Proposed Regulations Give Pass-Through Owners Additional Time to Defer Recognition of Gains by Investing in a Qualified Opportunity Fund

As part of the Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017, new tax incentives were created under Section 1400Z-2 of the Internal Revenue Code (“IRC”) that allow you to elect to defer certain gains until as late as December 31, 2026, to the extent that those gains are reinvested in a Qualified Opportunity Fund (“QOF”) within 180 days. On October 19, 2018, the Treasury Department issued proposed regulations explaining the operation of the rules, and providing some much needed guidance and clarity. These regulations provide flexibility to owners of pass-through entities that receive an allocable share. Read More.

IRS Finalizes Negative Section 263A Regulations

The IRS issued final regulations (T.D. 9843) that, under Section 263A, amend the Uniform Capitalization (“UNICAP”) rules for taxpayers. In addition, the IRS simultaneously released Rev. Proc. 2018-56, which updates the automatic accounting method change procedures to assist taxpayers in complying with the final regulations.  These final regulations are effective for taxable years beginning on or after November 20, 2018. The following are key takeaways from the final regulations and automatic accounting method change procedures. The new regulations: Created a new Modified Simplified Production Method (“MSPM”) for calculating additional Section 263A costs. Clarified how certain inventory costs are calculated and. Read More.

Section 274(a)(4): IRS Guidance on Nondeductible Employee Parking Expenses

The IRS has issued guidance detailing the deduction disallowance provisions of Section 274(a)(4), explaining how to determine the nondeductible portion of employee parking expenses.  For tax-exempt organizations these amounts are unrelated business taxable income (“UBTI”). The new rules set forth a reasonable way to determine the amount of parking expenses that are no longer tax deductible, but allow you to use any reasonable method until further guidance is issued. However, using the value of the employee parking is not a reasonable method for determining cost. In addition, beginning in 2019, any method you use will need to allocate expenses to. Read More.

2018 Year-end Tax Planning Checklist for Individuals

This tax year brings an extraordinary number of challenges and opportunities to year-end tax planning. The Tax Cuts and Jobs Act of 2017 (“TCJA”) revised tax rates, placed new limits on itemized deductions, expanded credits for children and other dependents, and raised the standard deduction. The TCJA also introduced two brand new tax savings provisions: Qualified Opportunity Zones and Section 199A, qualified business income deduction. What is tax planning really about?  When Cherry Bekaert tax professionals work with you this year, there are two goals – Help Individuals and families take advantage of traditional tax planning techniques: Defer income &. Read More.

This Year’s Hot Topics in Tax for your Business – Video

2018 brought sweeping changes to business tax in multiple ways: The Tax Cuts and Jobs Act of 2017 brought tax rate reductions to corporations and individuals; The Supreme Court decision in Wayfair v. South Dakota brought significant changes to sales and use tax nexus; International operations will report under a new modified territorial system; Limits to business deductions, partnership audit rules, and information reporting added complexity to tax returns; And more This  brief 12-minute video walks through a top ten list of events impacting your business’s tax returns in 2018. We also highlight planning tips that companies can use to reduce their taxes. Read More.

TCJA Changes to § 451: New Tax Automatic Accounting Methods for Revenue Recognition

On November 29, 2018, the IRS released Rev. Proc. 2018-60, which provides a new automatic change to comply with §451(b) for tax years beginning after December 31, 2017. [1] The change is applicable to taxpayers who are changing to recognize revenue under § 451(b) and/or have not adopted the ASC 606 method under Rev. Proc. 2018-29. The TCJA amended §451 of the Internal Revenue Code to provide that the all events test (used to determine when revenue is fixed and determinable with reasonable accuracy) with respect to income shall be treated as met no later than when taken into account within. Read More.

Section 199A: Waiting on Final Regulations and What to Consider before the Year Ends

The Tax Cuts and Jobs Act (“TCJA”) brought a substantial tax rate reduction for C corporations to 21 percent, down from the previous maximum rate of 35 percent. As a result of the significant rate reduction for corporations, Congress felt that some benefit was necessary for the owners of pass-through entities and provided a new pass-through deduction designed to reduce the tax liabilities of the owners. The new Section 199A permits a deduction of up to 20 percent of qualified business income (“QBI”) from a domestic pass-through business, plus 20 percent of qualified real estate investment trust (“REIT”) dividends and. Read More.

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