Do you know the 5 Year plus One Day Rule ?

For homeowners, this tax law rule is critical for you to understand. Why ?…..well, just about everyone knows that when you sell your primary residence, you are entitled to exclude the first $250K/$500K of gain, depending on whether you file your taxes as a single taxpayer or Married Filing Joint.  There, of course, is a mathematical calculation you must complete ( and a Form to file with your personal income tax return.

https://www.irs.gov/publications/p523/index.html

What most of us do not know is that we can receive this capital gain exclusion again, and again, and again, as long as we abide by the 5 years plus 1-day rule. This rule essentially states that, as long as you lived in your primary residence for two (any two) of the last five years, you can again utilize this wonderful tax benefit.

On the opposite side,  losses resulting from the sale of your primary residence are not deductible, and if you meet a portion of the 5 years plus 1-day rule, you are eligible to receive a pro-rata share of the exclusion. Working with an expert Tax Accounting firm like Core Performance is the ideal way to ensure you achieve the maximum benefit from the tax code. Let us know how we can assist you? we are truly here to help in any way we can. http://coreperformance.net/contact/

Hello People – Important Consideration – Did you Receive a raise or are you expecting one?

Here are some important reminders as you think about compensation, tax planning, savings and retirement planning.

The amount of tax withheld from your paycheck should increase automatically along with your higher income. But if you’re working two jobs, have significant outside income (from investments or self-employment), or you and your spouse file a joint tax return, the raise could push you into a higher tax bracket that may not be accounted for in the Form W-4 on file with your employer. Even if you aren’t getting a raise, ensuring that your withholding lines up closely with your anticipated tax liability is smart tax planning. Use the IRS Withholding Calculator; then, if necessary, tell your employer you’d like to adjust your W-4. We can help you navigate through this process if you prefer guidance.

Another thing to consider is using some of the additional income from your raise to increase your contribution to a 401(k) or similar qualified retirement plan. That way, you’re reducing your taxable income and saving more for retirement at the same time. Please contact us at peterc@coreperformance.net to review or discuss and we will get back to you promptly. Here’s hoping you have an awesome summer.

What’s better for Tax & Investment Purposes? Election of a Partnership or an S-Corp?

April 3, 2017 · Posted in Accounting, Profitability Tips, Tax Planning · Comment 

Let’s get QuizziCAL: LLCs and Partnerships

Here’s a stumper for our tax experts!

Your client Esteban, a chef of growing acclaim, recently left New York because he couldn’t stand the thought of a burrito being classified as a sandwich and was forced to pay sales tax on his most notable creation, the Spicy Mayan Lobster Burrito con Mojo. He came to California to be a part of the wildly expanding culinary scene in Los Angeles and plans to open his own restaurant at Row DTLA, an exciting and massive complex in the downtown Arts District. In the meantime, he has met Siouxzi, a creative mixologist who makes an astonishing cranberry lime margarita. The two want to form a business.

Esteban and Siouxzi are trying to decide whether to form as an S corporation or an LLC. They plan to invest $25,000 each, and they believe they will operate at a $75,000 loss per year for the first two years. To cover the losses, the business will have a $100,000 line of credit, which they both must personally guarantee. Under which business structure will Esteban and Siouxzi be able to deduct all of the losses?

Answer:

The should form an LLC, because they will be able to include the loan guarantee as part of their basis; whereas the S corporation basis is limited to their contributions and loans they personally make to the business. For more information,

Documenting Improvements to Real Property – Don’t get Screwed!

We often work with Companies constructing improvements to Real Property, including Commercial and Residential Real Estate that they own or lease. As we know,  these additions to the real property are essential in determining your investment in, or basis, in the property.  Down the road, when the Company taxpayer goes to sell the property, maintaining accurate records makes the difference between an optimal capital gain or loss calculation, and a less than optimal. We all know about the difference between these two.

Our clients rely on us to document to the California Board of Equalization (BOE), in order to establish the personal income tax adjusted basis of real property sold by them, based on information provided by the taxpayers’ external accountants, who tracked all costs and expenses of construction on the property and maintained bank and other financial records, receipts, and information.

