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

A Profitability Game Plan

November 28, 2019By Smeriglio Associates LLCNews

Right now, football teams are trying to put as many wins on the board as possible to make this a special season. Sports can highlight important lessons for business owners about profitability. One is that companies must learn from their mistakes and adjust their profitability game plans accordingly. Typical fumbles include poor customer service, ineffective … Read More

IRS: Competition Winner Tax Prize

November 28, 2019By Smeriglio Associates LLCNews

A competition winner must pay tax on the prize. A teenager was awarded a car for good grades and attendance. Her school had entered her in a local car dealership’s competition, along with other qualifying students. Her name was then pulled in a drawing. She asserted that the car was a gift and should be … Read More

IRS: Special Help for Retirees

November 27, 2019By Smeriglio Associates LLCNews

Are you a retiree who may owe taxes this year on your Social Security or pension income? The IRS has created a tool that calculates the taxable portion of benefits. It also incorporates that information into an overall estimate of the projected tax liability and withholding for the year. If a withholding change is needed, … Read More

IRS: Enforcement Revenue at an “All-Time High”

November 27, 2019By Smeriglio Associates LLCNews

Enforcement revenue at the IRS reaches “an all-time high,” according to a new report. A Treasury Inspector General for Tax Administration (TIGTA) audit showed that, in fiscal year 2018, the IRS collected a record $59.4 billion in enforcement revenue. This was despite a 4% decline in agency personnel over FY 2017. More than half ($30.2 … Read More

IRS: First Year Depreciation Deduction

November 26, 2019By Smeriglio Associates LLCNews

The IRS has issued final regs on the 100% additional first-year depreciation deduction. It allows businesses to write off most depreciable business assets in the year they’re placed in service. Changes from the regs proposed in August include qualified improvement property, leasehold improvement property, restaurant property, and retail improvement property. A taxpayer may choose to … Read More

Gift Tax Exclusion

November 26, 2019By Smeriglio Associates LLCNews

The annual gift tax exclusion is available only for gifts of “present interests.” But a contribution to a trust is, by definition, a gift of a future interest. To get around this obstacle, trusts typically provide beneficiaries with Crummey withdrawal powers. By giving them the right to withdraw trust contributions for a limited period of … Read More

Management Letter on Audited Financials

November 25, 2019By Smeriglio Associates LLCNews

Audited financial statements come with a special bonus: a management letter. Based on observations during audit fieldwork, the letter identifies issues affecting such areas of your business as internal controls, cash management, safety and employee benefits. Then it recommends possible corrective actions. Unfortunately, management letters are often filed away with the financial statements, and the … Read More