Developing News: 2014

By now you have likely heard about the new tangible property regulations. These new rules, which were a decade in the making and are almost 400 pages long, are expected to affect every taxpayer that uses tangible property in its business.

The rules are complex and their impact is widespread. We at Clark Nuber are evaluating our clients and the impact of the implementation of the rules in each client situation. Below are the top five things you should know to prepare for a conversation with your CPA.

1. Capitalization Policy

Do you have a capitalization policy for your business?

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NOTE: The information in this post was updated on October 13, 2015. Read the update.

Many hotels, clubs, restaurants and similar establishments provide complimentary food, drinks and snacks to guests in a variety of contexts. However, the potential sales and use tax liabilities associated with complimentary meals and drinks are often overlooked. A recently published administrative ruling from the Washington Department of Revenue’s appeals division highlights this issue and provides useful guidance to businesses that provide complimentary food and beverages to their guests.1

On audit, the Department of Revenue’s audit division asserted use tax on food and beverage purchases by a hotel that were used in providing complimentary meals to hotel guests.

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Eminent domain – what does it mean?

The link light rail is currently planned to expand, extending east into Bellevue with long-term goals of extending to Lynnwood.   With the expansion of the link light rail, some owners are finding themselves in unfamiliar territory: their property or a portion of their property is being taken under eminent domain.

What is eminent domain? It is the power the government has to seize private property without the owner’s consent. In most cases the property is taken for public use by a state or national government. We are seeing this in our own back yard due to the link light rail expansion.

What do the owners who find themselves in this situation need to know?

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What is deductible on my closing statement?

It’s no secret that the real estate market is heating up again. It’s easy to confirm this by the number of cranes I can see from Clark Nuber’s downtown Bellevue office. With the real estate market finally on the rebound, it’s a great time to consider selling or purchasing property.

Spring is the highest residential sales season in the Seattle area, so it’s possible that you have a closing statement filed away in a drawer in your office waiting to be looked at next April. Or perhaps you purchased a business or investment property in 2013 and you’re still waiting to file your extended return.

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As our area continues to emerge from the economic downturn and our core locally based companies continue to add jobs to our community, new apartment and mixed-use developments are still a viable venture for real estate developers. The City of Seattle has created a program to encourage developers to increase the supply of multifamily housing projects within the city. The program is also available to real estate developers interested in developing condominiums.

Qualifying developers will receive a real estate property tax exemption for 12 years, which could be a substantial cash flow savings to them and their investors. The catch – a percentage of the units must be available to low and moderate income households.

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B&O Traps for Real Property Lessors

NOTE: The information in this post was updated on October 13, 2015. Read the update.

Many owners of commercial or residential rental property in Washington are surprised to learn that they may owe business and occupation (B&O) tax to the state as a result of their rental activities.

While revenues generated directly from the non-transitory (i.e., long-term) lease or rental of real property are exempt from B&O tax, other ancillary revenue streams from the rental property rental may be subject to tax. By understanding the nature and limits of the rental income exemption, property owners can better evaluate the potential for assessment of B&O tax should they be selected for audit by the Washington Department of Revenue.

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When was the last time you looked at your non-real estate holdings? If it has been more than a year (or you can’t remember), now is the time to dig out your statements and take a deeper look. There are new tax brackets and changes on how investment income is treated this year. Not only “what” you’re invested in, but “how” you’re invested matters more than ever. Here are a few easy tips when evaluating your liquid investment portfolio:

  1. Do you have an Investment Policy Statement (IPS)? This statement provides the structure of rules around your investments. Typically, an IPS will state the investment strategy,

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Tax Extenders Act of 2013

For the past several months, CPAs everywhere have been patiently waiting to see if Congress would take action to extend the many tax savings provisions that were set to expire (and actually did) on December 31st. Like you, over the past several years we have gotten used to last-minute and even retroactive extensions of the taxpayer-friendly provisions. However, the end of 2013 was different in that no matter how much research I did, I could not find even a whisper on Congress’s intent to take action on these expiring provisions. Until I decided to take a few days of vacation…

Finally, on December 20th,

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Media Contact

Melissa Takade
Director of Marketing
Clark Nuber
Phone: 425-454-4919
Contact Melissa

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