The CBD Blog

Find peer advice, partner insights, and industry updates – all here in the CBD blog, ‘At The Helm’! With contributions from our entire team, we blog about the things that interest you.

Can Your Research Credits Offset Your Payroll Tax Bill?

Qualified small businesses have a new option for using their research tax credits: They can now elect to apply their credit to the Social Security tax portion of their federal payroll tax liabilities. That may come in handy for smaller start-ups with significant research expenses and little or no profits. Here are the details of recent IRS guidance on how to take advantage of this special privilege.

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Consider Taxes before Converting Your Home to a Rental Property

It’s popular for property owners in certain markets to rent out their former residences. Doing so generates income that’s largely offset by tax deductions and allows you to potentially participate in the property’s future appreciation in value. Before making the home-to-rental conversion, however, it’s important to understand the special and sometimes confusing tax rules that apply when the property is rented and eventually sold.

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Sharing Tax Issues in the Sharing Economy

Mobile apps and online platforms have revolutionized the way many businesses offer services to consumers. Examples of the so-called “Gig” are widespread from ride sharing and vacation rentals to on-demand housekeeping and legal advice. If you decide to jump on the sharing economy bandwagon, it’s important to understand the tax rules for recognizing income, making estimated payments and deducting legitimate business expenses.

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Reclassifying Business Expenses as “Constructive Dividends”

Corporations that make payments to shareholders beware: The IRS may challenge deductions claimed for certain business expenses and other related-party transactions. An inquiry could lead to reclassification of certain payments as constructive dividends, which could have unfavorable tax consequences for the company and its shareholders. Here’s a recent Tax Court case that highlights this contentious issue.

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Are Contingent Attorneys' Fees Tax Deductible?

Individuals who agree to attorneys’ fees that are contingent on the outcome of their case may wonder if they can deduct the fees on their personal tax returns. The federal income tax treatment of contingent attorneys’ fees taken out of a taxable non-business judgment or settlement has led to litigation between taxpayers and the IRS. Here, we cover guidance on this issue and provide an overview for taxable and business-related recoveries.

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The Ins and Outs of Deducting Legal Expenses

Many individuals are surprised to discover that legal expenses usually aren’t currently deductible under the federal income tax rules. Here are some exceptions to this general rule, including two recent real-life examples that highlight when legal expenses may, at least partially, be deductible.

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Financial Survival Tips for Recent College Graduates

Congratulations! It’s the moment you’ve spent the last few years working for: graduation. You’re finally part of the real world and the financial responsibilities can be daunting. You’ll have to pay bills, including student loans, and save for future life essentials, like cars, vacations, homes and even retirement. Here’s a crash course in financial survival to help you make smart choices.

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Employer Can Have Info about Whether Misclassified Workers Paid Tax

Many businesses use independent contractors to lower their costs and administrative burdens. A recent U.S. Tax Court ruling provides good news for businesses that may find themselves audited by the IRS over worker classification. The court found that an employer could receive information about whether misclassified workers paid tax on the income, which would reduce the tax liability of the business.

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Spring Cleaning: When Can You Purge Your Old Financial Records?

Tax Day gives many people the urge to purge their file cabinets of extraneous financial records. But some people hold on to personal and business data indefinitely, because they don’t want to be caught off guard by an unexpected IRS inquiry. Here are basic records retention guidelines for individual and business taxpayers to help reduce the mounds of paperwork that are collected over the years.

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Establishing Residency for State Tax Purposes

Which state (or states) do you call home? Many individuals move to a new state with lower personal state income tax rates, hoping to reduce their tax bills. But some people run into problems when they fail to establish legal residency in the new state or terminate it in the old state. Here, we discuss the importance of establishing “domicile” and several effective ways to prove it for state tax purposes, including a recent decision based on the location of the taxpayer’s beloved pet.

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10 Simple (and Fun) Ways to Cut Taxes This Summer

Summer is just around the corner. While you’re enjoying the warmer weather, don’t become complacent about business and personal tax planning. Here are 10 hot summer tax-planning tips. Some of these ideas such as buying a boat, throwing a company picnic and entertaining top clients enable you to combine tax planning with summertime fun.

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Wedding Bells and Taxes: Tax Issues to Consider Before Tying the Knot

If you or a loved one plan to get married this summer, there are some important financial issues the happy couple should consider. Should you file jointly or separately in 2017? Will you be hit with the marriage penalty or be lucky enough to qualify for the marriage bonus? Here’s guidance to help answer these questions, along with a tax tip for newlywed property owners who need to combine their households.

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Capital vs. Ordinary: Classifying Income and Losses Affects Your Taxes

If you sell an asset, will the profit be taxed at the (lower) long-term capital gains rate or the (higher) ordinary income rate? Or, if you incur a loss, how soon can you deduct it? In most situations, classifying taxable gains and losses as capital or ordinary is fairly straightforward but not always. Here’s a closer look at this issue and how some courts have ruled on it recently.

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Green Tax Breaks: Are You Claiming All the Credits You Deserve?

Have you made energy-efficient purchases in recent years? If so, certain expenditures including the cost of qualifying residential equipment and certain electric vehicles may be eligible for significant credits to offset your income tax and alternative minimum tax liabilities. Here’s what you need to know, including how you can still take advantage of an expanded list of qualifying expenditures for 2016.

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Remember the New FBAR Filing Deadline

Did you have an interest in (or authority over) a foreign financial account during 2016? If so, you’ll need to electronically file a form called the “Report of Foreign Bank and Financial Accounts” (FBAR). That form which is due on April 18, 2017 may be reviewed by IRS examiners as part of its efforts to unearth offshore tax evasion. Here’s an overview of how to comply with the IRS regulations on reporting foreign accounts.

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Relying on Audit Techniques Guides

IRS examiners use Audit Techniques Guides (ATGs) to prepare for audits and so can small business owners. These publications provide detailed information about an industry or audit-prone business transaction. For example, some ATGs are devoted to cash-intensive businesses, such as restaurants and bars. Another recently updated guide covers golden parachutes paid in corporate takeovers. Here, we explain ATGs and the types of information they may provide.

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There’s Still Time to Set Up a SEP for 2016

Self-employed individuals and small business owners can still claim a deduction on their 2016 tax return for contributions to simplified employee pensions (SEPs) that are made before their tax return due date. If you haven’t set up a retirement plan yet, consider using a SEP to lower your 2016 tax bill. Here are the details on how these accounts work.

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Seniors: Consider These Tax Breaks When Filing for 2016

There are some special tax breaks that can help “experienced” taxpayers reduce their federal income tax bills, including the bill for last year. Here are the details to help you decide if the tax-saving opportunities for itemized medical expenses and catch-up contributions to retirement accounts can work for you and your senior friends and family members.

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Consider Section 179 Deductions for Real Estate Expenses

The Sec. 179 deduction for qualified real property expenses is now a permanent feature of the tax law but that doesn’t necessarily mean it’s right for you. Here are the basic considerations, including which expenses qualify. But beware: There is a potential downside to taking this deduction when it comes time for individual taxpayers to recognize gains from selling the related real property.

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