The new tax law restricts a like-kind exchange to real property (e.g., buildings and land). Under the prior law, you could utilize a like-kind exchange for tangible personal property and intangible property used in a business or held for investment. Trade-ins of vehicles and equipment are now taxable, but the replacement probably qualifies for bonus depreciation and Sec. 179. Be aware of this change and contact us so we can help you plan accordingly.  

Please call our office to schedule a planning meeting.

While the TCJA is effective now, there are still many uncertainties. Additional technical guidance and regulations are necessary to provide more clarity on some of the changes. The Internal Revenue Service is working to provide that guidance, which we expect later this year.

We are at your disposal to identify opportunities within the new law that apply to you and help steer you away from new pitfalls and challenges.  Please call our office today at 262-358-8297 to set up a tax planning meeting. As always, planning ahead can help you minimize your tax bill and position you for greater success. 

Your tax planning at the end of the year shouldn't be difficult.  I have outlined below five strategies that will increase your tax deductions or decrease your taxable income in order to reduce how much cash you pay the IRS. 

1. Prepaying your 2019 expenditures right now decreases your taxes this year, without question. While it’s true you kicked the can down the road some, perhaps you have an offset with a big deduction planned for next year. And even if you don’t have such a plan at the moment, you have plenty of time to create one or to put more big deductions in place for 2019.
2. The simplest year-end strategy of all is to simply to stop billing your customers, clients, and patients. Once again, this kicks the can down the road some and makes your 2019 tax planning more important.
3. With 100 percent bonus depreciation and increased Section 179 expensing in 2018, you can make significant purchases of equipment, machinery, and furniture and write off 100 percent of the value. Make sure you place the assets in service on or before midnight, December 31, 2018, to get the deduction this year.
4. Charges to your credit cards can create deductions on the day of the charge. This is absolutely true if you are a sole proprietor or you operate as a corporation and the credit card is in the name of the corporation. But if you operate as a corporation and the credit card is in your personal name, your corporation needs to reimburse you before midnight, December 31, to create the 2018 deduction at the corporate level.
5. And finally, claim all your legitimate deductions. Don’t think you have too many, and don’t try to guess which of your too-many deductions could be a red flag. First, it’s unlikely you could have enough deductions to create a red flag. Second, no one knows what those red flags are. Third, if the deduction is legitimate, it doesn’t matter if the IRS audits it—you’ll win.

 
As you can see from the five strategies above, there’s much you can do to control your tax bite.

​The recently enacted Tax Cuts and Jobs Act (TCJA) has altered the tax landscape for a lot of individuals and businesses. The changes are extensive and this blog provides a high-level overview of some of the highlights to keep you informed. Due to the sweeping nature of the changes and the need for continued guidance, we’d like the opportunity to have a personalized conversation with you now to discuss planning opportunities for your specific situation. Additional conversations and tax projections are likely necessary to ensure we maximize your tax benefits. Please call our office at your earliest convenience to schedule a meeting.  

​Changes in tax rates
You may have heard in the news that the goal of tax reform was to reduce the number of tax rates from the existing seven rates to three. While that was discussed, the bill that was signed into law still has seven rates, but they are now generally lower with the highest rate being reduced from 39.6% to 37%. The tax rates applicable to net capital gains and qualified dividends did not change.

​One of the future goals for your children is their financial security and assistance with educational objectives and goals. It is important to demonstrate the value of saving money and taking advantage of tax breaks. The Tax Cuts and Jobs Act (TCJA) which contains provisions affecting tax planning for children and their education.

​As a reminder following are the IRS rules for substantiating charitable donations. We encourage you to maintain the records necessary to support your claim for these donations in the event of an audit. Many taxpayers may not be able to deduct their charitable donations due to the increased standard deductions ($12,000 for singles/$24,000 for joint returns). However, if your itemized donations do exceed the standard deductions be prepared to provide adequate documentation.
​
Cash contributions: No charitable contribution deduction is allowed for any monetary gift unless the donor maintains, as a record of the gift, a bank record or a written communication from the donee, showing the donee’s name, the date of the contribution, and the amount of the contribution. The regulations require a contemporaneous written acknowledgment of contributions of $250 of more from the organization. For gifts under $250, a canceled check or other records by the taxpayer is sufficient.

