China in 2012

China is world’s second largest economy….

2012 sales in China accounted for 11.2% of revenue reported by U.S. companies listed on Standard & Poor’s 500 (research by The Economist… quoted in the Journal of Accountancy (A publication of the American Institute of CPAs)).

Posted in General | 2 Comments

2013 Gift Basket & Production Activities Deduction

There is a recent tax court case that applies to gift baskets.

For a number of years there has been something called the Production Activities Deduction (PAD). It generally applies to MANUFACTURING. This tax court case may open a deduction for flower shops and other companies that assemble gift baskets.

If your bottom line income to the company is $50k from the applicable sales, the PAD is 9% (for 2012 and 2013). That is a $4,500 deduction. Apply a tax bracket of 25% and the savings is $1,125.

If the company showed a loss, the PAD would not apply.

It would not apply to just flowers. It would apply to gift baskets when you purchase other items (candy, cheese, etc) and ‘assemble’ them.

If this is the case, then we would need to know…..

Sales total for these items. Let’s say this is 20% of your sales. We would then also ask if 20% of wages, 20% of all expenses applies. A different percentage could very well apply especially for the real manufacturing entities.

In 10 minutes we could calculate what the savings would be.

In 2010 and 2011 the PAD was 6%. The statute of limitations would not allow amendments back further than 2010.

We can help prepare these amendments at

Posted in General | 97 Comments

2013 Form 1099 Late Filing Penalty

This has never been easy to explain…. here is the latest….

The penalties were increased two years ago to the following amounts:
•$30 per form, or per statement, if it was corrected within 30 days (maximum $250,000 per year),
•$60 per form, or per statement, if corrected more than 30 days after the filing due date by August 1 of the same year (maximum $500,000 per year),
•$100 per form, or per statement, if corrected later than August 1 of the same year or if not corrected (maximum $1,500,000 per year),
•Where intentional disregard of the requirements is found: $250 per return, or per statement, or 10% of the total amount that should have been reported (5% if amounts should have been reported of Form 1099-B), whichever is greater with no maximum cap,
•Payers with annual gross receipts of $5 million or less may qualify as “small business” payers for which the penalties may be reduced by 30% to 44% for various types of failures.

Just file on time and you won’t have to worry about these…..

or we can help.

Posted in General | 99 Comments

Cost Segregation Denied

Cost Segregation is good.  It allows faster write off’s via depreciation of buildings.  We have clients who have been very satisfied.
Taxpayer purchased a business and properly allocated the cost to the various asset classes per the purchase agreement.  Then the taxpayer paid for a cost segregation study.  It was decided that the the contract’s allocations could not be changed (Peco Foods, 11th Cir.)
If you want to know more about Cost Segregation visit our website
Posted in Income Tax, LLC's, Sub S Corporations | 480 Comments

Want to see what happens if you don’t pay payroll tax?

Posted in General | 98 Comments

Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts

The United States Department of Treasury has announced that beginning July 1, 2013, Form TD F 90-22.1 must be filed electronically by the taxpayer. To file the 2012 form after June 30, 2013, file the form through


Posted in General, Income Tax, International Taxation, Newsletter Topics | 1,048 Comments

EIC Earned Income Credit – easy to calculate?

We tell clients all the time that it is complicated and hopefully they can answer the questions correctly when they use boxed software or… ready for this… try to do it by hand!
The earned income credit is extremely difficult to calculate.  Eligibility & computation rules take up 8 pages in the 2012 Form 1040 instructions…. plus 17 pages of income-based tables to calculate the credit!
Posted in Ask Question or Comment, General, Income Tax, Newsletter Topics | 2,536 Comments

2013 Simple IRA Contribution Limits

The Simple IRA contribution limit for employees is $12,000 for 2013 (up from 2012 of $11,500).

If over age 50, the limit for 2013 is $14,500 (up from 2012 of $14,000).

Posted in General | 899 Comments

2013 Gifts

This is not about charitable donations to a 501(c)(3) organization. It is about just giving stuff away.

How much can I give (gift) without any tax?

$13,000 ( 2009 – present) is the amount of stuff that can be gifted with no gift tax… based on this amount to any one individual in a calendar year. So, Mary could give $13k on Dec 15th to someone, then another $13k in January (the next calendar year). She can give $13k to any number of individuals. The gift tax is based on any one individual.

Any amount above the $13k in a calendar year to any one individual subjects the giver (never the receiver) to a gift tax, and it is quickly expensive. The way around that is…. Let’s say she gives you $50k. She files a gift return that basically says…. I gave away $37k over the limit this year… I want to reduce my lifetime free giving amount from $1million to $963,000.

And, if she gives away stuff… let’s say $50k market value of stocks, the gift tax return is figured at the market value BUT the receiver of the gift takes the gift into their inventory of stuff at Mary’s basis (what she paid for it plus any reinvested dividends).

Posted in General, Income Tax, International Taxation, Newsletter Topics | 1,657 Comments

Club Dues – Deduction?

Business related meals and entertainment are deductible….

You cannot, however, deduct dues (including initiation fees) for membership in any club organized for pleasure, recreation or other social purposes.

Posted in General, Income Tax, International Taxation, LLC's, Sub S Corporations | 2,474 Comments