CPA Blog

Do you need to file a 2016 gift tax return by April 18?

Details

Published: Monday, 20 February 2017 08:16

Written by Phillip Strickler, CPA.CITP

Last year you may have made significant gifts to your children, grandchildren or other heirs as part of your estate planning strategy. Or perhaps you just wanted to provide loved ones with some helpful financial support. Regardless of the reason for making a gift, it’s important to know under what circumstances you’re required to file a gift tax return.

Some transfers require a return even if you don’t owe tax. And sometimes it’s desirable to file a return even if it isn’t required.

When filing is required

Generally, you’ll need to file a gift tax return for 2016 if, during the tax year, you made gifts:

• That exceeded the $14,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse),
• That exceeded the $148,000 annual exclusion for gifts to a noncitizen spouse,
• That you wish to split with your spouse to take advantage of your combined $28,000 annual exclusions,
• To a Section 529 college savings plan for your child, grandchild or other loved one and wish to accelerate up to five years’ worth of annual exclusions ($70,000) into 2016,
• Of future interests — such as remainder interests in a trust — regardless of the amount, or
• Of jointly held or community property.

Read more ...

Thinking big is the first step toward growing your business

Details

Published: Monday, 13 February 2017 08:57

Written by Phillip Strickler, CPA.CITP

Nearly every business owner wants to grow his or her company. But with growth comes risk, and that can keep you from taking the steps necessary to move forward. Yet if you don’t think big and come up with a long-term strategic plan, you’ll likely continue to spin your wheels.

Eyes on profits and value

Public companies answer to investors who consider earnings per share and stock price to be key indicators of their return on investment. Maximizing earnings is a short-term goal, but building value requires a long-term focus.

Many small to midsize businesses, however, have only their ownerships’ vision to motivate them. You also may have to operate much leaner, with more limited staff and overhead. In doing so, you may sacrifice value-building opportunities.

For example, a company that fails to invest in marketing may lose market share to a competitor that aggressively advertises and offers promotions. Or a business that hires managers only from within or chooses candidates based primarily on minimizing salary expense may lose out on the professional expertise that comes with a more seasoned management team.

Read more ...

What you need to know about the tax treatment of ISOs

Details

Published: Monday, 13 February 2017 08:43

Written by Phillip Strickler, CPA.CITP

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. However, complex tax rules apply to this type of compensation.

Current tax treatment

ISOs must comply with many rules but receive tax-favored treatment:

• You owe no tax when ISOs are granted.
• You owe no regular income tax when you exercise ISOs, but there could be alternative minimum tax (AMT) consequences.
• If you sell the stock after holding the shares at least one year from the exercise date and two years from the grant date, you pay tax on the sale at your long-term capital gains rate. You also may owe the 3.8% net investment income tax (NIIT).
• If you sell the stock before long-term capital gains treatment applies, a “disqualifying disposition” occurs and any gain is taxed as compensation at ordinary-income rates.

Read more ...

PTO banks: A smart HR solution for many companies

Details

Published: Monday, 06 February 2017 09:36

Written by Phillip Strickler, CPA.CITP

“I’m taking a sick day!” This familiar refrain usually is uttered with just cause, but not always. What if there were no sick days? No, we’re not suggesting employees be forced to work when they’re under the weather. Rather, many businesses are adopting a different paradigm when it comes to paid time off (PTO).

Under the “PTO bank” concept, employers merge most (or all) of the traditional components of excused absences (vacation time, sick time, personal days and so on) into one simple employee-managed account, typically offering not quite as many PTO days as under a traditional PTO system. One benefit of this approach is that employers are no longer put in a position to have to judge whether leave is used appropriately. PTO banks may not work for every business, but more and more companies are finding them beneficial.

6 primary motivations

There are a number of reasons that employers are offering PTO banks. Specifically, according to a survey by the HR professional society WorldatWork, here are the six primary motivations:

Read more ...