When our clients rely on us to maintain the construction accoutning, the BOE always finds that the information compiled and provided by us, our client’s Accountants, was the most reliable.  The BOE notes that the evidence submitted by the Accountants  reflected amounts for capitalized construction loan interest and capitalized mortgage interest included in the adjusted basis reported by the taxpayers. Those amounts were tracked meticulously on a detailed schedule that reflected the exact amounts of interest that were paid and whether the taxpayers had claimed those mortgage interest payments as current year deductions or had capitalized those amounts. So, we do go the extra mile. We do provide exactly what is needed to support and defend our Client’s interests. So, contact us for your Real Estate Project. We’re Real Estate Experts, and we know exactly what the BOE, the IRS and the FTB is requiring. You’ll be so thankful, and so will we.

Happy New Year’s 2017 to all our Readers – here’s some valuable details for you to Digest!

December 28, 2016 · Posted in Accounting, Decision-Making Tips, Profitability Tips, Tax Planning · Comment 

Here are the most essential updated limits for 2017; as we have identified for our Business Owner and Family clients.

Social Security maximum wage base for 2017 increased to $127,200. Amounts withheld at the 6.2% rate from an employee will now be $7,886.40 with the employer matching it. A self-employed person will pay the employee’s and employer’s shares which will be almost $15,772.80. The 1.45% Medicare tax is in addition to this and there is no salary cap on that. The employer will match employee’s amount and the self-employed will pay both shares. The employee’s total withholding tax will be7.65% and self-employed will be 15.3% on amounts up to the wage base and 1.45% and 2.9% on amount over that.

Capital Gains: Maximum rate is 20% plus 3.8% if the Net Investment Income Tax applies. The 0% rate will apply to extent ordinary income is taxed at a rate below 25%. A 15% rate is for individuals taxed at a 25% ordinary income tax rate or higher but below the 39.6% rate. The rate is 25% for unrecaptured Section 1250 depreciation; and 28% for long term sales of collectibles.

Alternative Minimum Tax exemption for those married filing jointly will be $84,500 and for singles $54,300. The exemption starts to phase out when joint and single income exceeds $160,900 and $120,700.

Personal exemption is $4,050 and starts to phase out when joint and single AGI reaches $313,800 and $259,400.

Section 179 Depreciation: $510,000 with this amount being reduced when the cost of qualifying property exceeds $2,030,000.

Gift Tax Annual Exclusion: $14,000 per person receiving a gift. This is doubled if there is a consenting spouse.

Estate and Gift Tax Lifetime Exemption: $5,490,000. For gifts this is doubled if there is a consenting spouse.

IRA contribution limit is $5,500 and an extra $1,000 for those who are age 50 and over. The limits apply for both traditional and Roth IRAs. There are phase outs for traditional IRAs for taxpayers covered by an employer plan; and for Roth IRAs based on AGI.

401k, 403b and most 457 plan contribution limits: $18,000 plus $6.000 for taxpayers past their 50th birthday.

Defined contribution limits: $54,000 plus $6,000 for those past their 50th birthday. SEP plans are not eligible for the over age 50 additional contributions.

Solo 401k plan combined with a SEP: $54,000 plus $6,000 for those past their 50th birthday.

SIMPLE plan limits are $12,500. The extra over age 50 amount is $3,000.

Medicare Part B premiums for those over age 65: Joint Modified AGI up to $170,000, $134.00 per month; MAGI over $170,000 up to $214,000, $187.50; MAGI over $214,000 up to $320,000, $267.00; MAGI over $320,000 up to $428,000, $348.30; MAGI over $428,000, $428.60. The single limits are half of the joint MAGI amounts for the premiums shown. These amounts will be reduced somewhat if you have the Medicare premiums deducted from your monthly Social Security benefits. Tip: These payments are deductible as medical insurance premiums which is especially beneficial for self-employed taxpayers. The Modified AGI reported on your 2015 tax return determines your 2017 premiums. To reduce your MAGI for 2017 (almost too late for 2016) consider transferring part or all of your 2017 Required Minimum Distributions (up to $100,000) directly to a charity. This might help reduce your 2019 premiums. You should consult with a tax advisor for other strategies to reduce MAGI. Starting early in the year will give you the best opportunities for tax planning.

Retirement plan tip: Consider making your 2017 contributions in January 2017 or as early in the year as you could so the tax deferred earnings start. Also, some plan contributions for 2016 can be made in 2017 and some of the plans can be opened in 2017 for the 2016 tax year. Further, do not overlook IRA contributions for non-working spouses. Self-employed people with no employees should consider a solo 401k combined with a SEP – if you qualify for 2016, open it ASAP! This must be done before Dec 31, 2016.

