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Auditors often say that the tone at the top of an organization trickles down to every level of the business. Is your company’s work environment ethical and open? If not, corporate culture assessments can help prevent and detect unethical and criminal behaviors. But, to cover all the bases, your external auditors generally must work closely with people inside your organization. Here’s how you can facilitate this critical part of the audit process.


IRAs and employer-sponsored plans such as 401(k)s are powerful retirement savings tools, but they also provide valuable estate planning benefits. If you hold a traditional IRA for life, for example, your children or other heirs can stretch out distributions over their lifetimes, maximizing the IRA’s tax-deferred growth and preserving more wealth for the family. If, however, you receive a distribution from an employer plan (such as when you change jobs or retire) and you don’t roll over the funds into an IRA or new plan within 60 days, you can lose these benefits.


The federal income tax filing deadline is slightly later than usual this year — April 17 — but it’s now nearly upon us. So, if you haven’t filed your individual return yet, you may be thinking about an extension. Or you may just be concerned about meeting the deadline in the eyes of the IRS. Whatever you do, don’t get tripped up by one of these potential pitfalls.


When a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs. If when filing your 2017 income tax return you found that your business had an NOL, there is an upside: tax benefits. But beware — the Tax Cuts and Jobs Act (TCJA) makes some significant changes to the tax treatment of NOLs.


When accountants conduct an audit or review, they can’t test every transaction. Instead, they set a “materiality” threshold. This benchmark is used to obtain reasonable assurance in an audit — or limited assurance in a review — of detecting misstatements that could be large enough, individually or in the aggregate, to be material to the financial statements.


A financial power of attorney — sometimes called a “power of attorney for property” or a “general power of attorney” — can be a valuable estate planning tool. The main disadvantage is that it’s susceptible to abuse by scam artists, dishonest caretakers or greedy relatives.


Home ownership is a key element of the American dream for many, and the U.S. tax code includes many tax breaks that help support this dream. If you own a home, you may be eligible for several valuable breaks when you file your 2017 return. But under the Tax Cuts and Jobs Act, your home-related breaks may not be as valuable when you file your 2018 return next year.


Normally when appreciated business assets such as real estate are sold, tax is owed on the appreciation. But there’s a way to defer this tax: a Section 1031 “like kind” exchange. However, the Tax Cuts and Jobs Act (TCJA) reduces the types of property eligible for this favorable tax treatment.


Owners of closely held businesses sometimes need to advance their companies money to bridge a temporary downturn or provide extra cash flow for an expansion, a major expense or other purposes. Should you categorize those advances as bona fide debt, additional paid-in capital or something in between? Under U.S. Generally Accepted Accounting Principles (GAAP), the answer depends on the facts and circumstances of the transaction.


Gifting assets to loved ones is one of the simplest ways of reducing your taxable estate. However, what may not be as simple is determining whether you need to file a gift tax return (Form 709). With the April 17 filing deadline approaching, now is the time to find out an answer.


Individuals can deduct some vehicle-related expenses in certain circumstances. Rather than keeping track of the actual costs, you can use a standard mileage rate to compute your deductions. For 2017, you might be able to deduct miles driven for business, medical, moving and charitable purposes. For 2018, there are significant changes to some of these deductions under the Tax Cuts and Jobs Act (TCJA).


Are you a high-income small-business owner who doesn’t currently have a tax-advantaged retirement plan set up for yourself? A Simplified Employee Pension (SEP) may be just what you need, and now may be a great time to establish one. A SEP has high contribution limits and is simple to set up. Best of all, there’s still time to establish a SEP for 2017 and make contributions to it that you can deduct on your 2017 income tax return.


By now, you have heard a lot about the new tax law passed at the end of last year, but there are two business deductions that were eliminated you might not be aware of.

The Tax Cuts and Jobs Act repealed the deduction for entertainment expenses. Included in these now non-deductible expenses are tickets to sporting events and theatre tickets.


Breakeven analysis can be useful when investing in new equipment, launching a new product or analyzing the effects of a cost reduction plan. The breakeven point is fairly easy to calculate using information from your company’s income statement. Here are the details.


