2012 tax calendar
The perfect exit strategy for business owners
Understanding the Offshore Voluntary Disclosure Program
IRS revises guidance on W-2 reporting of group health insurance costs
A quick look at recent IRS releases
Better governance starts with better ED and board relationship
Double strength: Merging can make your not-for-profit twice as effective
Dealing with terminated employees plan balances
Consider mediation for your next construction dispute
IRS releases extensive rules that affect businesses with tangible property
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2012 tax calendar
2012 Tax Calendar To help you make sure you don’t miss any important 2012 deadlines, we’ve provided this summary of when various tax-related forms, payments and other actions are due. Please review it and let us know if you have any questions about the deadlines or would like assistance in meeting them. Click here for a printer friendly (PDF) version of this calendar. Date…
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The perfect exit strategy for business owners
Overview: At some point in time, every business owner will retire and either sell his or her ownership interest or leave the company to others. The key to a seamless transfer is to identify an exit strategy that addresses the needs of not only the departing owner, but also the company in question. This article describes the ins and outs of creating an effective exit strategy, and looks at the various legal options available, depending on the owner’s goal for the business. The…
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Understanding the Offshore Voluntary Disclosure Program
Overview: Because of continued strong interest from taxpayers and tax practitioners alike, the IRS has reopened its Offshore Voluntary Disclosure Program (OVDP) for a third time. This article details the OVDP program and explains how the 2012 program differs from the previous two. IRS reopens the OVDP for a third time Because of continued strong interest from taxpayers and tax practitioners alike, the IRS has reopened its Offshore Voluntary Disclosure Program (OVDP) for a third time…
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IRS revises guidance on W-2 reporting of group health insurance costs
Overview: A provision of the 2010 health care reform law will generally require employers to report the cost of employer-sponsored group health coverage on the W-2 forms they furnish to employees. Last year, the IRS issued Notice 2011-28 to provide interim guidance on this requirement. On Jan. 4, 2012, the IRS issued Notice 2012-9, which modifies and expands the interim guidance. This article explains the reporting requirements and summarizes the key changes under the new guidance…
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A quick look at recent IRS releases
Not-for-profits must pay careful attention to all IRS releases regarding tax-exempt entities. If you don’t comply with the rule changes and guidance issued, your not-for-profit could end up wasting a lot of time — and even lose its tax-exempt status. Two recent IRS actions merit your attention. 1. Form 990 rules finalized On Sept. 8, 2011, the IRS released final rules for the redesigned Form 990. Also known as “Return of Organization Exempt From Income Tax,” this is…
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Better governance starts with better ED and board relationship
Most not-for-profits are led by an executive director (ED) and a board of directors — separate parties that, nevertheless, rely on one another to be effective. For example, if an ED fails to keep her board apprised of a developing financial crisis, the board can’t develop strategies to address it. Or, if a board fails to provide its ED with performance feedback, he may not know how he needs to improve — and, by extension, how the organization as a whole could be doing better…
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Double strength: Merging can make your not-for-profit twice as effective
The weak economy has been particularly hard on not-for-profits. Reduced government funding and donor support and stiff competition for grants have forced some to even question how long they’ll be able to remain in operation. If your organization is struggling and other not-for-profits provide similar services in your community, you may want to consider a merger. Teaming up with another not-for-profit enables you to pool resources, cut costs and possibly better serve your constituents. A…
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Dealing with terminated employees plan balances
When a participant terminates employment with a company and leaves a vested account balance in the plan, several options are available. The terms of your plan document will control the participant’s decision. Force-outs Generally, when a participant’s vested account balance is $5,000 or less, the plan can require the participant to take a distribution. The payout may be in the form of a cash distribution or by rolling the balance into an IRA or a new employer’s plan. If the…
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Consider mediation for your next construction dispute
It’s going to happen. A construction dispute, that is. You can hope that every job from here on out goes smoothly. But, if you stay in business long enough, it’s highly likely you’ll encounter a situation with an owner or developer that can’t be resolved with a simple chat. In such situations, lengthy and expensive litigation may seem inevitable — and if not that, a binding arbitration hearing. But there’s another alternative to consider: mediation. A…
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IRS releases extensive rules that affect businesses with tangible property
Overview: The IRS has issued its long-awaited regulations on the tax treatment of expenditures related to tangible property. The regulations are intended to simplify compliance with Section 263 of the Internal Revenue Code, which generally requires the capitalization of amounts paid to acquire, produce or improve tangible property. This article provides an overview of the regulations, which focus largely on how to determine whether expenditures are for deductible repairs or capital…
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Congress extends payroll tax relief, for 2 months
After much debate and political maneuvering, Congress has passed a two-month extension of payroll tax relief. The Temporary Payroll Tax Cut Continuation Act of 2011 will extend through Feb. 29, 2012, the 2010 Tax Relief act provision that reduced the employee portion of the Social Security tax on earned income from 6.2% to 4.2%. The Senate had passed a previous version of the act Dec. 17, but that version couldn’t garner enough votes in the House. In negotiations with Speaker of the…
