Bauman Associates Announces Two New Principals

BY Bauman Associates

Bauman Associates is pleased to announce the promotion of Daniel R. Carlson, CPA and Chad C. Ryder, CPA to Principal in the Eau Claire office. Both individuals have been with the firm for several years and play an important role in the delivery of services to our clients and the leadership of our firm.

Dan Carlson, CPA

Dan Carlson has been with Bauman Associates since 2003, occupying roles as a Manager on the audit, accounting services, and consulting teams, and now as Principal, specializing in healthcare clients. “Dan has earned the privilege of partnering with some of our most valuable clients on the A&A side of our business.  The level of knowledge and respect Dan brings to the firm is hard to match. Dan is an obvious choice for this promotion and we look forward to many more years of his outstanding contribution to the firm,” said Gregg Mleziva, Managing Principal of Bauman Associates.

 

Dan is a graduate of the University of Wisconsin-Eau Claire, where he received a Bachelor’s degree in Accounting. He is a licensed, certified public accountant in the state of Wisconsin and a member of the Wisconsin Institute of Certified Public Accountants (WICPA), the American Institute of Certified Public Accountants (AICPA), and Leadership Eau Claire. In addition, Dan is a member of the Eau Claire Regional Arts Council.

Daniel Carlson Tax and Accounting and Business Advisory Services in Wisconsin and Midwest

 

Chad Ryder, CPA

Since November 2004, Chad Ryder has been serving Tax and Business Planning clients of Bauman Associates.  Chad started his career at Bauman as a Manager and has enjoyed being able to indulge his passion for public speaking, developing relationships with clients, and being a part of a team oriented around client service. In his new role as Principal, Chad will continue to take part in new client development, mentoring young CPAs, and recruiting top talent. “Since joining our firm, Chad has gone from a reliable tax preparer to one of our most valued and sought-after tax advisors.  Chad is very active in our community and highly respected as one of the leaders in our firm.  Chad has a bright future ahead of him and we are proud to be a part of it,” said Gregg Mleziva, Managing Principal of Bauman Associates.

 

Chad holds a Bachelor’s degree from the University of Wisconsin-Eau Claire, where he majored in Accounting and minored in Economics. He is a licensed, certified public accountant in the state of Wisconsin and is a member of the American Institute of Certified Public Accountants (AICPA), the Wisconsin CPA Society (WICPA), the Institute of Management Accountants, and the UWEC Accounting and Finance Advisory Board. Additionally, he serves as President of the Chippewa Valley Chapter of Institute of Mangement Accountants and is an alumnus of Leadership Eau Claire.

Chad Ryder Tax and Accounting and Business Advisory Services in Wisconsin and Midwest 

About Bauman Associates, Ltd

Bauman Associates was founded in 1947 as a certified public accounting firm and has offices in Eau Claire and Hudson, Wisconsin.  The firm provides multi-discipline professional services to businesses and individuals including business consulting; accounting and auditing services; business valuation; forensic accounting; tax strategy, planning and preparation; accounting software training; payroll services; human resource consulting; and estate, trust and retirement planning. For more information, visit www.baumancpa.com or call 888‐952‐2866.

Changes to Fringe Benefits, Entertainment Expenses

BY Reidar Gullicksrud

Changes to Fringe Benefits, Entertainment Expenses

The tax reform legislation that Congress signed into law on December 22, 2017, was the largest change to the tax system in over 3 decades. The new tax code contains many provisions that will affect individual, estate, and corporate taxpayers. One of those changes, the elimination of a business-related deduction used for entertainment, amusement or recreation expenses, will make it costlier for business owners to entertain clients.

Previously, if an entertainment or meal expense was related to or associated with the active conduct of a trade or business, it was deductible up to 50 percent. Under the new tax code, these expenses are now considered the cost of doing business. In the chart below, we have highlighted the major changes.

Activity 2017 Old Rules 2018 New Rules
Qualified client meal expenses 50% deductible 50% deductible
Qualified employee meal expenses 50% deductible 50% deductible
Meals provided for employer convenience (incl water, coffee and snacks at the office for employees) 100% deductible 50% deductible (not deductible after 2025)
Client entertainment expenses

Event tickets

Qualified charitable events

50% deductible

50% deductible at face value of ticket

100% deductible

No deduction for entertainment expenses
Office holiday parties 100% deductible 100% deductible

 

The elimination of this deduction will impact business owners who are accustomed to treating clients to golf outings or providing clients with tickets to sporting events or concerts. Businesses will have to re-evaluate their entertainment expenses related to their trade or business, as these items are no longer 50 percent deductible.