There are other items but these cover the most items we get questions about. All of these amounts and limits should be checked for amount and applicability with our office as your tax advisor.

Use the Federal and State Tax Code to the Best of Your Advantage

Our business is built entirely on advising Entrepreneurs on profit and growth strategies, using accurate accounting and management reporting; and then we show them tax efficient investment plans and strategies to keep their wealth. In order to do this effectively, we structure our relationship with our Clients to meet regularly for review and updating of their plans and strategies so they fit into the present circumstances and goals. A big part of that is year-end timing and income/spending decisions to minimize the impact of taxes over the lifetime of the business. We can help your business succeed in these critical areas. We focus on achieving these goals for our Customers daily, so that when the time comes, we are ready to deliver results that matter to you. Please review our year-end Tax Guide, then drop me at note or place a call so we can set up a time to discuss your specific situation and requirements. You’ll be happy you did this, and your views about Accountants may change as well.

Peter P Cullen

peterc@coreperformance.net

949 478-4795

2016-year-end-tax-planning

We help individuals, businesses, and exempt organizations get back on the right track

October 5, 2016 · Posted in Accounting, Profitability Tips, Tax Planning · Comment 

FreshBooksCertified (1)bbblogo

cqbc_mediumIs your IRS or FTB problem causing financial difficulty, or do you believe an IRS procedure isn’t working as it should? if so, please contact us at http://coreperformance.net/contact/ – and a team member will respond the same business day.

Our tax resolution engagements generally fit into one of the following types:

1) Where a taxpayer is experiencing some financial difficulty, emergency, or hardship, and the IRS needs to move much faster than it usually does under its normal procedures. If the IRS doesn’t act quickly (for example, to remove a levy or release a lien), the taxpayer will experience even more financial harm.

2) Where many different IRS units and steps are involved, and the case needs a “coordinator” or “traffic cop” to make sure everyone does their part. We play that role.

3)Where the taxpayer has tried to resolve a problem through normal IRS channels but those channels have broken down.

4) Where the taxpayer is presenting unique facts or issues (including legal issues), and the IRS is applying a “one size fits all” approach, isn’t listening to the taxpayer, or doesn’t recognize that it needs new guidance for those circumstances.

We can assist you in quickly resolving these issues. Just contact us!

Why it’s Important to understand your future Tax expense and what this has to with Click Thru Nexus?

May 10, 2016 · Posted in Accounting, Profitability Tips, Tax Planning · Comment 

Work Local Awards - FBFreshBooksCertified (1)This may sound like an unusual title for a Blog Post. And yet, I believe when you see the logic and how the evidence is laid out, you will see that State and Local Sales and Income tax revenues in the near future will look very different than they do now. First some basic facts about the current state of business, Company formation, the broader economy, governmental budget pressures, and how this all fits together:

• Businesses are less inclined to station their own employees and property in any given location. People work virtually, which means they have the potential to establish nexus in multiple jurisdictions. Thereby, incurring tax liabilities in multiple States and jurisdictions.

• E-commerce companies are increasing in numbers and in capabilities, meaning a greater number of buyers are using vendors without physical presence in the state of delivery. This is putting pressure on the States to change they way they govern and tax online transactions.

• Actions and inaction by the federal government and courts cause confusion regarding acceptable standards for nexus. It’s cloudy out there, like the wild wild west when it comes to defining taxing jurisdictions.

• States want to increase revenue, and the perception that E-commerce is evading tax assessment and impatience/aggravation with guidance from the federal government is leading to greater disparity in standards between states.

• Businesses are operating under the new normal circumstances of doing more with less. This is a growing wave, and we are in the early stages.

• More and more State legislatures are defining the sale of Digital Goods as a taxable event in their state.

•  Impact of digital currency – The larger states are now defining Digital Currency as Cryptocurrency – A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. This allows the states and the Federal Government to treat Digital Currency as property, like Inventory, or an Investment, e.g. taxable.

• Businesses will now look at Accruing Loss Contingencies, for sales/use tax liabilities, when it is probable that a State will assess a tax.

