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CJBS to be Featured Panelist at Love, Marriage, Divorce, and Real Estate Panel Event

Larry Goldsmith, head of CJBS Forensic Accounting and Litigation Support group, will be a featured panelist at Love, Marriage, Divorce, and Real Estate Panel Event presented by Compass Mortgage and @Properties.

Join us for this free educational event on Sunday, March 18, 7-10 PM.

Where:
Kasbeer Hall
25 East Pearson Street
Floor 15
Chicago, IL 60611

CLICK HERE TO REGISTER

Questions or comments? E-mail Larry Goldsmith (larry@cjbs.com). Larry is an experienced Financial Forensic expert and CPA who investigates and verifies financial income and assets in matrimonial matters.

What Did the GOP’s Tax Plan Revamp Actually Do for Small Businesses?

The new tax plan is a jolt for business, and not just corporate giants. Small businesses and other ‘pass-through’ entities are also benefiting.

In an article from Dallas News, author Tom Benning writes, “And while Republicans are staking that high-dollar tax cut on helping smaller businesses — with Jenkins, among others, planning to invest in facilities and hire more workers — the overall impact remains murky for many individual owners and the economy at large”.

In the article, Benning discusses:

  • Businesses as ‘pass-throughs’
  • Not all pass-throughs are small businesses
  • Pass-through businesses now earn more net income than C-corps

Benning continues, “One restriction, for instance, focuses on businesses where the ‘principal asset’ is the ‘reputation or skill of one or more of its employees or owners’. That definition has sent business owners, financial planners and accountants scrambling for clarity on what exactly it means”. What benefits from the tax plan do will your small business see?

To read more, see the full article from Tom Benning in Dallas News.

Interested in VC Funding? These 4 Statistics Tell You Exactly What You Need to Know

As an entrepreneur, if you are considering venture capital to fund your startup, be sure to study the state of your current market.

In an article from Entrepreneur, author Jayson DeMers writes, “For the past several years, the total dollar amount of VC given to startups has increased significantly, with venture capitalists showing increasing interest in new technologies and potential “unicorns” that could be valued at a billion dollars or more”.

In the article, DeMers discusses:

  • Total VC funding down 11%
  • The median deal size
  • Unicorn valuations
  • VC for AI and machine learning has nearly doubled

DeMers continues, “It’s still an exciting time to be a startup tech entrepreneur — though the dynamics are changing. But if VC is the direction in which you’re headed, you should stay up to date with the latest trends, and position yourself accordingly”.

To read more, see the full article from Jayson DeMers in Entrepreneur.

Five Big Business Trends to Watch in 2018

As 2018 begins, business owners are paying close attention to the trends that will impact their businesses. In an article from Fortune, author Alan Murray discusses five trends that he will be watching:

  • Recession watch
  • AI Advances
  • The tech backlash
  • The CEO Statesman
  • A changing workplace for women

How will these five trends impact your business? Are there more trends business leaders should be keeping an eye on?

To read more, see the full article from Alan Murray in Fortune.

Adaptability: The Most Valued Leadership Skill

Directing changes can be a difficult task for any business leader. As the business world evolves, what are some ways that companies are keeping up with the changes of consumers?

In an article from Disruption Hub, author Sally Henderson writes, “We are living in a world with unprecedented levels of change. Advances in technology, changes in consumer behaviour, and new business models are forcing organisations and individuals to make complex and often uncomfortable decisions on a daily basis”.

In the article, Henderson discusses:

  • Why change is important
  • 3 simple words that will help with changes
  • Adaptability

Henderson continues, “Be aware change is an energy hungry beast and a very demanding partner at times. To ensure consistent commitment enroll a great team of supporters into your world so you can stick with the plan when the going gets tough”. What business changes can you implement in your business? How will your customers respond?

To read more, see the full article from Sally Henderson in Disruption Hub.

Under New Tax Law, Should Your Business Restructure as a C Corporation?

As tax reform begins in America, many businesses might want to consider filing as a C corporation.

In an article from Inc., author Zoe Henry writes, “Most U.S. small businesses currently don’t qualify for the reduced corporate tax rate. The majority of small enterprises are structured as pass-through entities such as limited liability companies or S corporations, where profits are taxed according to the owner’s personal rate. While there is some tax relief in the bill for those pass-through firms–including a temporary ability to deduct up to 20 percent of income–many could access the permanent cut by converting to full-blown C corporations”.