The Tax Cuts and Jobs Act has doubled the federal gift and estate tax exemption, with inflation-adjustments projected to raise it to $11.18 million for 2018.This means federal estate taxes are a concern for fewer families, at least in the short term. (The doubled exemption expires December 31, 2025.) But it’s important to consider how state estate or inheritance taxes may affect your estate plan.


With bonus depreciation, a business can recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The Tax Cuts and Jobs Act (TCJA), signed into law in December, enhances bonus depreciation.

Typically, taking this break is beneficial. But in certain situations, your business might save more tax long-term by skipping it. That said, claiming bonus depreciation on your 2017 tax return may be particularly beneficial.


General contractors should protect themselves from new liabilities.

Legislation enacted in 2017 makes general contractors jointly liable with their subcontractors and any lower-tier subcontractors for any unpaid wage, fringe or other benefit payment or contribution owed to any wage claimant or third parties, including unions.1 Although the general contractor may be held liable for unpaid wages and benefits, including interest, their liability does not extend to any other penalties or liquidated damages.


Business owners often complain that they’re required to provide too many disclosures under U.S. Generally Accepted Accounting Principles (GAAP). But comprehensive financial statement footnotes contain a wealth of valuable information.

Here are some examples of hidden risk factors that may be discovered by reading footnote disclosures. This information is good to know when evaluating your company’s performance, as well as when evaluating the performance of publicly traded competitors or potential M&A targets.


A celebration took place after the passage of the Republican tax reform bill by Congress on Wednesday, December 20th. Some were more delighted than others, but specifically trade organizations representing the beer, wine, and distilled spirits industries were very pleased. They highlighted that a provision reducing excise taxes on the production of these alcoholic beverages would vastly advance growth within their industries.


Along with tax rate reductions and a new deduction for pass-through qualified business income, the new tax law brings the reduction or elimination of tax deductions for certain business expenses. Two expense areas where the Tax Cuts and Jobs Act (TCJA) changes the rules — and not to businesses’ benefit — are meals/entertainment and transportation. In effect, the reduced tax benefits will mean these expenses are more costly to a business’s bottom line.


Working from home has become commonplace. But just because you have a home office space doesn’t mean you can deduct expenses associated with it. And for 2018, even fewer taxpayers will be eligible for a home office deduction.

Changes under the TCJA

For employees, home office expenses are a miscellaneous itemized deduction. For 2017, this means you’ll enjoy a tax benefit only if these expenses plus your other miscellaneous itemized expenses (such as unreimbursed work-related travel, certain professional fees and investment expenses) exceed 2% of your adjusted gross income.


Owners of private businesses often wonder: How much is my business interest worth? Financial statements are a logical starting point for answering this question. Here’s an overview of how financial statements can serve as the basis for value under the cost, income and market approaches.


Although the drop of the corporate tax rate from a top rate of 35% to a flat rate of 21% may be one of the most talked about provisions of the Tax Cuts and Jobs Act (TCJA), C corporations aren’t the only type of entity significantly benefiting from the new law. Owners of noncorporate “pass-through” entities may see some major — albeit temporary — relief in the form of a new deduction for a portion of qualified business income (QBI).


Under the Tax Cuts and Jobs Act (TCJA), individual income tax rates generally go down for 2018 through 2025. But that doesn’t necessarily mean your income tax liability will go down. The TCJA also makes a lot of changes to tax breaks for individuals, reducing or eliminating some while expanding others. The total impact of all of these changes is what will ultimately determine whether you see reduced taxes. One interrelated group of changes affecting many taxpayers are those to personal...


It’s common for grandparents to want to help ensure their grandchildren will get a high quality education. And, along the same lines, they also want the peace of mind that their wealth will be preserved for their children and grandchildren after they’re gone. If you’re facing these challenges, one option that can help you conquer both is a 529 plan. And it’s become even more attractive under the Tax Cuts and Jobs Act (TCJA).