Donations of property: Additional substantiation requirements apply when donations involve property. For property under $250, the donor must obtain a receipt from the donee or keep reliable records. A donor who claims a noncash contribution of at least $250 but not more than $500 is required to obtain a contemporaneous written acknowledgment. For a donation of more than $500 but not more than $5,000, the donor must obtain a contemporaneous written acknowledgment and file a completed Form 8283 (Section A), Noncash Charitable Contributions.

For claimed noncash contributions of $5,000 or more, in addition to a contemporaneous written acknowledgment, the donor must obtain and file a qualified appraisal with the filing of the tax return. 
​

When you get busy with your business, you can easily forget about retirement accounts and medical coverages and plans. But the end of the year is nearing, and now is the time to act.
 
The following  six action steps for 2018 that can help you reduce your taxes and put extra money pocket.

• Put your retirement plan in place no later than December 31 to make sure you have a plan. Actually, make sure you make a contribution to the plan before December 31. 
• Convert to a Roth IRA. The long-term savings here can be huge. Make sure to leave the converted funds in the Roth for at least five years.
• If you have a Section 105 plan in place and you have not been reimbursing expenses monthly, do a reimbursement now to get your 2018 deductions, and then put yourself on a monthly reimbursement schedule in 2019.
• If you have not reimbursed your qualified small employer health reimbursement account (QSEHRA), make sure to get that done properly now. If you have not yet put a QSEHRA in place and you plan to do so on January 1, do that now and just suffer that $50-per-employee penalty should you be found out.
• If you operate your business as an S corporation and you want an above-the-line tax deduction for the cost of your health insurance, you need the S corporation to (a) pay for or reimburse you for the health insurance and (b) put it on your W-2. Make sure that happens before December 31.
• Claim the tax credit for the health insurance you give your employees. If you provide your employees with health insurance, see whether your pay structure and number of employees put you in a position to claim a 50 percent tax credit for some or all of the monies you paid for health insurance in 2018 and, possibly, prior years.

​A taxpayer who is an eligible individual under the health savings account (HSA) rules for December 2018 is treated as having been an eligible individual for the entire year. Thus, an individual who first became eligible on, for example, December 1, 2018, may then make a full year’s deductible-above-the-line contribution for 2018. If the individual makes that maximum contribution, you can get a deduction of $3,450 for individual coverage and $6,900 for family coverage (those age 55 or older also get an additional $1,000 catch-up amount).

​You may have experienced paper losses on stock in a particular company or industry in which you want to keep as an investment. The taxpayer may be able to realize their losses on the shares for tax purposes and still retain the same, or approximately the same, investment position. This can be accomplished by selling the shares and buying other shares in the same company or another company in the same industry to replace them, or by selling the original holding then buying back the same securities at least 31 days later.

Beginning in 2018, may taxpayers who claimed itemized deductions in prior years will no longer be able to do so. That’s because the standard deduction has been increased and many itemized deductions have been cut back or abolished. A bunching strategy can help taxpayers get around these new limits — by accelerating or deferring discretionary medical expenses and/or charitable contributions into the year where they will do some tax good. For example, a taxpayer who expects to itemize deductions in 2018 but not 2019, and usually contributes a total of $1,500 to charities each year, should consider making a total of $3,000 of charitable contributions before the end of 2018 (and skipping charitable contributions in 2019).

The recently enacted Tax Cuts and Jobs Act (TCJA) has altered the tax landscape for a lot of individuals and businesses. The changes are extensive and this blog provides a high-level overview of some of the highlights to keep you informed. Due to the sweeping nature of the changes and the need for continued guidance, we’d like the opportunity to have a personalized conversation with you now to discuss planning opportunities for your specific situation. Additional conversations and tax projections are likely necessary to ensure we maximize ​your tax benefits. Please call our office at your earliest convenience to schedule a meeting.  

Let’s say you dissolved your corporation, and then some unexpected corporate expenses arrived. You paid them personally because the corporation was no longer in business.
 
Guess what? No deduction. The corporation can’t pay the expenses because it no longer exists. The owner can’t pay the expenses and then deduct them because he didn’t incur those expenses inside a business that he operates in his personal name.
 
