Post Tax Reform Rules for Deducting Business Travel, Job Relocation, Meals and Entertainment: What can I expense?By Michael Pace, CPA,Senior Manager and Michael J. Greenwald, MPPM, CPA, Partner, Business Entity Tax Practice Leader
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the entertainment deduction but kept the deduction for travel expenses generally intact. Major changes to business meal expense deductions were initially introduced by the IRS without providing clear and comprehensive guidance, leaving business owners uncertain about what can be deducted...
Qualified Opportunity Zones: Final Regulations Explained
Qualified Opportunity Zones (QOZ) were first introduced as part of the Tax Cuts and Jobs Act and provide significant tax breaks for those real estate investors and businesses who invest in economically distressed areas. On December 19th, 2019, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury)...
The Wayfair Decision: Issues on the Horizon and the Impact on States and SellersBy Alan Goldenberg, JD, MBA, LL.M., Principal
The US Supreme Court ruling in South Dakota v Wayfair was the most significant development in state and local taxation in decades – with implications reaching across state lines. In its decision, the Court provided that states can impose sales tax requirements on remote sellers so long as those requirements do...
Eight Ways to Jumpstart Your 2019 Year-End PlanningBy Andrew Cohen, JD, LL.M
The leaves are changing, the kids are off to school and 2020 is right around the corner — what better time to consider your year-end tax planning? We know that the elimination of familiar tax planning strategies under the Tax Cuts & Jobs Act (TCJA) as well as additional changes that...
SALT Deduction Workarounds: Where are We Now?By Alan Goldenberg, JD MBA, LL.M., Principal
More and more taxpayers are beginning to feel the impact of the Tax Cuts and Jobs Act’s $10,000 cap on the federal income tax deduction for state and local taxes (SALT). As taxpayers start finalizing their tax returns previously on extension, many are seeing their federal taxes rise with the...
Economic Nexus and Market-Based Sourcing: How to Stay Ahead in an Evolving Tax LandscapeBy Tom Corrie, JD, LL.M., Principal
As states continue to move forward, adopting varying approaches to market-based sourcing and economic nexus, taxpayers must understand how these two methodologies relate in order to avoid costly tax consequences. In some instances, differences in sourcing rules can lead to double taxation or “no-where” income. That’s why it’s crucial to...
Withholding Considerations for Nonresident EmployeesBy Alan Goldenberg, JD, MBA, LL.M., Principal
One of the more difficult aspects of tax compliance for employers is dealing with employees who travel outside of their state of residence for business purposes. The challenge is that states have varying standards and obligations for employers to withhold income taxes on employees traveling to nonresident states for temporary...
Potholes in the Qualified Parking Expense
Internal Revenue Code Section §274(a)(4), is one of the many provisions that were amended under the Tax Cuts & Jobs Act ("TCJA"). Notably, this revision created a cavity in the dispensation for employers to deduct “qualified parking.” The IRS has since released Notice 2018-99 to help employers determine the extent...
Steer Clear of Allocation Traps Created by the GST Tax
The Tax Cuts and Jobs Act ("TCJA") doubled the generation-skipping transfer ("GST") tax exemption to $10 million beginning last year. The exemption is adjusted annually for inflation (for 2019, the exemption amount is $11.4 million). While most families won’t be affected by the tax, beginning in 2026 the GST tax...
A Guide to the IRS’ Recent Proposed Regulations for Qualified Opportunity Funds
Under the Tax Cuts and Jobs Act ("TCJA"), Congress sanctioned qualified opportunity zones ("QOZs") as a tax incentive to promote investment in low-income communities. Specifically, when investors put capital into a QOZ they may defer, reduce or remove taxes on certain capital gains.
The IRS released its first round of guidance on...
Is Your Partnership Ready for the New Audit Rules?
The Bipartisan Budget Act of 2015 established a new “centralized audit” regime for partnerships, including LLCs taxed as partnerships. Although the new audit rules apply to partnership tax returns for tax years beginning after 2017, the IRS didn’t finalize regulations on these rules until December 2018. However, there’s good news....
Tax Cuts & Jobs Act: Changes to the Kiddie Tax By By Jonathan Curry-Edwards, CPA, Principal
The Tax Cuts and Jobs Act (“TCJA”), passed in December 2017, changed how certain children are taxed on their unearned income -- also known as the "Kiddie Tax." Prior to TCJA, a child who had not turned 18 years old or a child whose earned income did not exceed half of...
Exploring the Four Categories of Non-business Interest
The Tax Cuts and Jobs Act has made a significant impact — both directly and indirectly — on the deductibility of interest expense. This article explores four categories of nonbusiness interest: qualified residence interest, investment interest, qualified student loan interest and personal interest.
Matters of interestWhen are interest payments deductible?
How to Make the Most of Your Deduction Under the New Tax CodeBy Sharon Yang and Kimberly Dula
As an individual taxpayer, due to the large scale changes triggered by the Tax Cuts and Jobs Act ("TCJA"), you'll need to plan more carefully to ensure you reap all possible tax benefits. While the TCJA's individual tax provisions increase the tax benefits for some taxpayers, limitations to itemized deductions could...
