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Archives for November 2018

2018 – 11/16 – Why revenue matters in an audit

Revenue is highly susceptible to financial misstatement, so auditors give it special attention. It will get even more scrutiny as the new revenue recognition standard goes into effect in 2018 for public companies and 2019 for others. Auditors customize their procedures to unearth improper revenue recognition tactics. For example, they may target such issues as contracts, principal-agent relationships and cutoffs. Contact us to help ensure your company has in place updated, effective revenue recognition policies, procedures and controls.

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2018 – 11/20 – Catch-up retirement plan contributions can be particularly advantageous post-TCJA

Will you be age 50 or older on December 31? Are you still working? Are you already contributing to your 401(k) up to the regular annual limit? Then you may want to make “catch-up” contributions by the end of the year. Increasing your retirement plan contributions can be particularly advantageous if your itemized deductions for 2018 will be smaller than in the past because of changes under the TCJA. The additional contributions can reduce your taxable income and help make up for the loss of some of your itemized deductions. Contact us for more information.

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2018 – 11/23 – 4 steps to auditing AP

A lot of money flows through accounts payable (AP). So, it’s important to get it right. Auditors can help by performing these four procedures on AP: 1) reviewing standard operating procedures (SOPs), 2) analyzing source documents (such as purchase orders, invoices and bank records), 3) confirming balances with vendors, and 4) comparing the AP ledger to the financial statements. To facilitate fieldwork next audit season, let’s discuss the procedures we plan to use on your AP and what documents and workpapers you can prepare before we arrive

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2018 – 10/23 – Could “bunching” medical expenses into 2018 save you tax?

Some of your medical expenses may be tax deductible, but only if you itemize deductions and have enough expenses to exceed the applicable floor for deductibility. With proper planning, you may be able to time controllable medical expenses to your tax advantage. The Tax Cuts and Jobs Act (TCJA) could make bunching such expenses into 2018 beneficial for some taxpayers. At the same time, certain taxpayers who’ve benefited from the deduction in previous years might no longer benefit because of the TCJA’s increase to the standard deduction. Contact us to learn more.

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2018 – 11/12 – It’s not too late: You can still set up a retirement plan for 2018

If most of your money is tied up in your business, retirement can be a challenge. So if you haven’t already set up a tax-advantaged retirement plan, consider doing so this year. There’s still time to set one up and make contributions that will be deductible on your 2018 tax return. And funds can grow tax deferred. If you have employees, they generally must be allowed to participate in the plan, provided they meet the requirements. But you might be eligible for a $500 tax credit for setting up the plan. Would you like to set up a plan this year? Contact us!

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2018 – 11/05 – Buy business assets before year end to reduce your 2018 tax liability

Investing in business assets is a traditional and powerful year-end tax planning strategy, and it might make even more sense in 2018. Sec. 179 expensing and bonus depreciation both allow an immediate deduction for the cost of eligible asset purchases, rather than depreciating them over a number of years. The TCJA increases potential deductions under these breaks and expands the assets that are eligible. To qualify, you must place assets in service by the end of the year. So there’s still time to make purchases and reduce your 2018 taxes. Contact us to learn more.

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2018 – 10/30 – Donate appreciated stock for twice the tax benefits

Did you know that you may be able to enjoy two tax benefits if you donate long-term appreciated stock instead of cash? First, if you itemize, you can claim a charitable deduction equal to the stock’s fair market value. Second, you can avoid the capital gains tax you’d pay if you sold the stock. But the charitable deduction will provide a tax benefit only if your total itemized deductions exceed your standard deduction, and the TCJA nearly doubled the standard deduction. Also, additional rules and limits apply. Contact us to learn more.

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2018 – 11/02 – LIFO lessons learned

The last-in, first-out (LIFO) method allocates the most recent inventory costs to cost of sales. Assuming increasing inventory values, LIFO may reduce taxable income and, therefore, be preferred for tax purposes. But LIFO also poses financial reporting challenges. For example, you might not want to report lower earnings to stakeholders, measure changes in inventory costs, and incur taxes on “phantom income” from declining inventory or the “LIFO recapture amount” from an S corporation conversion. Contact us to discuss whether LIFO is right for your business.

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2018 – 10/29 – Research credit available to some businesses for the first time

The TCJA didn’t change the research credit, but it has an impact on the credit. Previously, corporations subject to alternative minimum tax (AMT) couldn’t offset the research credit against AMT liability, which erased the credit’s current benefits. By eliminating corporate AMT, the TCJA removed this obstacle. Pass-through businesses can still claim the credit against AMT if their average gross receipts are $50 million or less. And qualifying start-ups without taxable income can still claim the credit against up to $250,000 in payroll taxes. Contact us for details.

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2018 – 10/23 – Could “bunching” medical expenses into 2018 save you tax?

Some of your medical expenses may be tax deductible, but only if you itemize deductions and have enough expenses to exceed the applicable floor for deductibility. With proper planning, you may be able to time controllable medical expenses to your tax advantage. The Tax Cuts and Jobs Act (TCJA) could make bunching such expenses into 2018 beneficial for some taxpayers. At the same time, certain taxpayers who’ve benefited from the deduction in previous years might no longer benefit because of the TCJA’s increase to the standard deduction. Contact us to learn more.

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