Tax, Accounting and Business Consulting

  Cost Segregation There is a big hype in the tax market that everyone can save bunch of taxes by doing cost segregation. Is it correct or they are selling their stuff? Fist let’s understand what cost segregation is and what it does for you. What is cost segregation Cost segregation is separating value or cost of a real estate property from the actual structure of the building. It is a process that separates add-ons that are installed on top of the building. In other words, those other assets which can be separated from the building, the can be separately replaced and can be easily differentiated from the property. Examples are cabinets, kitchen tops, floorings, fence, landscaping, sometimes windows, doors, electricity, appliances, and some fixtures and so on. By separating these values, you can take bigger depreciation or faster write offs on those non-real estate assets with in 5, 7 and 15 years. On the other hand Real Estates are depreciated at slower pace for tax purpose....

  Qualified Opportunity Zone (QOZ)   ü   Established by The Tax Cuts and Jobs Act 20174 to provide a tax incentive for private, long-term investment in economically distressed communities ü   Capital Gain Tax deferral or reduction: Investors in these programs have opportunities to defer and potentially reduce tax on recognized capital gains. ü   Tax savings: Tax payer can avail saving in taxes when they retain the investment in the Qualified Opportunity Fund for the time frame stipulated. Meaning, if you are hot by a huge tax bill due to capital gains, investing in a Qualified Opportunity Fund may worth considering, provided you invest within a prescribed time frame. What is Qualified Opportunity Zone? IRS says: A QOZ is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as QOZs if they were nominated for that designation by a state, the District of ...

  Tax on Gain/loss on Sale of an S-Corp S-Corp has no federal taxes on its own, the ordinary income/gains flows through to the shareholders. Same way the profit or loss from sale of a business also flows through to the shareholders. The gain or loss on sale of a business is generally capital gain or loss. The gain or loss is computed by stock-basis of the shareholders from the price you paid for the business. Loss from sale is capital loss and only offset against capital gains and only $3000 can be deducted from other income on personal tax form 1040. “ More the stock basis less the gain, less the stock basis more the gain ” Buyer has no tax liabilities on purchase of a business. There are two ways you can structure your sale of a business       1.       Sell your company     2.       Sell company’s assets only When you sell your company, you calculate income by the money you received for your ...

  Employee Retention Tax Credit (ERTC) What is Employee Retention Tax Credit Employee Retention Credit is a fully refundable tax credit provided under CARES Act to encourage businesses to keep employees on their payroll. Most of the small and medium business entities are eligible to this credit if they have employees on payroll and they were impacted by pandemic. The impact may be partial or full shut down of the business or substantial decrease on their revenue. For 2020 The credit is equal to 50% of wages of the employee. The maximum amount of qualifying wages per employee is $10,000. In simple words, an employer can get refund up to $5,000 per employee or 50% of the wages paid whichever is lower. The business should have been shutdown or partially shut down or there is reduction of revenue by 50% during the same quarter compared to 2019 quarters. For 2021 The credit for 2021 is 70% of wages per employee per quarter till September 30, 2021 (before October 1, 2021). The maximum el...