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IRS issues form and guidance for reporting foreign financial assets
The IRS has released a new form for reporting foreign financial assets for the 2011 tax year, as well as some guidance on who must file the form. The agency warns that individual taxpayers should take the time to determine whether they need to file Form 8938, Statement of Specified Foreign Financial Assets, because failure to comply can trigger some significant penalties. Required foreign asset reporting The filing requirement is part of the Foreign Asset Tax Compliance Act (FATCA), which was…
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Deadline looms to begin using Form 8955-SSA
The IRS announced on June 18, 2011, that all qualified retirement plans and ERISA 403(b) plans must comply with a new IRS filing requirement by January 17th, 2012. In short, plans must file the new IRS Form 8955-SSA to report terminated participants with remaining plan balances. The new Form replaces the Schedule SSA that was eliminated in 2009. What information must be reported? The Form requires the filer to report any participant who terminated in a prior year and still has…
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The IRS's 2012 cost-of-living adjustments are a little more significant than in recent years
On Oct. 20, the IRS released most cost-of-living adjustments for 2012. These are automatic adjustments built into the tax law, but they don’t always result in increases. With inflation now a little higher than it has been, some amounts that haven’t risen in recent years are increasing for 2012. Still, there are many amounts that will stay the same as they were for 2011. The changes — or lack thereof — could affect your tax planning. Retirement plans For the first time…
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Avoid Costly Mistakes with a Review of Plan Administration Basics
The Devil is in the Details Once annual enrollment has come and gone, it's a good time to brush up on some basic employee benefit plan requirements, to help avoid the common mistakes made in plan administration. The following list of potential errors is by no means exhaustive, but represents a sampling of issues to steer clear of: • Keep your plan documents up to date and reference them in related plan communications. ERISA requires that all employee benefit plans be maintained…
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Saving for retirement is becoming more challenging
Saving for retirement is becoming more and more challenging. Longer life expectancies, fewer traditional pensions, and making the right investment decisions are the most obvious challenges. But there are other threats to your retirement. Here's a look at some of them: • Benefits can change. Your employer can't take away benefits you've already earned, but benefits going forward can be reduced. Traditional pension plans experienced massive losses during the market decline …
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Coordinating All Your Investments
Don't view your 401(k) investments in isolation, without considering your other investments. To help maximize your investment results, first make overall decisions for your entire portfolio, then determine how your 401(k) investments fit into that plan. Some items to consider include: • Consider the tax consequences before making 401(k) investments. Earnings on investments inside your 401(k) plan are tax deferred until withdrawn, with capital gains taxed at ordinary…
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Detecting, Correcting and Avoiding Plan Errors
The IRS has released a list of 11 potential 401(k) plan errors. Has your company's plan made any of them? Ignoring these mistakes can lead to costly penalties and even disqualification of a plan's tax-favored status. The good news is you may be able to correct errors before the IRS comes calling. It is critical to keep your company's 401(k) plan in compliance with numerous federal laws and regulations. Plans that are found to be in violation risk expensive penalties and disqualification. The…
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Tax Qualified Retirement Plans Should be Designed to Maximize Owners Goals
Note: This article originally appeared in the Cincinnati Business Courier's Goering Center Supplement. In an economic climate where tax increases may be imminent, smart privately-held companies are taking a second look at their current tax qualified retirement plans. Business owners with an eye on their own retirement goals are requesting innovative changes to their plan designs so they can wisely shelter more of their wealth. It may be time for you to review your benefit plan…
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Hiding Assets with a Plastic Spending Account
In an attempt to hide cash in a divorce, bankruptcy or other case of financial wrongdoing, some perpetrators turn to credit cards. Read how the schemes work and how financial investigators track down the hidden assets. When a bankruptcy or divorce case involves embezzlement, fraud, defalcation, or hidden assets, cash is the most difficult item to trace. It's fungible and leaves no record of ownership or transfer if kept outside of the banking system. Few of us keep track of the serial numbers…
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Should Valuations be Formal or Informal
At some point, business owners need to determine the value of their companies for purposes such as estate planning, divorce settlement, a potential sale, recapitalization or a shareholder dispute. The article explains more about the types of valuations that can be obtained. Business owners frequently need to determine how much their companies are worth. The valuation reports they can obtain range from informal to formal, depending on the purpose of the valuation and its intended use. Here's a…
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Goodwill It Can Be Personal
Valuing the goodwill of a business involves separating personal factors from other assets. Here's an explanation of how it's done. If you talk to business owners or professional practitioners, many will tell you that their businesses or practices could not survive without them. That may be a bit of an exaggeration, but they do have a point. The goodwill of a business or professional practice can be a critical factor and consists of two distinct parts: 1. The reputation of the owner. This is…