Percentages and Wage Limits

The Social Security (FICA) tax rate for the employee's and employer’s share remains the same at 6.2%. The payroll limit will increase from $127,200 to $128,400.   This equates to a maximum withholding per employee of $7,960.80 for 2018.   A contribution rate of 12.4% of gross wages up to $128,400 is to be used to compute... 


The Tax Cuts and Jobs Act (TCJA) generally reduces individual tax rates for 2018 through 2025. It maintains seven individual income tax brackets but reduces the rates for all brackets except 10% and 35%, which remain the same.

It also makes some adjustments to the income ranges each bracket covers. For example, the 2017 top rate of 39.6% kicks in at $418,401 of taxable income for single filers and $470,701 for joint filers, but the reduced 2018 top rate of 37% takes effect at...


The Tax Cuts and Jobs Act (TCJA) enhances some tax breaks for businesses while reducing or eliminating others. One break it enhances — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file...


Do you remember the high-profile fraud that happened at drugstore chain Phar-Mor in the 1990s? Executives manipulated the company’s financial statements to hide approximately $500 million in losses.

A key ploy that perpetrators used in the Phar-Mor case was to overstate inventory balances at individual stores. Management became adept at hiding the scam from their financial statement auditors by shifting inventory from location to location and overstating unit prices. Dishonest managers also... 


On December 20, Congress completed passage of the largest federal tax reform law in more than 30 years. Commonly called the “Tax Cuts and Jobs Act” (TCJA), the new law means substantial changes for individual taxpayers.

The following is a brief overview of some of the most significant...


The recently passed tax reform bill, commonly referred to as the “Tax Cuts and Jobs Act” (TCJA), is the most expansive federal tax legislation since 1986. It includes a multitude of provisions that will have a major impact on businesses.

Here’s a look at some of the most...


It’s important to resist the temptation to rely on gut instinct or take shortcuts when budgeting for 2018. Creating a solid budget that’s based on the three components of your company’s financial statements will help...


Who is required to file?

All corporations and limited liability companies registered in California or doing business in California must file a Statement of Information with the California Secretary of State's office and pay a $25 filing fee for a corporation or a $20 fee for the LLC.  You will receive a...


The Internal Revenue Service requires the filing each year of Form 1099 information returns. All individuals, corporations, partnerships, limited liability companies and joint ventures that are engaged in a trade or business (including part-time businesses, and rentals) must file the forms. Failure to file required information returns will cause substantial penalties and could cause the disallowance of deductions. The penalty for not filing the forms or filing late could amount to up to $530 per form. The Internal Revenue Service also sends this information to the State Franchise Tax Board. The 2017 forms are due to the recipient and to the Internal Revenue Service by...


By now you probably have heard about the sweeping proposed tax changes coming in 2018. Here are some 2017 tax planning items to consider in light of some proposals from the new tax laws. As no tax law has been finalized, these items may...


The FASB’s “Emerging Issues Task Force” (EITF) has been working to provide accounting guidance on the use of cloud computing arrangements (CCA’s) due to their rise in popularity. The FASB has continued to receive pressure from practitioners and businesses to give them guidance on this subject, as costs related to implementing these systems are often...


On October 2, 2017, the President signed H.R. 3823, the Disaster Relief and Airport and Airway Extension Act of 2017, which provides temporary tax relief for victims of hurricanes Harvey, Irma and Maria. The following is a brief overview of some...


The Secure Choice retirement program signed into law by Governor Jerry Brown on September 29, 2016 will go into effect in 2019 and requires employers with 5 or more employees that don't presently provide a retirement plan to either offer one or provide Secure Choice. It is a voluntary program that employees can opt out of at any time and...


Starting January 1, 2017, employers with ten or more employees have been required to electronically submit employment tax returns, wage reports and payroll tax deposits to the Employment Development Department (EDD) (Assembly Bill 1245, Stats. 2015, Ch. 222). Beginning January 1, 2018, this requirement will apply to...


Additional tax rate changes became effective October 1, 2017 for most jurisdictions within Los Angeles County due to the 0.25 percent Measure H, Sales Tax for Homeless Services and Prevention. You can find new rates at...