All this points out that Tax Expense, which used to be directly connected to the business transactions done within your own State, are increasingly shifting to Indirect Tax, which can come about from many places at the same time, based on differing interpretations of Commerce, Click thru Nexus, and a State’s desire to claw back at online sellers. You need a tax expert who thinks about and applies logic to every business situation, so that proper business structuring, using tax planning as a key ingredient, will become paramount. If it has not done so already. Please contact us to discuss your business situation, and how we can help you mitigate the very real risk that these imminent pressures will impact your business operations.

natp

 

 

 

Paying your Taxes has never been this easy!

April 4, 2016 · Posted in Accounting, Business Tips, Tax Planning · Comment 

The IRS offers several payment options for you to consider as the April tax deadline approaches.You can pay online, by phone or from your mobile device. Paying online is easy and secure. Here are a few of the options  available to you:

  1. When you’re e-filing your taxes, you can use the electronic funds withdrawal method. EFW allows you to e-file and pay from your bank account when you are using tax preparation software or a tax professional. Your can schedule your payment any time before your taxes are due.
  2. You can use IRS Direct Pay anytime to pay your taxes directly from your checking or savings accounts at no cost to you. You receive instant confirmation that your payment was submitted, and you can schedule your payment up to 30 days in advance.
  3. Another option is paying your taxes by phone or online through any of the secure debit and credit card processors. Though the IRS does not charge a fee for this service, the card processors do.
  4. There’s also the Electronic Federal Tax Payment System. It’s free, and it takes five to seven business days to enroll before you can make a payment. If you can’t pay in full, you may want to consider requesting a payment agreement. If you owe $50,000 or less in individual income taxes and can pay the full amount within 72 months or less, you can use the online payment agreement tool.
  5. There’s no need to call or write the IRS because you make the request directly from your computer. It’s easy, and your personal information is safe and secure. If you prefer to pay with your mobile device, use IRS2Go, the official mobile app of the IRS. IRS2Go provides easy access to the mobile-friendly payment options Direct Pay for free, and debit or credit card payments through an approved payment processor for a fee. You can download IRS2Go from Google Play, the Apple App Store or Amazon and make your payments when it’s convenient for you.
  6. Visit IRS.gov/Payments for easy and secure ways to pay your taxes. Electronic payment options are quick, easy, secure and much faster than mailing a check or money order. April 1, 2016 

How do we convert all of the newly available insight into better decisions ?

I have been saying for awhile now that technology frees finance & accounting departments of the time-consuming manual responsibilities of the past. As a result, today’s accounting and business finance professionals are expected to take advantage of these efficiencies – to show results and plan strategically. To accomplish this, Accountants must incorporate analytics into their daily work, in order to develop expertise at using the results of the analytics. What are these results of improved analytics? ….. better data, more aligned with Customer requirements, and agile enough to bend with changing times.

Cloud Accounting technology gives us the ability to store and organize large sets of data over time so that results can be analyzed effectively, KPIs can be benchmarked against companies in a specific peer group and resources can be allocated appropriately. These unconventional activities provide an opportunity for us to elevate the value of our businesses’ accounting function by demonstrating our ability to turn data into knowledge and ultimately provide client companies with a competitive market advantage.

ANALYTICS AND BENCHMARKING

Analytical tools are designed to help you gather insight from your data and develop a business wealth creation strategy for your company. With access to benchmarking results, you can quickly compare your company results to those within your peer group—a game-changing advantage.

The key point here is that analysis and insight not only gives you an opportunity to plan strategically, but it can also provide your company with a tangible competitive edge. Now that you know how cloud accounting technologies enable you to glean business insight from your data, learn more about how Core Performance delivers better results for its clients, stay tuned to this blog.

Next Page »

  • top-100-90x90
  • Client Center

  • Is Your Business Leaking Money?

    Want to Know the Top 10 Money Leaks in Your Accounting System?
    Enter your email below and get Peter's free report:
    You'll also receive our free newsletter full of QuickBooks and Business tips.
  • Our Certifications

  • Complimentary Consultation

    Want a free consult with Peter?
    Call us at 949-502-4680 or email us to schedule your free consult today.

  • Our Latest Testimonial

    “Peter Cullen is the best at what he offers- a comprehensive solution to managing a business thru QuickBooks.”
    --Debbie Biscotti,
    District Sales Manager at Ovation Payroll Service

  • Connect With Us