Blog Archives: 2019

Invest in a Qualified Opportunity Fund by End of Year for Maximum Tax Benefits

In order to enjoy the maximum potential tax benefits of a Qualified Opportunity Fund (QOF), you must invest in a QOF by December 31, 2019. This will allow you to hold the investment for seven years prior to December 31, 2026 and thus receive the maximum 15% reduction in capital gains. Investors may still invest in QOFs after December 31st, but the potential exclusion from tax for invested gains would be limited to 10%, assuming a five year hold prior to December 31, 2026.

More importantly, December 31st is the only day that a taxpayer can invest in a QOF to receive the maximum tax benefits from deferring Section 1231 gains.

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New Question Regarding Cryptocurrencies Added to Form 1040

Virtual currency investors, and blockchain miners, take note: the IRS wants to know more about your 2019 cryptocurrency transactions.

In an effort to raise awareness of the tax consequences involving virtual currencies, the IRS added a new check box to the top of Schedule 1, Form 1040, Additional Income and Adjustments to Income that asks whether the taxpayer was involved in any virtual currency transactions in 2019. The IRS noted that some taxpayers with virtual currency transactions may have previously failed to report income and pay the resulting tax or did not report their transactions properly. Thus, the IRS is now directing responsibility for the accurate reporting of these transactions,

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Tone at the Top: The Most Important Internal Control?

It’s common knowledge that internal controls are important for preventing and detecting fraud. Separation of duties, multiple layers of review, two check signers for large disbursements, and written policies and procedures to formalize everything; these are all good elements for a strong internal control system. But poor tone at the top can undermine the whole puzzle.

To see the importance of tone at the top, we can examine this fraud in Lincoln County, West Virginia. The unfolding story involves a CEO of a not-for-profit medical facility who was charged with making personal purchases on a company credit card to the tune of $100,000.

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Catching “Under the Radar” Fraud with Strong Internal Controls

When it comes to fraud, it is true that we live in a technological age of cyber-threats, such as ransomware and account hacking.  However, one should always remember that the opportunity to commit fraud can be as simple as not having basic internal controls.

This fraud story comes to us from Brownsville, Pennsylvania and involves a treasurer for a volunteer ambulance organization who seems to have taken advantage of an internal control oversight. The treasurer was tasked with writing checks for the nonprofit and sending the financial records to the independent accounting firm.

The problem? He allegedly wrote or deposited 132 checks into his own personal account or to the account of his own business.

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Washington B&O Tax Alert – Annual B&O Tax Apportionment Reconciliation Due October 31st

For business and occupation (“B&O”) tax purposes, taxpayers earning apportionable revenue calculate their taxable Washington revenue by applying a “receipts factor” apportionment methodology. Taxpayers computing B&O tax in this manner are required to complete and file an Annual Reconciliation of Apportionable Income form with the Department of Revenue.

When is the Annual Reconciliation of Apportionable Income Form Due?

The form must be submitted to the Department of Revenue by October 31st of each year. Failure to timely file the reconciliation form may result in penalties.

Who Must File?

In-state taxpayers that earn income from apportionable business activities performed for customers located inside and outside of Washington may apportion such revenue to Washington for B&O tax purposes.

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