In consideration of the elimination of this deduction, we recommend creating separate accounts for meals and entertainment expenses. Educating employees to separate their expenses will be vital as business meals will remain 50 percent deductible until 2025.

The IRS recently issued guidance regarding the business expense deduction for meals and entertainment expenses:

Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.

Furthermore, food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.

The Department of the Treasury and the IRS expect to publish proposed regulations clarifying when business meal expenses are deductible and what constitutes entertainment. Until the proposed regulations are effective, taxpayers can rely on guidance in Notice 2018-76.

Entertainment expenses are notoriously targeted by auditors. Considering the law change, we anticipate these expenses to be a heightened area of concern during an audit. The professionals at Bauman Associates can help ensure you are in compliance, call us today at (715) 834-2001.

 

Sales Tax — What the Overturn of the Physical Presence Standard Means for Your Business

BY Chad Ryder

On June 21, 2018, The U.S. Supreme Court issued its highly anticipated decision in the South Dakota v. Wayfair case. The verdict, declaring that states can impose sales tax nexus without requiring a seller’s physical presence in the state, will have serious implications for all sellers, not just online retailers.

The decision overturns the Supreme Court precedent in Quill Corp. v. Dakota which required retailers to have a physical presence in a state before a state could require the seller to collect sales taxes from in-state customers.

The court’s decision sides with states like South Dakota, that were ultimately missing out on billions of dollars in income by not collecting sales tax from online retailers who lacked a physical presence in their state. According to the U.S. Government Accountability Office, state and local governments could have gained up to $13 billion in 2017 if states were given authority to require sales tax collection from all remote sellers.

Historical Perspective

In 1992, North Dakota attempted to require Quill Corporation, a retailer with no physical presence in North Dakota, to collect and pay sales tax for doing business in the state. Having done business through mail orders and by phone, Quill was able to successfully argue that they should not be required to pay taxes in a state in which they had no physical presence. The courts agreed, and thus the physical presence standard was born.

Since then, states have enacted a variety of nexus provisions to counteract the loss of revenue by out of state businesses that do not collect sales tax for the state. These types of provisions, which require remote sellers to collect tax or provide information about in-state customers, are known as remote seller nexus. This chart maps out the states that have passed legislation.

In the 1990’s, no one could have anticipated how predominate online sales and e-commerce would become. What was once a fraction of interstate sales had become a $450 billion industry. Supreme Court Justice Anthony Kennedy displayed willingness to revisit the Quill case, recognizing the decision had become dated. South Dakota identified the window of opportunity to re-challenge the 1992 Quill verdict. In a 5-4 ruling, the Supreme Court overturned Quill’s physical presence standard in Dakota v. Wayfair.

Who Will This Impact?

It is important to note that all sellers, not just online retailers, will be impacted by the overturn of the physical presence standard. This ruling will result in increased complexities for consumers, brick-and-mortar retailers, online retailers, accountants, and the technology companies that develop accounting software.

If your business sells products or services in multiple states, this ruling should warrant your attention. It will be imperative to be proactive; start by determining what the impact will be and plan accordingly.

Looking Forward

While states aren’t required to collect tax from out of state retailers, many states are expected to follow South Dakota’s path since these standards were reviewed by the Court for the Wayfair decision. Some states have passed economic nexus standards that are already in effect or will take effect within the next year.

If you would like to evaluate the impact this new law may have on your business, please contact Bauman Associates today by calling (715) 834-2001.

Gregg Mleziva Is Named Managing Principal at Bauman Associates

BY Bauman Associates

Eau Claire and Hudson, WI, September 12, 2018: Gregory D. Mleziva, CPA is named Managing Principal of Bauman Associates (Bauman) effective September 1, 2018. Mleziva succeeds John Satre, who has served as the firm’s Managing Principal since 2012.

This announcement represents Bauman Associate’s commitment to their clients and community and reinforces the firm’s cooperative focus toward a sustainable future. Over the next year, Satre and Mleziva will work closely to ensure a smooth and vibrant transition. Satre will continue managing client engagements and help mentor up-and-coming CPAs in his ongoing role as a Principal in the Firm.

“Bauman Associates is a vibrant firm, made up of a team of talented professionals, and it has been my honor to serve as Managing Principal the last few years. I’m confident that Bauman Associates will continue to emphasize excellent, timely client service under Gregg’s leadership,” says Satre.

Mleziva has a longstanding relationship with Bauman Associates, having served clients in the areas of Audit & Assurance, Accounting Controls, Reporting Services, and Consulting since 1990.

