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IRS Provides Guidance Under The CARES Act To Taxpayers With Net Operating Losses

The Internal Revenue Service today issued guidance providing tax relief under the CARES Act for taxpayers with net operating losses. Recently the IRS issued tax relief for partnerships filing amended returns.

COVID Relief for taxpayers claiming NOLs
Revenue Procedure 2020-24 provides guidance to taxpayers with net operating losses that are carried back under the CARES Act by providing procedures for:

waiving the carryback period in the case of a net operating loss arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021,
disregarding certain amounts of foreign income subject to transition tax that would normally have been included as income during the five-year carryback period, and
waiving a carryback period, reducing a carryback period, or revoking an election to waive a carryback period for a taxable year that began before Jan. 1, 2018, and ended after Dec. 31, 2017.

Six month extension of time for filing NOL forms
In Notice 2020-26, the IRS grants a six-month extension of time to file Form 1045 or Form 1139, as applicable, with respect to the carryback of a net operating loss that arose in any taxable year that began during calendar year 2018 and […]

By Linkenheimer LLP|2020-09-03T20:03:08+00:00April 10th, 2020|business, extension, extensions, New Tax Laws, small business, tax deadlines, tax implications|0 Comments

Which Entity is Most Suitable for Your New or Existing Business?

The Tax Cuts and Jobs Act (TCJA) has changed the landscape for business taxpayers. That’s because the law introduced a flat 21% federal income tax rate for C corporations. Under prior law, profitable C corporations paid up to 35%.

The TCJA also cut individual income tax rates, which apply to sole proprietorships and pass-through entities, including partnerships, S corporations, and LLCs (treated as partnerships for tax purposes). However, the top rate dropped from 39.6% to only 37%.

These changes have caused many business owners to ask: What’s the optimal entity choice for me?

Entity tax basics

Before the TCJA, conventional wisdom was that most small businesses should be set up as sole proprietorships or pass-through entities to avoid the double taxation of C corporations. A C corporation pays entity-level income tax and then shareholders pay tax on dividends — and on capital gains when they sell the stock. For pass-through entities, there’s no federal income tax at the entity level.

Although C corporations are still potentially subject to double taxation, their current 21% tax rate helps make up for it. This issue is further complicated, however, by another tax provision that allows noncorporate owners of pass-through […]

By Linkenheimer LLP|2020-09-03T20:03:51+00:00June 28th, 2019|business, New Tax Laws, tax planning|0 Comments

An FLP Can Save Tax in a Family Business Succession

One of the biggest concerns for family business owners is succession planning — transferring ownership and control of the company to the next generation. Often, the best time tax-wise to start transferring ownership is long before the owner is ready to give up control of the business.

A family limited partnership (FLP) can help owners enjoy the tax benefits of gradually transferring ownership yet allow them to retain control of the business.

How it works

To establish an FLP, you transfer your ownership interests to a partnership in exchange for both general and limited partnership interests. You then transfer limited partnership interests to your children.

You retain the general partnership interest, which may be as little as 1% of the assets. But as general partner, you can still run day-to-day operations and make business decisions.

Tax benefits

As you transfer the FLP […]

By Linkenheimer LLP|2020-09-03T20:04:30+00:00August 13th, 2018|child, estate, New Tax Laws, small business, succession planning, tax planning|0 Comments

New Tax Rules May Affect Your Business for Web

New laws and regulations could have an impact on how you manage your business or your tax planning. Below is a summary of important developments you should be aware of:

In a change from past rules, businesses must file all Forms W-2 and W-3 and some Forms 1099-MISC with the IRS and the Social Security Administration no later than Jan. 31 in the year following the one to which the forms relate. As a result, forms for 2016 activities must be filed by Jan. 31, 2017. Employees and vendors or independent consultants must still receive their forms by Jan. 31.
There are new due dates for returns for partnerships, C corporations and several other business returns. For calendar-year partnerships, the new filing date is March 15 and for C corporations, it’s April 15. The date for fiscal year C corporations is the 15th of the fourth month following the end of the corporation’s calendar year, which is good news. The CPA profession has long advocated for these changes because they’ll minimize tax season complications and delays and make it easier to ensure that tax returns are accurate and on time. Among other benefits, […]

By Linkenheimer LLP|2020-09-03T20:05:00+00:00December 13th, 2016|irs|0 Comments