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Archives for January 2018

2018 – 01/12 – How financial statements can be used to value private businesses

How much is your business worth? The answer lies in your financial statements. The balance sheet serves as the basis for the cost approach, though adjustments may be needed to align the book values of assets and liabilities with their fair market values. Likewise, the income statement and statement of cash flows can be used to derive value from 1) discounting techniques under the income approach, and 2) pricing multiples under the market approach. Contact our experienced financial pros for help calculating an estimate of value that you can count on.


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Reminder – Forms W-2 and 1099 Due Date

We would like to remind you January 31, 2018 is the due date for payroll and information returns.  Forms W-2 and 1099s are to be distributed to your employees and contractors by this day.  These forms along with Form W-3 are due to the government on the same day. 

If you need our assistance with form preparation we are asking you to get your information to us by Monday January 22, 2018.  Make sure you have updated addresses for employees and contractors, along with SSN or EINs.  Please do not hesitate to contact us with any questions.


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2018 – 01/08 – New tax law gives pass-through businesses a valuable deduction

Owners of “pass-through” businesses may see some major (albeit temporary) relief under the Tax Cuts and Jobs Act (TCJA) in the form of a new deduction for a portion of qualified business income (QBI). For tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, owners of entities such as sole proprietorships, partnerships, S corporations and LLCs generally can deduct 20% of QBI, subject to restrictions that can apply at higher income levels. More rules and limits apply; careful planning will be necessary to gain maximum benefit. Contact us for details.


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2018 – 01/05 – Income statement items warrant your auditor’s attention

During your financial statement audit, we assess whether the amounts reported on your income statement capture financial performance during the reporting period. This requires us to focus on three main components: 1) revenue, 2) cost of goods sold, and 3) operating expenses. Each component requires a different audit approach, depending on the level of complexity, possible effects on balance sheet items and the potential for manipulation by dishonest employees. Contact us for more information on how we plan to test and verify these accounts this audit season.

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Tax Cuts and Jobs Act – Changes for Businesses

On Friday, December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The following tax law changes are effective for tax years beginning after December 31, 2017, unless otherwise noted.


There are several provisions pertaining to businesses that we believe will be of interest to you as follows.

  • The corporate tax rate has been reduced to a flat 21% and the corporate alternative minimum tax has been repealed;
  • The maximum amount a taxpayer can immediately expense for qualified property (Sec. 179) has been increased to $1,000,000 and the phase-out threshold amount is increased to $2.5 million;
  • A 100% first-year deduction for qualified property (increased from 50% deduction) for property placed in service after September 27, 2017 and before January 1, 2023;
  • The deduction for domestic production activities has been repealed ;
  • The deduction of 50% of expenses relating to entertainment has been repealed;
  • Net operating losses can no longer be carried back but can be carried forward indefinitely and the deduction is limited to 80% of taxable income.


While this summary is not comprehensive, we hope it will help you understand upcoming changes to your tax liability. As always, we are available to discuss your circumstances and how this new law may affect you.

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2017 – 12/26 – Tax Cuts and Jobs Act: Key provisions affecting individuals

On December 20, Congress completed passage of the Tax Cuts and Jobs Act. The new law means substantial changes for individual taxpayers. For example, it reduces tax rates for most brackets, nearly doubles the standard deduction and expands the child tax credit. And it provides alternative minimum tax (AMT) and estate tax relief. But it also reduces or eliminates many tax breaks. Most changes affecting individuals are only temporary, generally applying for 2018 through 2025. If you have questions or would like to discuss how you might be affected, contact us.


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The TCJA temporarily expands bonus depreciation

The Tax Cuts and Jobs Act (TCJA) enhances some tax breaks for businesses while reducing or eliminating others. One break it enhances — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file your 2017 tax return.

Pre-TCJA bonus depreciation

Under pre-TCJA law, for qualified new assets that your business placed in service in 2017, you can claim a 50% first-year bonus depreciation deduction. Used assets don’t qualify. This tax break is available for the cost of new computer systems, purchased software, vehicles, machinery, equipment, office furniture, etc.

In addition, 50% bonus depreciation can be claimed for qualified improvement property, which means any qualified improvement to the interior portion of a nonresidential building if the improvement is placed in service after the date the building is placed in service. But qualified improvement costs don’t include expenditures for the enlargement of a building, an elevator or escalator, or the internal structural framework of a building.

TCJA expansion

The TCJA significantly expands bonus depreciation: For qualified property placed in service between September 28, 2017, and December 31, 2022 (or by December 31, 2023, for certain property with longer production periods), the first-year bonus depreciation percentage increases to 100%. In addition, the 100% deduction is allowed for not just new but also used qualifying property.

The new law also allows 100% bonus depreciation for qualified film, television and live theatrical productions placed in service on or after September 28, 2017. Productions are considered placed in service at the time of the initial release, broadcast or live commercial performance.

Beginning in 2023, bonus depreciation is scheduled to be reduced 20 percentage points each year. So, for example, it would be 80% for property placed in service in 2023, 60% in 2024, etc., until it would be fully eliminated in 2027.

For certain property with longer production periods, the reductions are delayed by one year. For example, 80% bonus depreciation would apply to long-production-period property placed in service in 2024.

Bonus depreciation is only one of the business tax breaks that have changed under the TCJA. Contact us for more information on this and other changes that will impact your business.

© 2018

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