If you are going to shut down your S corporation, consider keeping the business open for an extra period of time to ensure you receive all income and pay all expenses, or make sure to resolve all potential accounts payable prior to closing the business.
 
Since you incur costs for keeping the S corporation open (tax return filings, state franchise taxes, etc.), you need to weigh the additional costs against any lingering accounts payable or other expense issues that could arise. If you are considering shutting down your S corporation, let’s talk before you do it.

The IRS gave Notice (2018-76) states that client and prospect business meals will continue to be tax deductions under the Tax Cuts and Jobs Act. Which confirms  what we expected! 
 
However, under this new IRS guidance, you may deduct 50% of your client and prospect business meals if:

To prove your business meals, follow the two easy steps below:

1. Keep the receipt that shows the name of the restaurant, the number of people at the table, and an itemized list of food and drinks consumed.
2. On the receipt, record the name or names of the person or persons with whom you had the meal and also record the business reason for the meal.

 
In the event the receipt is not available, such as with the purchase of hot dogs and drinks at a baseball game while sitting in the stands, make sure to make a written note of the expenditures immediately after the game.
 
If you charge a business meal to a credit card, the credit card statement provides your proof of payment. When possible, always pay by credit card or write a check so that you have clear proof of payment.
 
Proof of payment is not proof of what you purchased, so in addition to proof of payment, keep the receipt with the notations as described earlier. With this combination of proof of payment and receipt with notations, you have what we call audit-proof documentation.
​

Good question. The general rule is that to claim the credit for your company’s first tax year that begins after December 31, 2017, you must have your written family and medical leave policy in place before you pay the family and medical leave for which the credit will be claimed.
 
But under a favorable transition rule for the first tax year beginning after December 31, 2017, your company’s written leave policy (or an amendment to an existing leave policy) will be considered in place as of the effective date of the policy (or amendment) rather than the later adoption date.
 
So if you make the effective date of the policy January 1, 2018, your company can claim the credit for qualifying family and medical leave payments made on or after that date. This transition rule is available if

1. the policy or amendment is adopted on or before December 31, 2018; and
2. you bring your leave practices into compliance with the terms of the retroactive policy (or amendment) for the entire period covered by the policy (or amendment), including making any retroactive leave payments by no later than the last day of the tax year.

 
Example. Your company uses the calendar year for tax purposes. Back in January, Eve took two weeks of unpaid family and medical leave for the period beginning on January 15, 2018.
 
On November 15, 2018, your company adopts a written policy that satisfies the family and medical leave policy requirements explained earlier and makes that policy effective retroactively as of January 1, 2018. On or before December 31, 2018, the company pays Eve for two weeks of leave at 50 percent of her normal pay, as specified by the new policy. Assuming all the other requirements for the family and medical leave credit are met, your company can claim the credit for the 2018 leave payments made to Eve.

George Washington declared the new nation of the United States would have a public day of prayer in 1789.  This was agreed by the congress and they celebrated. However, it was Abraham Lincoln (after the Gettysburg Address -Monday November 18, 1863) who declared that the Fourth Thursday of November would be a National Day of Thanksgiving.

Thanksgiving was celebrated on the fourth Thursday in November from then until 1939, When then President Franklin Delano Roosevelt wanted to boost the economy during the Great Depression decided to give the country more shopping days from Thanksgiving to Christmas moved Thanksgiving day up one week to the Third Thursday.  This didn't last long.  In 1941, Thanksgiving was moved back to Lincoln's Original Proclamation the Fourth Thursday in November, because of the outcry of the citizens.

You compete for employee talent in a variety of ways, including perhaps by implementing a medical and family leave policy.
 
The good news on this front is that your federal government may have given you a tax credit (yes, that lovely dollar-for-dollar offset to your taxes) for what you wanted to do anyway. The Tax Cuts and Jobs Act (TCJA) establishes a new federal income tax credit for employers that provide qualifying paid family and medical leave benefits to their employees.
 
This new tax credit is available for two employer tax years only—those beginning between January 1, 2018, and December 31, 2019. If your business operates on a calendar year for tax purposes, you can put your business in a position today to claim the tax credit for both the 2018 and 2019 tax years. But you will need to hurry.
 