In the article, Henry discusses:

  • A smart business decision
  • How long would it take to convert to a C corp?
  • Taking the time to reorganize and avoid being double taxed

Henry continues, “While the reduction to the maximum corporate tax rate is written as permanent, it could change, Reitmeyer points out. For instance, Democrats could retake a Senate majority, and vote through changes to the law. If that happens, it would be far more complicated to convert back to an S corporation or an LLC than the other way around”. Have you considered a C corporation for your business?

To read more, see the full article from Zoe Henry in Inc.

Congress Passes Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, which was passed in both houses of Congress earlier this week, was signed into law by President Trump on December 22, 2017. The majority of the provisions contained in the sweeping reform legislation go into effect as of January 1, 2018. Read on for a few recommendations on actions to be taken before the end of 2017 followed by an overview of items included in the act.

Initial Recommendations:

For Individuals

  • Pay state income taxes due before December 31, 2017.
  • Accelerate your charitable contributions into 2017 since all brackets will benefit.
  • If you make charitable contributions to the athletic department of your favorite university in order to be entitled to purchase tickets to athletic events, definitely make those contributions before December 31, 2017.
  • Prepay 2% itemized deductions due (such as investment advisory fees, tax preparation fees, professional licenses, etc.) before December 31, 2017.
  • Prepare for additional estate gifting beginning January 1, 2018.

For Businesses

  • Consider a change of accounting methods for business below $25MM to a cash basis method or completed contract accounting (as opposed to percentage of completion)
  • Consider accelerating equipment purchases for immediate write-offs.
  • Close 1031 exchanges on personal property before 12-31-17
  • Pay for business entertainment in 2017
  • Pay for R&D expenditures in 2017
  • Consider timing of terminated partnerships—technical termination rules go away in 2018
  • Consider choice of business entity.

Items Affecting Individuals:

Tax Rates – The act keeps the seven tax brackets but reduces the rates for five of them. The new bracket rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The maximum rate is for income above $600,000 married filing jointly and $300,000 for singles.

Standard Deduction and Personal Exemptions – The standard deduction is increased to $24,000 for married filing jointly and $12,000 for singles. Personal exemptions are repealed.

Mortgage Interest – The mortgage interest deduction is capped at interest on $750,000 of mortgage debt each for a principal residence and a second home. The deduction for interest on home equity lines of credit is repealed.

Taxes – The act puts a $10,000 cap on deductions in connection with state and local income, property, and sales taxes. It also provides that no deduction will be allowed in 2017 for prepayment of tax for years beginning after December 31, 2017.

Medical Expenses – The threshold for deducting medical expenses is temporarily reduced from 10% to 7.5% (for the 2017 and 2018 tax years only).

Child Tax Credit – The per-child tax credit is doubled, rising from $1,000 to $2,000 per qualifying child. The phase out threshold is increased to $400,000 for married filing jointly and $200,000 for those filing singly.

Credit for Non-Child Dependents – The act temporarily allows parents to take a $500 credit for each non-child dependent whom they support, such as a child 17 or older, an ailing elderly parent, or an adult child with a disability.

Pass-Through Income – The act includes a 20% deduction on Qualified Business Income from sole proprietors, S-Corporations, LLCS, and partnerships (subject to limitations).

Alternative Minimum Tax – The act reduces the number of filers who would be hit by this tax by raising the income exemption levels to $70,300 for singles and $109,400 for married filing jointly.

Affordable Care Act Individual Mandate – The individual mandate is repealed as of 2019.

College Athletic Fund Contributions – These contributions, made in exchange for preferential seating, are no longer deductible.

Alimony Deduction – This is repealed after 2018.

Estate Tax – This tax remains at 40% but the exemption is doubled to $10.98 million per individual.

Miscellaneous Tax Breaks – The act preserves some smaller, but popular, tax breaks, including deductions for student loan interest and classroom supplies bought with a teacher’s own money. It also keeps the tax-free status of tuition waivers for graduate students.

Items Affecting Businesses:

Corporate Tax Rate – The corporate tax rate is reduced from a top graduated rate of 35% to a flat 21%.

Corporate Alternative Minimum Tax – The act repeals this tax.

Full Expensing for Certain Business Assets – The bill provides 100% expensing of qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. It also increases (tenfold) the Sec. 179 expensing limitation ceiling and phase out threshold to $5 million and $20 million, respectively, both indexed for inflation.

Interest Expense – For tax years beginning after December 31, 2017, every business, regardless of its form, is generally subject to a disallowance of a deduction for net interest expense in excess of 30% of the business’s adjusted taxable income. Farming businesses can elect out of these rules if they use ADS to depreciate any property used in the farming business with a recovery period of ten years or more.

