Author Archive

2% S-Corp Shareholder Health Insurance

November 18, 2013

Are you properly reporting the purchase of health insurance for any shareholders which own over 2% of the stock of an S corporation?  Watch this video from Stephen Tierney as he explains the tax implications of purchasing health insurance for this shareholder.  If you have any further questions, please call or email us at eos@ntcpas.com

 

 

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Economic Forecast – 2013

January 29, 2013

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This morning, several members of Nienow & Tierney, LLP had the opportunity to attend the 14th Annual Economic Forecast Breakfast sponsored by the OC Chapter of California Society of CPA’s.  The speaker for the morning was Dr. Esmael Adibi from the Anderson Center for Economic Research at Chapman University.

Dr. Adibi presented a forecast of cautious and slow growth for 2013.  He expects the GDP for the United States to increase by 2.1% in 2013.  This was following a 2.4% increase in 2012.

Dr Adibi also indicated that he expects consumer spending to increase by 1.8% in the United States for 2013.

In California, Dr. Adibi projects about 225,000 new jobs being produced and with 25,000 of those occurring in Orange County.   He also estimated that housing prices will increase by 6.8% in California.

It was a pleasure to hear Dr. Adibi’s forecast and we hope for an above average increase to our clients in 2013.

CPA Day at the Capital

January 27, 2013

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On January 23rd, CPA’s from all around the State of California converged on our state capital in Sacramento as a part of the annual CPA Day at the Capital.

Meetings were scheduled with each state Senator and Assemblymen/women.  It was an opportunity for the CPA profession to voice a united opinion on the topics which affect our profession and also the taxpayers for whom we prepare tax returns and financial statements.

This year, Stephen Tierney took part in this opportunity to share with our state legislature the issues which we feel are important to clients such as yourself.

We specifically called upon the legislature to forego any effort to impose sales tax on service organizations.  As a profession, we feel that this tax would provide an unfair advantage to service based business owners located outside of the state.  This additional tax would also cause increased costs to our clients for tax preparation services.

As we met with the state representatives, we also promoted a financial literacy program which is sponsored by the California Society of CPA’s.  This program is designed to educate individuals on basic financial issues such as maintaining a budget and how to save for future expenses.  These programs are provided free of charge by CPA’s around the State of California.

Stephen loved the opportunity to meet with our state representatives and participate in helping promote issues for our clients and our profession.  He looks forward to participating in this event in future years.

FTB Installment Payment Error

January 18, 2013

On December 28, the Franchise Tax Board (FTB) computer system failed to post around 25,000 installment agreement payments.  This error only relates to payments that were made by automatic withdrawal for installment agreements that taxpayers had with the FTB.  This computer error did not impact payments made through the web payment system for estimated tax or prior liabilities.

If you are currently set up for automatic withdrawal, you should check to see if the funds have been withdrawn from your account for December.  The FTB has sent a letter to the taxpayers who would have been impacted by this error.  The FTB is requesting that the taxpayers impacted resubmit the payment.  If the payment is received within 10 days of the letter, then the payment will be applied effective December 28, 2012.

As always, please contact us if you have any questions.

Simplified Home Office Deduction Calculations

January 18, 2013

The IRS has introduced a new simplified system for calculating the home office deduction.  Beginning with the filing of the 2013 tax returns (in 2014), taxpayers will be able to claim $5 per square foot for a home office deduction.  This simplified method is limited to a maximum deduction of 300 feet or $1,500.    If taxpayers decide to take advantage of this new method, they will be able to complete a much simpler form from the current 43 line Form 8829.

The new simplified method does not reduce the eligibility requirements for determining if taxpayers qualify to take a home office deduction.  This change just simplifies the record keeping requirements and calculations for deducting a home office.

With the new option, taxpayers will not have to break out the mortgage interest or property tax portion of their home office.  They will still be allowed to take 100% of these deductions on Schedule A.  The new simplified system does not permit the taxpayer to claim any depreciation for the use of a home office.

If you have any questions, please contact our office.

 

Anaheim Enterprise Zone Credits

December 11, 2012

 

On February 1, 2012, the State of California designated the City of Anaheim as eligible to receive Enterprise Zone Credits.

These credits provide tax incentives to businesses that are located in the specified Enterprise Zones.  There are currently 42  zones located in the State of California.  This program was established in 1984 to stimulate the economy in several depressed areas.

Anaheim will receive the designation for 15 years (through January 31, 2027).

There are several ways to receive the tax incentives.

1. Hiring Tax Credits – Businesses located within the Enterprise Zone that hire qualified individuals can earn up to $37,440 in state credits for each qualified employee hired.  These credits can be used to directly offset state income tax and can be carried over until used up.

2.  Sales Tax Credit – Companies can earn sales tax credits on the purchase of machinery and equipment.  The business will receive a state tax credit equal to the sales or use tax paid on up to $20 million per year of equipment purchased.

3. Interest Deduction – Lenders that loan money to businesses located in the Enterprise Zone are not taxed on the net interest income earned on the loan.  This can save of thousands of dollars in tax each year.

To find out if your business is located in the Anaheim Enterprise Zone, please click the following link.

www.anaheimchamber.org/anaheimez/boundaries.asp

If you would like more information about Enterprise Zone credits or to find out if your business is located in one of the 42 zones, please contact our office at (714) 836-8300.

