Financial accounting and cost accounting with preparation of SSARS No. 21 financial statements

• Construction
• Government grants
• Manufacturing
• Professional corporations
• Service companies
• Trusts and estates

US tax compliance

• Corporations
• Managing net operating losses
• Individuals
• Multi-state tax compliance
• Organizations exempt from tax
• Partnerships, limited liability companies and hedge funds
• Startups
• All aspects of corporate life cycle: Formation, growth and stock or asset sale, decline and dissolution  trade or business in the US
• Determination of Fixed, Determinable and Periodical [FDAP] passive income

        ∞Assessment of  bookkeeping compared to generally accepted accounting principles

        ∞Transition support from bookkeeping to generally accepted accounting principles

• Perpetual inventory system design and management consulting
• Forensic data analysis for expert witness testimony

Planning for the termination of the Tax Cuts and Jobs Act

• Planning for the dramatic changes to the Internal Revenue Code when the Tax Cuts and Jobs Act sunsets on December 31, 2025.
• New: House and Senate budget resolution below

House and Senate Budget Resolution

and 2025 Tax Planning

The slow pace in reaching a reconciliation bill in Congress can be interpreted by the  difficulty in rationalizing extension of the provisions of the Tax Cuts and Job Act [TCJA]. Specifically the pass-through qualified business income [QBI] deduction [IRC Sec.. 199A] is perhaps the major point of contention as indicated by the scaling back of the initial $4.5 trillion proposed federal budget cuts by the House Ways and Means Committee to $2 trillion [Title IV, Sec. 4002(a)(1) of the continuing resolution] occurring from fiscal year 2025 through fiscal year 2034.

The cuts were targeted to reducing the Health Insurance Premium Tax Credit, Supplemental Social Security Income [SSI], Temporary Assistance for Needy Families, Social Services Block Grants as well as other agency-targeted cuts, for example, to the Consumer Financial Protection Bureau formed in 2011 resulting from a proposal by Senator Elizabeth Warren to return compensation resulting from financial institution fraud.

In order to try to put Section 199A into federal budgetary perspective, the cost of it to the taxpayers since its inception in 2018 has been estimated to be between $200 billion and $400 billion. Extending QBI from  2025 and 2034 is estimated to be conservatively $600 billion, and the Congressional Budget Office has estimated the cost in terms of increasing federal deficits to be as much as $4.6 trillion.

The math is relatively simple: $4.5 trillion in proposed cuts to pay for $4.6 trillion to extend QBI. Complicating the math, however, are the following tax changes promised during the election adding approximately $1 trillion to the federal deficit. Those include:

• No tax on tips
• No tax on social security
• No tax on overtime
• Raising the cap on deducting state and local income taxes

Further complicating the math in reaching a reconciliation bill is an expected widening gap between 2025 and 2034 in social security receipts from $100 billion to $500 billion. Though sunsetting the QBI provision of the TCJA altogether may not necessarily be imminent, it may alternatively become politically expedient to reduce the 20% QBI deduction, especially given the slim Republican majorities presently existing in the House and in the Senate.

Pass-through entity elective tax

See the above post updating the budget reconciliation process.  Pass-through entity elective tax services may be resumed depending on the result of the final bill in Congress.

Pass-through entity elective tax services have been discontinued except for those already having made the election as of June 17, 2024 due to the complexity of the rules of compliance  and the time requirement for complying with the rules.  Only advisory services related to the pass-through entity elective tax will be provided to new clients as part of overall planning for the sunsetting of the Tax Cuts and Jobs Act on December 31, 2025.

Chief among the rules increasing the level of tax compliance difficulty is the inability to electronically file certain tax returns for those making the election resulting in little or no ability to confirm whether paper returns have been filed. Additionally, the complex computational aspect of the pass-through elective tax combined with the strict deadlines for filing and paying the elective tax increases the likelihood of errors. 

The pass-through elective tax is often targeted toward high income taxpayers, increasing the already heightened prospect of a tax examination. For example, if a high-income taxpayer reduces their S corporation salary in order to increase their pass-through entity income and thus their pass-through entity state tax deduction, doing so could trigger a tax examination as well as recharacterization of distributions as salary resulting in delinquent employment taxes being owed, plus penalties.  For those having made the pass-through entity elective tax election, it is  irrevocable and if a taxpayer has no taxable income subsequent to having made the pass-through entity election, the pass-through entity tax will not be refunded and instead it is required to be carried over for five years.

State tax authorities have struggled to keep apace with managing the pass-through elective tax since the inception of the $10,000 state and local deduction limitation ushered in by the Tax Cuts and Jobs Act. With a potential sunset of the $10,000 state and local tax deduction limit looming on the horizon on December 31, 2025, it is likely changes will have to be made with respect to taxpayers already having made the election.

Topics of general interest...

SECURE Act basics for inherited IRAs:

Post 12/31/19 inherited IRAs are required to distributed within 10 years of the date of death.

Exceptions apply for beneficiaries who are not eligible designated beneficiaries:

Surviving spouses

Individuals not more than 10 years younger than the account owner

Chronically ill individuals

Disabled individuals

Minor children

An exception applies to designated beneficiaries, meaning one who is not an eligible designated

beneficiary. Designated beneficiaries can "stretch" inherited IRA RMD (required minimum distributions)

over their lifetime if they are not more than 10 years younger than the account owner

Decedents' Estates

A trust or a decedent's estate is a separate legal entity for federal tax purposes. A decedent's estate comes into existence at the time of death of an individual. A trust may be created during an individual's life (inter vivos) or at the time of their death under a will (testamentary). If the trust instrument contains certain provisions, then the person creating the trust (the grantor) is treated as the owner of the trust's assets. Such a trust is a grantor type trust and, accordingly, obtaining an EIN for a decedent's estate is required. Source: https://www.irs.gov/pub/irs-pdf/i1041.pdf

In general, deducting expenses on an inherited property is allowed so long as you have never occupied it personally. The amount of your loss that you will be able to deduct, however, will only be limited to the difference between the price you sell it for and the fair market value of the home when you inherited it, and an appraisal at the date of death establishes fair market value.