Tag: IRS

Challenge A stonemasonry business encountered significant tax liabilities due to its use of the accrual method of accounting. Because the business was a C corporation and the 2017 Tax Cuts and Jobs Act offered opportunities for tax relief to organizations such as theirs, the owners reached out to CBM’s construction and real estate team for assistance. Solutions CBM’s team was familiar with the tenets of the Tax Cuts and Jobs Act due to having assisted several other businesses and advised… Read more ›

In a surprising move, the IRS announced that the SECURE 2.0 rule, which stated that catch-up contributions for high earners must go into Roth accounts, will be delayed until 2026. Originally scheduled to start in 2024, the delay provides a window for employers’ retirement plans to comply with the law and employees to reap the tax benefits of current catch-up contributions. The rule requires employees aged 50 or above, who earned $145,000 or more the previous year, to direct their… Read more ›

A business valuation report is the complex process of and set of procedures used to estimate the economic value of a business. This economic value can be used to make financial decisions or determine the outcome of a major business event. In industries subject to constant change, such as construction, this can be a life saver for the company’s economic wellbeing. Ideally, an industry-recognized valuation expert—such as a certified valuation analyst—who has experience working with construction businesses with their taxes,… Read more ›

While the value of virtual currency continues to fluctuate, the IRS’s interest in it has only increased. In 2021, for example, the agency launched Operation Hidden Treasure to root out taxpayers who don’t report income from cryptocurrency transactions on their federal income tax returns. Moreover, the Inflation Reduction Act of 2022, allocated $80 billion to the IRS, most of it designated for enforcement activities. However, the Fiscal Responsibility Act, enacted in May 2023, will claw back $21.39 billion of that amount by the end… Read more ›

In response to the COVID-19 pandemic, the federal government provided several options for tax relief for businesses and tax-exempt groups, one of which was the employee retention tax credit (ERC). Some scammers, unfortunately, have stirred the attention of the IRS by aggressively misleading unsuspecting employers into thinking they are eligible to receive the credit and, as a result, manipulating them into submitting false, ineligible claims. The IRS has emphasized that organizations that improperly submit a claim for the ERC may… Read more ›

President Biden has signed into law the new debt ceiling agreement that he reached with U.S. House of Representatives Speaker Kevin McCarthy (R-CA). The Fiscal Responsibility Act (FRA) suspends — as opposed to raising — the debt ceiling until 2025, after the next presidential election. The FRA also makes a variety of changes related to domestic spending, although it falls far short of the cuts included in the Republican bill that the House passed in April 2023, with no changes to… Read more ›

The Inflation Reduction Act (IRA) extended and expanded the Section 30D Clean Vehicle (CV) Credit, previously known as the Electric Vehicle (EV) Credit. The credit now covers “clean vehicles,” which include plug-in hybrids, hydrogen fuel cell cars and EVs. On April 17, 2023, the IRS will publish proposed regulations to clarify how a CV can qualify for the credit. The proposed regs effectively limit the number of currently available models that qualify, due to strict sourcing requirements that will apply to CVs that buyers… Read more ›

The U.S. Supreme Court recently weighed in on an issue in the Bank Secrecy Act (BSA) that has split two federal courts of appeal. The 5-4 ruling in Bittner v. U.S. is welcome news for U.S. residents who “non-willfully” violate the law’s requirements for the reporting of certain foreign bank and financial accounts on what’s generally known as an FBAR. FBAR stands for the Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts. FBAR Reporting Requirement The… Read more ›

Debtors typically experience a feeling of relief when a creditor agrees to provide debt forgiveness. But that feeling often is replaced by shock and confusion when they learn they owe taxes on so-called “cancellation of debt” (COD) income. Read on to learn the tax rules for COD income and how they might affect your tax situation. General Rule of Debt Forgiveness Taxes The IRS considers your debt canceled if it’s forgiven or discharged for less than the full amount you owe…. Read more ›

Losses can be used, within certain limits, to offset other highly-taxed income, such as salary from a job. However, in general, losses from “passive” activities can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years. The tax law generally defines a passive activity as a trade or business in which you don’t “materially participate.” The IRS has established various tests for determining whether someone qualifies… Read more ›