Article Archives: 2020

Posted by: Matt Medlin

As spring ebbed into summer this past year, the economic impact of the pandemic inflicted severe stress across all economies and geographies. The U.S. government responded with stimulus through various means, including the CARES Act and its now renowned Paycheck Protection Program (PPP) loans. Many state, county, and municipal governments also responded with aid to businesses, including eviction moratoria, grants, and other fiscal aid.

These efforts were well placed, and they have often provided businesses the help needed to pay their teams and to keep their business afloat. The programs have also demanded significant time from business owners, operations leaders, and financial executives.

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Posted by: Jeff Pannell

Over the past few years, many high net worth taxpayers have witnessed the unfortunate removal of a substantial amount of itemized deductions from their Schedule A worksheets. Examples include a $10,000 limitation for state and local taxes, no deduction for miscellaneous items such as investment and other professional fees, and a cap on home mortgage interest deductions.

Furthermore, the standard deduction has doubled in the past three years. Under current law, for 2020, the standard deduction that can be subtracted from your taxable income without itemizing is $12,400 for individuals and $24,800 for married couples. This increase may leave individuals with nominal or no mortgage on their primary or secondary residences in a position of not actually itemizing.

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Posted by: Hillary Parker

On Nov. 18, 2020, the AICPA held its annual Global Manufacturing Conference, a yearly gathering of CPAs and global manufacturing companies where industry trends are discussed. Like many conferences and meetings in 2020, things went virtual. While the schedule was reduced for remote delivery, the convenience and access to high value speakers made it one of best conferences in recent years.

I learned three takeaways from the conference concerning the economy, trade, and increased risks to the sector. I’ve summarized the key takeaways below.

Manufacturers Expect to Return to Pre-COVID Levels by the End of 2021

Dr. Chad Moutray, Chief Economist for the National Association of Manufacturers (NAM),

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Posted by: Joe Purvis

Does your organization have a complete set of financial policies and procedures? If so, when was the last time you reviewed them?

Effective financial policies and procedures can help provide efficient financial management, risk mitigation, and the alignment of financial operations with the overall mission of the organization. Before you begin creating financial policies and procedures or reviewing them for your organization, it is important to understand what these are, the intended purpose and benefits, how to implement them, and when they should be reviewed.

What Are Financial Policies and Procedures?

Financial policies are the rules that govern the financial activities within an organization.

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The first month of the new year is always challenging with the many forms that need completing and the closing out of financial statements. Planning and preparation will provide your organization with peace of mind that you are ready for the financial requirements in 2021. As your organization gears up for 2021, here are practical tips for closing out your year and preparing for the next:

Vendors

Review your vendor list well before year-end to check that you have all Form W-9s. It is essential to have Form W-9s from all your vendors to ensure the IRS can match their EIN against the payments received.

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Posted by: Dan Wright · Jeff Pannell

Unfortunately, not all startup companies become the next Snowflake and turn into one of the largest IPOs in the history of the U.S. stock exchanges. In fact, many are not successful. If one of your emerging company investments has failed, you may be surprised to learn that the investment could still yield immediate favorable tax benefits.

Using IRC Section 1244

Section 1244 of the Internal Revenue Code (IRC) allows an annual ordinary loss deduction for “worthless stock” up to $100,000 for a married couple filing jointly, and $50,000 for an individual filing single. For example, if $100,000 was invested by a married couple filing jointly with a 37% marginal rate,

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Posted by: Steve Day

On Friday, October 2, 2020, the Small Business Administration (SBA) issued a notice providing information on the required procedures for when a change in ownership occurs for entities holding a Paycheck Protection Program (PPP) loan. This guidance will help PPP borrowers who are contemplating or currently executing a transfer of ownership.

What is Considered a Change in Ownership?

A change in ownership occurs when:

  • At least 20% of the common stock or other ownership of the PPP borrower (including a public entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity.

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Posted by: Karen Dunn

The 21% tax on compensation over $1 million could apply to more organizations than one would think. This tax applies not only to compensation over $1 million but also to excess parachute payments. And those parachute payments need not even be over a million dollars to be subject to the tax. It could also apply with respect to volunteers or low wage employees.

Clarification, provided in the recently published proposed regulations [Reg-122345-18], helps explain how this could be true and provides exceptions which give some relief in these situations.

About the Tax

First, the tax is imposed on remuneration over $1 million paid by an applicable tax-exempt organization (ATEO) or its related organizations to a covered employee.

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Posted by: Jeff Pannell

The last time you heard the phrase “location, location, location” was probably from your real estate agent when buying or selling your home. But when was the last time you heard this same mantra from your investment advisor or financial planner?

Asset location, not to be confused with asset allocation, is a term for strategically locating your investments into different investment accounts. By strategically placing assets into the correct accounts, the tax efficiency and overall after-tax investment returns of the entire (taxable and non-taxable) portfolio can be optimized. The resulting, highly tax efficient, portfolio may save a tremendous amount of tax dollars over a long-term investment horizon.

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Posted by: Sarah Huang

This article reflects the law prior to the passage of the Consolidated Appropriations Act (CAA) in December 2020. As such, certain sections may now be outdated. To learn more about the CAA updates, read our article here.

Often, the focus of Paycheck Protection Program (PPP) loan forgiveness is on whether the proceeds were used for eligible costs. However, what many borrowers fail to recognize is that maximum forgiveness depends also on maintaining your employment and wage levels during the covered period.  Below, we walk through the details of these two requirements and cover the available exceptions when the requirements are not met.

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