“I look forward to the opportunity to lead such a skilled group of individuals down a successful path such as I have experienced the past 28 years under the guidance of superior leadership. Our firm has a reputation of providing exceptional client service and it is my job to make sure we meet and continue to exceed such expectations while providing rewarding opportunities to our staff,” says Mleziva.

Bauman Associates has a rich history of service in the community and has become one of the premier accounting and consulting firms in the region, having recently been named Best Tax Service for 2018. In his new role, Mleziva will continue to build on the momentum established over the last 70 years and uphold the firm’s emphasis on superior client service.

 About Bauman Associates, Ltd

Bauman Associates was founded in 1947 as a certified public accounting firm and has offices in Eau Claire and Hudson, Wisconsin.  The firm provides multi-discipline professional services to businesses and individuals including business consulting; accounting and auditing services; business valuation; forensic accounting; tax strategy, planning and preparation; accounting software training; payroll services; human resource consulting; and estate, trust and retirement planning. For more information, visit www.baumancpa.com or call (715) 834-2001.

Dinner With Bauman

BY Bauman Associates

 

Students, don’t miss out on a free Dinner with Bauman!

Contrary to popular belief, there IS such a thing as a FREE dinner! Join accounting professionals from Bauman Associates on Thursday, September 20th for pizza, door prizes and a unique opportunity to find out what it is like to work in a public accounting firm. Students will also learn about the employment opportunities Bauman Associates offers and network with leaders in the field. This event will take place at UW-Eau Claire in Davies Center, Chancellors, Room 311  from 4:00 – 6:30 pm. Space is limited and there is a deadline, so fill out and submit your application today (or by Wednesday, September 19th). We look forward to seeing you there!

  Click here to download 2018 Dinner with Bauman Application

Bauman Associates’ Tax Team Voted #1

BY Bauman Associates

For the last eleven years, Volume One has turned to its readers to vote for their local favorites. From yummy places to eat to emerging bands to trusted tax services,  the community of Chippewa Valley weighs in on the best of the best.

 

As Volume One puts it, “the goal here is to make the Chippewa Valley a better place to live through the voices and votes of those who live here. Because really, the best burger joints or the best parks aren’t going to be the reason this is a great place to live. It’s the people here who populate those places and try new things and genuinely care about making their home great. After all, this is your home. Your neighbors are your neighbors. It’s up to both of you — not one or the other — to make this place great. There’s something kinda beautiful in that.”

Bauman Associates is honored to make Chippewa Valley’s Best Of list in 2018. Click to learn more about our Tax Services.

 

Bauman Associates Promotes Bernie Hull as COO and Director of HR

BY Bauman Associates

We are pleased to announce the promotion of BernadetteBernie” Hull, CPA, PHR, SHRM-CP to COO and Director of HR.

“We believe that developing great people is critical to the success of our firm and our clients. As with any business, it’s important that we have someone dedicated to overseeing the day to day operations of the business. Bernie knows our business, community and people exceptionally well,” stated Managing Principal John Satre.

Bernie has been with the firm since 1981 and is a principal in the firm. Further, in addition to her background as a CPA, Bernie regularly consults with the firm’s business clients on matters of operations and HR. Bernie will continue to lead the HR consulting services and assist with tax consulting services for clients in her role as COO and Director of HR for the firm.

“I am excited about my new role at Bauman Associates as we celebrate our 70th anniversary of service to our community and look forward to the exciting years ahead, working with our exceptional Bauman team and clients,” commented Bernie Hull. “I am truly grateful for this opportunity.”

Bernie has served in multiple roles in the firm as a CPA in the accounting, auditing and tax areas. She served as the firm’s first firm administrator from 1988 to 2003, obtaining her certification as an HR professional during that period. These experiences helped her to become uniquely qualified to assist clients with tax consulting, business administration, and HR management and consulting matters, becoming a principal in 2010.

Bauman Associates has a rich history of service in the community. It has grown over the years and has become one of the premier accounting and consulting firms in the Chippewa Valley and Hudson, WI marketplaces.

What You Need to Know About the Incoming Tax Law

BY Casper Haas

The tax reform legislation that Congress approved last month was the largest change to the tax system in over 3 decades. The last time the U.S. tax code saw such a significant reform was under President Reagan in 1986. Those reforms sought to simplify income tax, broaden the tax base and eliminate many tax shelters.

Under this new legislation, substantial changes have been made to both individual and corporate tax rates. While most of the corporate provisions are permanent, the individual provisions technically expire by the end of 2025. There is speculation whether a future Congress will uphold the Individual provisions.

