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Important Update: The Corporate Transparency Act and Its Impact on Your Business

Starting January 1, 2024, a significant change will affect many businesses. The Corporate Transparency Act mandates corporations, limited liability companies (LLCs), limited partnerships, and other entities such as non-U.S. companies that register to do business in the U.S. through a filing with a Secretary of State to file a report with the Financial Crimes Enforcement Network (FinCEN). This report will disclose detailed information about the entity’s “beneficial owners.” Most entities must file these reports by January 1, 2025. However, new entities formed in 2024 must file the report within 90 days of the entity’s formation.

Key Points to Note:

Purpose: This federal initiative aims to combat money laundering and tax evasion by shedding light on the actual individuals behind corporate entities.
Reporting Requirements: The information required includes the legal name, residential address, date of birth, and an identification number (from a passport, driver’s license, or state ID) of the beneficial owners; the entity will also have to provide an image of any of these forms of documentation.
Penalties for Non-Compliance: Failing to report or update this information can lead to substantial fines, including fine of up to $500 per day until the violation […]

By Linkenheimer LLP|2024-01-04T17:01:35+00:00January 4th, 2024|business, llc, New Tax Laws, News, s corp|0 Comments

Calculating Corporate Estimated Tax

The next quarterly estimated tax payment deadline is June 15 for individuals and businesses so it’s a good time to review the rules for computing corporate federal estimated payments. You want your business to pay the minimum amount of estimated taxes without triggering the penalty for underpayment of estimated tax.

Four methods

The required installment of estimated tax that a corporation must pay to avoid a penalty is the lowest amount determined under each of the following four methods:

Under the current year method, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the current tax year’s return (or, if no return is filed, 25% of the tax for the current year) by each of four installment due dates. The due dates are generally April 15, June 15, September 15 and January 15 of the following year.
Under the preceding year method, a corporation can avoid the estimated tax underpayment penalty by paying 25% of the tax shown on the return for the preceding tax year by each of four installment due dates. (Note, however, that for 2022, certain corporations can only use the preceding year method […]

By Linkenheimer LLP|2022-06-10T20:37:48+00:00June 10th, 2022|estimated tax payments|0 Comments

Research Credit Available to Some Businesses for the First Time

The Tax Cuts and Jobs Act (TCJA) didn’t change the federal tax credit for “increasing research activities,” but several TCJA provisions have an indirect impact on the credit. As a result, the research credit may be available to some businesses for the first time.

AMT reform

Previously, corporations subject to alternative minimum tax (AMT) couldn’t offset the research credit against their AMT liability, which erased the benefits of the credit (although they could carry unused research credits forward for up to 20 years and use them in non-AMT years). By eliminating corporate AMT for tax years beginning after 2017, the TCJA removed this obstacle.

Now that the corporate AMT is gone, unused research credits from prior tax years can be offset against a corporation’s regular tax liability and may even generate a refund (subject to certain restrictions). So it’s a good idea for corporations to review their research activities in recent years and amend prior returns if necessary to ensure they claim all […]

By Linkenheimer LLP|2020-09-03T20:04:26+00:00November 9th, 2018|business, credit, New Tax Laws, research credit|0 Comments