For Partnerships, the Time to Act is Now: Key Insights for Selecting Your Partnership RepresentativeBy Michael J. Greenwald, MPPM, CPA, Partner
Friedman’s tax experts have stayed on the pulse of changes surrounding the Centralized Partnership Audit Regime (CPAR), enacted as part of the Bipartisan Budget Act of 2015 (BBA). Many of you have sought guidance on how and when to act in response to the CPAR, effective for tax years beginning...
All Roads Lead Home: What You Need to Know About Your Domicile for Tax Purposes
In the state personal income tax area, perhaps no subject is less understood than the concept of “domicile,” or what is commonly referred to as a taxpayer’s “home state.” A person can have many residences, but in a tax sense, an individual can only have one domicile. A taxpayer’s domicile...
Are you Personally Liable for Your Company's Payroll Taxes?
When a business fails to remit payroll taxes, the IRS has the authority to collect those taxes from “responsible persons,” including certain shareholders, partners, officers and employees. The IRS takes an expansive view of who constitutes a responsible person.
Definition of a responsible person
In this context, a “responsible person” includes anyone...
Alimony deduction is coming to an end
The Tax Cuts and Jobs Act (TCJA) eliminates the tax deduction for qualified alimony payments, effective for divorce decrees or separation agreements issued or executed after December 31, 2018. It won’t affect existing arrangements or arrangements finalized before the end of 2018.
For Partnerships, The Time to Act is Now: Key Insights for Selecting Your Partnership Representative
Friedman’s tax experts have stayed on the pulse of changes surrounding the Centralized Partnership Audit Regime (“CPAR”), enacted as part of the Bipartisan Budget Act of 2015 (“BBA”). Many of you have sought guidance on how and when to act in response to the CPAR, effective for tax years beginning...
The Price of Giving
Tax Reform's Impact on Charitable Donations
Get in the Opportunity Zone: By Steven Bokiess, CPA, Partner and Andrew S. Cohen JD, LL.M, Senior Tax Manager
How investing can enhance your tax position and spur economic growth
Gross Receipts Tax: The Other State TaxBy Alan Goldenberg, JD, MBA, LL.M., Principal
While most states employ some type of a net income tax to raise revenue from businesses, some states impose a gross receipts tax instead of, or as a supplement to, a business income tax. Under a net income tax approach, tax regimes follow a methodology in which federal taxable income...
New IRS Initiatives Target NonresidentsBy Liz McGrath, Director and Ryan Dudley, CPA, CA, CTA, MIT, Partner, International Tax Practice
In a May 21, 2018 statement, the IRS’s Large Business and International Division (LB&I) announced it will be launching campaigns focused on nonresident individuals. These initiatives aim to improve compliance in reporting effectively connected income, tax credits and deductible expenses, and withholding tax.
The complex U.S. international tax rules include denial of...
These brief tips explain the pros and cons of using a calendar tax year vs. a fiscal tax year, how a donor-advised fund operates, and the tax advantages of using solar power.
Calendar tax year or fiscal tax year?
Many businesses use the calendar year for tax-filing purposes, but in some cases...
Breathe New Life Into a Trust By “Decanting” It
The term “decanting” typically is associated with wine. But, in regard to an irrevocable trust, decanting allows a trustee to use his or her distribution powers to “pour” funds from one trust into another with different terms. Doing so provides the trustee with additional flexibility in light of changing tax...
Seven Ways to Move Your Tax Planning ForwardBy Michael J. Greenwald, MPPM, CPA, Partner
There is still considerable uncertainty as to how to interpret many aspects of the new tax law, which results from outright drafting errors and the delegation to the IRS of significant latitude to issue regulations clarifying the law. While our tax advisors remain cautious about suggesting any major tax moves...
Tax Cuts and Jobs ActBy Tom Corrie, JD, LLM, Principal
Connecticut’s Governor Aims to Ease Burden with Proposed Pass-Through Entity Tax
Phishing for Your W-2: Key Cyber Security Tips to Avoid Being Caught During Tax Season By Sean Johnstone and Jake Lehmann, Friedman CyZen LLC
In 2016, the IRS saw a 400% surge in phishing and malware incidents during the tax season, which cost American taxpayers $21 billion. This exclusive article from CyZen's cybersecurity advisors covers what phishing is, who is targeted by tax-related phishing campaigns and how to protect yourself and your business during...
Are bad business debts deductible?
If a business owner holds a business-related debt that’s become worthless or uncollectible, a “bad debt” deduction may allow him or her to cut their losses. But don’t assume a debt is deductible just because the odds of collecting are slim. This article explains the differences between a business and...
Friedman LLP’s Robert Charron Featured Guest on the Stoler ReportBy Michael, Stoler
Friedman LLP’s Robert Charron was a featured guest on the newest Stoler Report, “The Tax Reform Act & Its Effect on the Individual.” With the vast uncertainty surrounding the new tax law, it’s clear that corporations will benefit greatly, but will others feel these advantages as well? Charron states that...