Save taxes by donating appreciated assets

July 20, 2012

 

One of the most effective but sometimes unknown ways to make a charitable donation to a nonprofit organization is by giving appreciated assets such as stocks, real estate or investments. The donation of appreciated assets when properly planned can have a tax benefit to the taxpayer as well as provide a significant and lasting benefit to the charitable organization. This approach also allows a donor to make a meaningful contribution to a charity without necessarily impacting their monthly cash flow.

In order to take advantage of this tax saving strategy, the donor needs to keep in mind the following factors. First, the taxpayer needs to determine that the item being donated is a capital asset. Capital assets are usually personal property (not business property) that if held for over one year would be subject to long term capital gain rates when sold. Examples of capital assets would be stocks, rental properties, bonds, jewelry, coin collections and cars.

Next, the taxpayer needs to donate the investment directly to the charity without selling it first. If the donor sells the investment personally and then donates the money to charity, they will need to report the capital gain on their personal income tax returns and pay the appropriate long term capital gains taxes. This transaction reduces the amount of the charitable deduction available to the donor and also results in less cash contributed to the nonprofit organization.

If the donor adheres to these factors, they are allowed a tax deduction equal to the fair market value of the donated item and will not be subject to any taxation. This fair market value deduction is allowed regardless of the basis (usually the purchase price) in the investment by the taxpayer. The taxpayer’s deduction for a donation to charity can be up to 30% of their adjusted gross income in any given year. Any donation over the 30% limitation can be carried forward and used in the future up to five years.

As individuals start reviewing their year-end tax plans, this strategy can significantly reduce a taxpayer’s income tax liability. But before making a donation you should discuss your specific situation with your tax advisor.

How do I start a nonprofit organization–step 1

February 17, 2012

There are many steps involved in forming a nonprofit organization.  When you started your movement, idea, or ministry, you were excited about the goals you were accomplishing.  Your ministry starts developing and you realize that in order for your organization to grow and reach other individuals, you need to get a more formal entity in place.  You are now ready to take it to the next level.

The first step in forming a 501(c)(3)nonprofit charity organization is to form a nonprofit corporation or LLC.  This corporation will be formed at the state level.  You will need to enlist the assistance of an attorney and he/she will guide you in deciding what type of nonprofit corporation will best suite your organization.  In the State of California you will want to go to the Secretary of State office and search to ensure your business name has not already been used.  The website is http://kepler.sos.ca.gov/.

This website is a great resource in helping you start your entity and to stay in compliance with the state.

There are three categories of California nonprofit  corporations.  You will need to decide if your nonprofit corporation will be organized as a Mutual Benefit, Public Benefit or a Religious corporation.

  1. A Religious corporation is one organized to operate a church or structured primarily for religious purposes.
  2. A Public Benefit corporation is organized primarily for charitable purposes and plans to obtain state tax exempt status under California Revenue and Tax Code section 23701(d).  This category covers most of your 501(c)(3) organizations, civic leagues or social welfare organizations.
  3. A Mutual Benefit corporation is corporation organized other than religious charitable, civic league or social welfare purposes.  These organizations may not be planning tax exempt status at all.

Following you will find a link to download the instructions and sample forms needed to file your Articles of Incorporation. 

www.sos.ca.gov/business/corp/pdf/articles/corp_artsnp.pdf

After filing your articles, you will receive back a stamped copy from the state indicating the approval of your Articles of Incorporation and your new state identification number.

You are now ready to move onto the next step.

As always if we can be of service, please contact steve@ntcpas.com

2012 OC Economic Forecast

February 8, 2012

On January 24th, Dr. Esmael Adibi presented the 2012 Economic Forecast at the California Society of CPA’s event in Orange County.  Dr. Adibi is the director of the A. Gary Anderson Center for Economic Research at Chapman University. 

His presentation projected a positive but small growth in the economy in 2012 and mild improvements in consumer spending. 

One of the main area’s that Dr. Adibi focused on was job growth.  He indicated that it is taking so much longer for our country to break out of the recession because there is less job creation than at the end of previous recessions.  There have been 11 recessions in the US since World War II and this recession is one of the longest because there are no new jobs to boost the economy.  He mentioned that presidents are irrelevant when it comes to our economic growth but new jobs are the key. 

Dr. Adibi projected mild increases in auto sales and consumer spending in 2012.  One encouraging sign for the US is that Canada and Mexico are both growing.  These countries are the leading export for the US.

Dr. Adibi concluded that consumer’s personal income should rise by 5.4% in 2012 but that the housing market will still remain flat with only a .2% increase in the current year.

Stephen Tierney on “Real Orange” television show on Thursday

February 1, 2012

Real Orange

On Thursday at 5pm, Stephen Tierney will be featured on the PBS broadcast of “Real Orange”.  Stephen is partner at Nienow & Tierney, LLP and also the Chief Running Officer for Up and Running Again.  Up and Running again is a nonprofit dedicated to training homeless and at-risk youth to run half marathons.

Steve will be given the opportunity to share with the Orange County community the mission of Up and Running Again.  In the interview, he hopes to communicate the amazing achievements that so many of the homeless and at-risk kids have completed over the past year. 

The show will air on channel 50 in the Orange County area.

Also don’t forget to look for Up and Running Again at the Surf City half marathon on Sunday February 5th!