sell business assets to pay estate taxes. It allows an estate to pay interest only (at modest rates) for four years and then to stretch out estate tax payments … Read More

Closely Held Corporation Dividend Alternatives

December 1, 2019By Smeriglio Associates LLCNews

Do you want to withdraw cash from your closely held corporation at a low tax cost? The easiest way is to distribute cash as a dividend. However, a dividend distribution is taxable to you as a shareholder but it’s not deductible by the corporation. But there are several alternatives that may allow you to withdraw … Read More

Not-For-Profit Intrastate Jurisdictions

November 30, 2019By Smeriglio Associates LLCNews

Many not-for-profits use fundraising methods that cross state boundaries. If yours is one of them, it may need to register in multiple jurisdictions. But keep in mind that registration requirements vary, sometimes dramatically, from state to state. For example, some states exempt certain nonprofits from registering and others require them to register but drop annual … Read More

American Opportunity Credit Phase-outs

November 30, 2019By Smeriglio Associates LLCNews

We all know college is expensive. Fortunately, there are two sizable federal tax credits for higher education costs that you may be able to claim. The American Opportunity credit generally provides the biggest benefit to most taxpayers. It offers a maximum benefit of $2,500. But it phases out based on modified adjusted gross income (MAGI). … Read More

IRS: Settlement in Micro-captive Insurance Transactions

November 29, 2019By Smeriglio Associates LLCNews

The IRS is offering a settlement to taxpayers under audit who participated in abusive “micro-captive” insurance transactions. In these deals, promoters and others persuade owners of closely held entities to participate in schemes that lack many of the attributes of genuine insurance. The IRS has long disallowed the related tax benefits claimed by taxpayers. The … Read More

IRS: Bonus Depreciation and Qualified Improvement Property

November 29, 2019By Smeriglio Associates LLCNews

The IRS bonus depreciation regulations, just released by the IRS, contain a crucial clarification. Qualified improvement property (QIP) placed in service after 2017 isn’t eligible for bonus depreciation unless a legislative change is made. When drafting the Tax Cuts and Jobs Act, Congress intended a permanent 15-year depreciation period for QIP. That change would have … Read More