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Discounts When Valuing Company Stock
Business owners often receive generous discounts when valuing company stock for gift tax purposes. Here's how one couple transferred shares of their business to family members at a 40 percent discount. When valuing gifts of stock in a closely held business, it's not unusual for steep discounts to be allowed. For gift tax purposes, the discounts are available for two reasons: The lack of marketability of shares in a closely held company and the lack of control that a minority shareholder has…
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Defined Contribution Plans vs Defined Benefit Plans
What is the best retirement plan for your business? The answer depends on several factors, including the ages of owners and employees, the number of years to retirement, and more. This article explains some of the options available and how they can benefit you and your business from a tax-savings standpoint. Which Option Is Right For Your Business? Have you procrastinated in setting up a tax-advantaged retirement plan for your business? If the answer is yes, you're not alone. Still, not…
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Countdown to Retirement
When your retirement date is only a couple of years away, take steps to ensure that all financial arrangements are in place. Some items to consider include: • How much will you spend annually during retirement? You probably looked at these numbers when planning for retirement, but take one final look based on your current retirement plans. Don't wait until after you retire, when your options are more limited. Based on this analysis, you may decide to postpone retirement or look for…
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Avoid These Distribution Mistakes
During your working years, your emphasis was to accumulate as much as possible for retirement. But as you near retirement age, you need to start thinking about how to withdraw those funds to maximize your income. To help accomplish that, avoid these mistakes: • Not understanding all available options. Each retirement option, such as 401(k) plans, profit-sharing plans, and individual retirement accounts (IRAs), has different tax and plan rules regarding withdrawals. Review all your…
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Small Employers Get 7-Day Safe Harbor for 401(k) Deposits
Employee retirement plans bring with them a boatload of rules that can be daunting. Unfortunately, the rules are a necessary evil when employee funds are involved. But the Labor Department has heard the concerns of small businesses and is working to make the red tape a little easier to navigate. Read on to learn how certain employers now have a safe harbor when it comes to depositing employee 401(k) contributions. Timing is Everything Small employers* now have added certainty in knowing their…
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Meeting the ERISA Plan Audit Requirement
Certain benefit plans must include an independent audit with the annual report required under the Employee Retirement Income Security Act. Click "Full Article" for a rundown of the requirements and exemptions. Large Plans Are Most Affected When filing the Form 5500 annual report for employee benefit plans that is required under the Employee Retirement Income Security Act, employer-sponsors must also be sure to include a financial statement audit for certain types of plans. The audit, which…
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Stretching Your IRA Balance Out
With the increased limits for individual retirement account contributions and the ability to roll over 401(k) balances to an IRA when leaving a job, many investors have significant IRA balances. Thus, IRAs are becoming more than just retirement planning vehicles. Click "Full Article" to see how they are also estate planning tools for investors who won't use the entire balance during their lifetimes. With the increased limits for individual retirement account (IRA) contributions and…
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A Compass for Your 401k
Retirement plan investment options can be complicated to navigate and while investment policy statements are de rigueur in defined benefit plans, they are less frequent with 401(k)s. Yet, there are many advantages to having a policy document to clarify goals and manage fiduciary responsibilities. Read on for some guidelines of what these statements should cover. Keep It Clear and Transparent Do you need an investment policy statement for your 401(k) plan? The answer is "yes," given…
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Do You Know What Your Business Is Worth?
This article originally appeared in the Cincinnati Business Courier, Goering Center Supplement. “October. This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” - Mark Twain The reasoning above could certainly be applied to valuing small businesses. The values of publicly traded stocks change significantly from day to day, so…
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The Importance of a Buy-Sell Agreement
To avoid future conflicts and to protect their interests, business co-owners generally need a buy-sell agreement. Without one, an unanticipated event can damage - and even destroy - a business. Here is an overview of buy-sell agreements, along with the methods used to value business ownership interests. A Buy-Sell Agreement Can: Transform a closely-held business ownership interest into a liquid…
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Buy-Out Provisions Can Cause Higher Valuation
When drafting buy-out provisions in a closely held business, you should anticipate that they will be used for other purposes. Here's one divorce case where such a provision resulted in a valuation that was higher than the husband desired. How Business Agreements: Can Figure into a Divorce The buy-out provisions in a partnership or membership agreement are designed to maintain control of the firm and help partners cash out their interests. However, those same provisions can be used in ways…
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A Question of Value
When an estate contains stock in a closely held business interest, it is essential to have a professional valuation that uses recognized and accepted methods. The IRS often challenges these values - and the underlying methods must be able to withstand scrutiny from auditors and the courts. In one case, a decedent's shares in a bank holding company were valued at $50 a share on the estate tax return, yet IRS auditors determined the value to be $320 per share. …