How to Claim Research Payroll Tax Credits
If a business dedicates resources to creating or improving products, processes or software, it may be eligible for substantial federal tax credits for “increasing research activities.” There’s just one catch: To enjoy the benefits, the company must have sufficient federal tax liability against which to offset the credit. Historically, that...
Mutual Funds, Deductions, and Capital Gains
Unclaimed Property Tips to Protect your Business in the PresentBy Tom Corrie, JD, LLM, Principal
Nearly twenty years ago, while consulting with several clients about state and local tax issues, I discovered a problematic theme—noncompliance in the unclaimed property (UP) area. Oftentimes, when I mentioned unclaimed property, client responses fell into two categories: the client denying that they had unclaimed property or the client admitting...
Philadelphia’s Onerous Business Tax Regime
Must-knows on the BIRT and NPT
Tax Tips: Home Sale Exclusion and Tax-Free IRA for Kids
These brief tips discuss how the IRS now views the unexpected birth of a child an "unforeseen circumstance" when it applies to the home sale exclusion and also explains how children can take advantage of a tax-free Roth IRA.
Home sale exclusion: Unexpected birth is “unforeseen circumstance”
The unexpected birth of a...
Cash vs. Accrual: Are You Using the Right Accounting Method?
Which accounting method should your business be using for tax purposes? Many business owners are surprised to learn that they have a choice. True, certain businesses are required to use the accrual method, but you’d be surprised how many businesses are eligible for the cash method. If you have the...
What’s New in Tax Reform?By Michael J. Greenwald, MPPM, CPA, Partner
With the last major tax overhaul taking place more than thirty years ago, it’s time to modernize the tax code so it works for businesses and individuals in the 21st Century. However, the tax code is complex and reform is a tricky subject for Congress — the slightest change is...
For Surviving Spouses: It’s Not Too Late to Elect PortabilityBy Scott Testa CPA, JD, Partner
If you missed the filing deadline to elect portability and increase your federal gift and estate tax exclusion, there's still time. A recent Internal Revenue Services (“IRS”) Revenue Procedure, Rev. Proc. 2017-34, provides a simplified, less expensive way to get an extension, make the election and reap substantial tax savings.
These brief tips explain why it’s important to obtain a contemporaneous written acknowledgment when substantiating a charitable deduction; detail a court case involving the mortgage interest deduction; and cover why a cash balance plan may be the answer for business owners who have fallen behind on retirement plan contributions.
You can’t take it with you
Making the most of tax carryovers
What Is This Thing Called “Use Tax”?By Tom Corrie, JD, LLM, Principal
Perhaps one of the most misunderstood areas in the state and local tax field is that of “use tax.” Most people comprehend the concept of sales tax— that when taxable property or a taxable service is purchased, forty-five of the fifty states impose a tax upon the retail sale of...
Business Traveling Tax WiselyBy Liz McGrath, International Tax Director
Did you know that employers can deduct employees’ travel expenses, including amounts for meals and lodging, if both the employer and the employee carefully follow the tax rules? Conversely, if the rules are not followed, the expenses will be taxable to the employee and fully subject to FICA and payroll...
Decoding State Tax Nexus for Foreign CompaniesBy Alan Goldenberg, JD, MBA, LLM
In order for a state to legally impose its taxes upon an out-of-state entity, nexus – a connection between the income producing company and the state – must exist. Nexus laws, which may vary from state to state, can be particularly troublesome for foreign companies who often overlook these complex...
Sales and Use Tax when Purchasing ArtBy Tom Corrie, JD, LLM, Principal
Sales and use tax considerations can be quite complex, and when applied to the purchase of high-end art, these taxes can add up to a hefty sum. During the course of our everyday practice, our clients regularly ask us to address tax issues regarding the purchase and sale of artwork....
Timing Compensation in a Changing Tax Climate
All eyes on Sec. 409A
Standard mileage rates can lead to inaccurate reimbursements
A Truly Laden Cross to Bear: The Crushing Tax Burdens of New York
It comes as no surprise to New Yorkers that year after year, numerous tax studies conclude that they face some of the highest tax burdens in the United States. Multiple reports released in 2016 found that on a regular basis almost 13% of a New York City resident’s income is...
Tax Tips: Avoiding Tax Scams, Using Charitable Trust for College Expenses
These brief tips cover scams to be aware of during tax season, how to check your IRS account online and the benefits of using a charitable trust to cover college expenses.
Watch out for tax scams
With tax season in full swing, criminals posing as IRS officials are stepping up their efforts...
These brief tips cover how the IRS has made it easier for taxpayers to obtain an extension for retirement plan rollovers, ways to protect taxpayers from charity scams and how to make a partial disposition election for disposed property.
Late rollover relief just got easier
It’s possible to withdraw funds from an...
Business Tax? But I’m Unincorporated!By Alan Goldenberg, JD, MBA, LL.M
Businesses are often surprised to learn of the New York City Unincorporated Business Tax (UBT), an entity-level tax imposed on unincorporated businesses operating within the City. Many businesses presume that as pass-through entities, such as limited liability companies, taxes are never due by the entity. Rather, the tax liabilities are...