If eligible, you can claim a credit equal to 12.5 percent of wages paid to “qualifying employees” (defined later) who are on family and medical leave, as long as the leave payments are at least 50 percent of the normal wages paid to those employees.
 
You can increase the credit beyond the 12.5 percent. For each 1 percent increase in medical leave payments over the 50 percent threshold, the credit rate increases by 0.25 percent, up to a maximum credit rate of 25 percent. A qualifying employee is one who has been employed by your company for at least one year and whose compensation last year was less than $72,000.
 

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Photo from IRS Website

Review these carefully, Depending on your filing Status and Income your tax rate for 2019 is below.  The 2018 Tax Bracket will be used to file your 2018 Tax Return this below tax bracket begins 2019 tax year.  The below income ranges determines what level you will be tax at.  This is of extreme importance as you make business moves and plan for the upcoming year.  Contact us for Professional advice on your tax situation.

Guess What?  You can be both!  You  can be both real estate investor and real estate dealer with respect to your real estate portfolio.
 
Good News!  You are in control!!!  Just by knowing just a few rules about dealer and investor classifications, you can do much to increase your net worth.
 
Let’s take a quick look at how big a difference you can make in the tax bite. Say you have a $90,000 profit on the sale of a property.
 

• Dealer taxes could be as high as $46,017.
• Investor taxes could be as high as $18,000.

 
The investor potentially saves a whopping $28,017 in taxes.
 
You, the individual taxpayer, can be both a dealer and an investor! The law does not cut you in half or anything. No, the law simply looks at each property in its respective light. But you need to make the light shine on your properties by making a clear distinction in your books and records as to which properties are investment properties and which are dealer properties.
 
Should you fail to make the distinction, you place yourself at the mercy of the IRS. (The word “mercy” does not exist in the tax code, so expect a very unhappy result if you rely on mercy.) The courts look at your intent in buying and holding the property. Your books and records help establish that intent.
 
Dealer property is property you hold for sale to customers in the ordinary course of a trade or business. The more properties you buy and the more properties you sell during a calendar year, the greater the chances that you are a dealer with respect to those properties.
 
Properties that you buy, fix up, and sell generally are dealer properties. Also, properties that you subdivide have a great chance of being dealer property, except when those subdivisions are done under the very limited rules of Section 1237.
 
Where the dealer’s principal purpose for owning property is to sell it to customers in the ordinary course of business, the investor’s purpose in owning property is to
 

• have it appreciate in value, and/or
• produce rental income.

 
Each property stands alone with respect to its status as a dealer or an investment property. Thus, you (the individual taxpayer) or your corporation may own both dealer and investment properties. If you have both types of properties, make a clear distinction in your books and records as to which properties are investment properties and which are dealer properties.

November 13, 1789.....Ben Franklin writes "Nothing . . . certain but death & taxes"

You won’t get a Section 199A tax deduction for your cannabis business. But some of the other tax reform changes may make the C corporation a more attractive choice of entity than before.
 
Let’s look at an example. Say the cannabis business has the following financials:​

If the business is an S corporation and you are in the 32 percent federal income tax bracket:
 

• You’ll pay $56,000 in federal income tax on the taxable net income (32 percent of $175,000).
• You’ll need to distribute 75 percent of the $75,000 net cash income just to cover the federal income tax bill.
• Your adjusted gross income increases by $175,000, not only causing you to lose various tax benefits but also subjecting you to possible additional taxes (such as the net investment income tax).

​If the business is a C corporation:
 

• Your corporation pays $36,750 in federal income tax on the net income (21 percent of $175,000).
• Your after-tax profit is $38,250, which you can retain in the C corporation or distribute as a dividend. For every $1,000 you distribute as a dividend, you take a $150 tax hit on your individual tax return. If you distribute the entire $38,250, your tax on the dividends would be $5,737 and your total tax would be $42,487 (significantly less than the $56,000 as an S corporation owner).
• Your personal Form 1040 adjusted gross income is unaffected by the C corporation’s net income (unless you distribute dividends). The key is that the “phantom” income created by Section 280E doesn’t impact your individual tax return—only the corporation’s.

 
Because Section 280E creates “phantom” income for tax purposes (that is, the income doesn’t exist in real cash), it makes the S corporation and other pass-through entities less attractive overall for the cannabis business.