Net Operating Losses (NOL) – For NOLS arising in tax years ending after December 31, 2017, the two-year carryback and the special carryback provisions are repealed, so losses can only be carried forward. However, a two-year carryback applies in the case of certain losses incurred in the trade or business of farming.

Foreign Provisions – The act includes several international tax changes including a repatriation provision—US shareholders owning at least 10% of a foreign subsidiary will include in income the share of the post-1986 historical earnings and profits (E&P) of the foreign subsidiary, to the extent that E&P have not been previously subject to US tax. The portion of E&P attributable to cash or cash equivalents would be taxes at a 12% rate and the remainder would be taxed at a 5% rate.

Farms Property – For property placed in service after December 31, 2017, in tax years ending after that date, the cost recovery period is shortened from seven years to five years for any machinery or equipment (other than any grain bin, cotton ginning asset, fence, or other land improvement) used in a farming business, the original use of which commences with the taxpayer. Additionally, the required use of the 150% declining balance depreciation method for property used in a farming business (i.e., for 3-, 5-, 7-, and 10-year property) is repealed. The 150% declining balance method continues to apply to any 15-year or 20-year property used in the farming business to which the straight-line method does not apply, and to property for which the taxpayer elects the use of the 150% declining balance method.

Cash Method of Accounting – The act increases the cash accounting method applicability threshold for most business up to $25 million in revenue, including businesses with inventory.

Percentage of Completion Requirements – The act increases the percentage-of-completion method applicability threshold to business with average revenue of $25 million or more.

Deduction for Entertainment – This deduction is repealed; previously entertainment was 50% deductible.

Research and Development Expenses – Must be capitalized and amortized over five years.

Technical Termination of Partnership Rules – The act repeals these.

Inspiring the Disruptors of Tomorrow

With the widening talent gap in technology, it will be increasingly difficult for businesses to find an employment standard.

In an article from Disruption Hub, author Laura Cox writes, “As enterprises inevitably enter the digital age, employment requirements are changing. Unfortunately, the workforce often seems to be playing a game of catch up. The tech talent gap is hardly breaking news, last year KPMG’s annual CIO survey found that 65 per cent of technology leaders faced difficulties when hiring employees with relevant skills”.

In the article, Cox discusses:

  • Ins’PI’ring students
  • Relevant ideas for real world problems
  • A communal effort

Cox continues, “Creating events and competitions for young people could be instrumental in encouraging talent and diversity in the technological community”. Is your business looking to address the talent gap in technology? How will this talent gap impact your future employees?

To read more, see the full article from Laura Cox in Disruption Hub.

Death Warrant in the Tax Proposal?

photo of Larry Goldsmith

Larry Goldsmith

The Senate and Congressional income tax bills propose to eliminate itemized medical deductions.  For the elderly, who depend on pensions and social security income, and who require nursing homes and private caregivers, this deduction is essential. Nursing home expenses and caregiver costs can easily exceed $100,000 annually. If an elderly individual with an annual income of $80,000 is forced to pay taxes on the $80,000, this individual will not have the financial resources for necessary living expenses.

Larry Goldsmith is a partner and director of litigation services at CJBS, LLC. Mr. Goldsmith is regularly engaged to be a financial forensic expert witness in matters of divorce and business litigation.

Questions or comments? E-mail Larry Goldsmith at larry@cjbs.com if you have any questions about this posting or if he can be of assistance in any way.

Larry Goldsmith to Address Highland Park-Highwood Legal Aid Clinic

photo of Larry Goldsmith

Larry Goldsmith

Larry Goldsmith, J.D., C.P.A., M.A.F.F., will speak on the subject of Financial Discovery at the Highland Park-Highwood Legal Aid Clinic on Wednesday, January 18th, 2017 at 7:00 pm. Financial discovery, including careful study of tax returns, is an important part of the process for uncovering useful information in legal proceedings involving divorce or other litigation matters.

Larry Goldsmith is a partner and director of litigation services at CJBS, LLC. Mr. Goldsmith is regularly engaged to be a financial forensic expert witness in matters of divorce and business litigation.

The Highland Park-Highwood Legal Aid Clinic is located at 1830 Green Bay Rd. in Highland Park, Illinois. Phone: (847) 926-1867.

Questions or comments? E-mail Larry Goldsmith at larry@cjbs.com if you have any questions about this posting or if he can be of assistance in any way.