The new tax code contains many provisions that will affect individual, estate, and corporate taxpayers. To help you prepare, we have highlighted a few of the most pertinent details below. Please keep in mind, the purpose of this article is to summarize the key provisions.

What’s Changing?

Tax Bracket Rates. While taxpayers will still fall into one of seven tax brackets based on their income, the rates have changed. Some of the brackets have been lowered. The new rates are: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Standard Deduction. The standard deduction has nearly doubled. For single filers it has increased from $6,350 to $12,000; for married couples filing jointly, it’s increased from $12,700 to $24,000.

Personal Exemption. Under the prior tax code, a taxpayer could claim a $4,050 personal exemption for themselves, their spouse and each of their dependents, thus lowering their taxable income. Under the new tax code, the personal exemption has been eliminated. For some families, this will reduce or counter the tax relief they receive from other parts of the reform package.

State and Local Tax Deduction. The state and local tax deduction, or SALT, now has a cap. While it remains in place for those who itemize their taxes, it now has a $10,000 limit. This is a significant change as filers could previously deduct an unlimited amount for state and local property taxes, plus income or sales taxes.

The Child Tax Credit. The child tax credit has been expanded, doubling to $2,000 for children under 17. It’s also available to more people. Single parents who make up to $200,000, and married couples who make up to $400,000 can claim the entire credit, in full.

Non-Child Dependents. A new tax credit is available for non-child dependents. Taxpayers can claim a $500 temporary credit for non-child dependents. This can apply to a number of people adults support, such as children over age 17, elderly parents or adult children with a disability.

Alternative Minimum Tax. Fewer taxpayers will be affected by the alternative minimum tax. The purpose of the AMT is to ensure those who receive a lot of tax breaks are still paying some level of federal income taxes. The exemption will rise to $70,300 for singles, and to $109,400 for married couples.

Mortgage Interest Deduction. Going forward, anyone purchasing a home will only be able to deduct the first $750,000 of their mortgage debt. Down from $1 million, this will likely only affect people buying homes in more expensive regions. Current homeowners will likely be unaffected.

529 Savings Accounts. In the past, 529 savings accounts were untaxed and could only be applied towards college expenses.  Under the new tax code, up to $10,000 can be distributed annually to cover the cost of sending a child to a public, private or religious elementary or secondary school.

Alimony Payment Tax Deduction. The tax deduction for alimony payments will be eliminated for couples who sign divorce or separation paperwork after December 31, 2018.

Moving Expenses Deduction. The tax deduction for moving expenses is also gone, but may be exceptions for members of the military.

Tax Preparation Deduction. Taxpayers can no longer deduct the cost of having their taxes prepared by a professional or the money they may have spent on tax preparation software.

Disaster Deduction.  Under the prior tax code, losses sustained due to a fire, storm, shipwreck or theft that insurance did not cover and exceeded 10% of their adjusted gross income, were deductible. Effective under the new tax code, taxpayers can only claim the disaster deduction if they are affected by an official national disaster.

Estate Tax. Prior to the tax reform, a limited number of estates were subject to the estate tax, a tax which applies to the transfer of property after someone dies. Now, even fewer taxpayers will be affected. The amount of money exempt from the tax — previously set at $5.49 million for individuals, and at $10.98 million for married couples — has been doubled.

Health Insurance Mandate. The failure to repeal Obamacare earlier this year afforded the Republicans the opportunity to eliminate one of the health law’s key provisions with tax reform. Effective in 2019, the individual mandate, which penalized people who did not have health care coverage, was eliminated.

Corporate Tax Rate. Beginning in 2018, the corporate tax rate has been cut from 35% to 21%.

Pass-through Entities. The owners, partners and shareholders of S-corporations, LLCs and partnerships will receive a tax break. Those who pay their share of the business’ taxes through their individual tax returns will have a 20% deduction.

To ensure business owners do not abuse the provision, the legislation has included additional terms to this provision.

Multinational Corporations. The new tax bill is a shift towards globalization, changing the way multinational corporations are taxed. Companies will no longer pay federal taxes on income they make overseas. These companies will be required to pay a one-time, 15.5% on cash assets and 8% on non-cash assets, on any existing offshore profits.

Nonprofit Organizations. There is a new 21% excise tax on nonprofit employers for salaries they pay out above $1 million.

Sexual Harassment Settlements. Companies can no longer deduct any settlements, payouts or attorney’s fees related to sexual harassment if the payments are subject to non-disclosure agreements.

Bonus Depreciation. The Bonus depreciation will increase from 50% to 100% for property placed in service after September 27, 2017, and before January 1, 2023, when a 20% phase-down schedule will begin. The previous rule that made bonus depreciation available only for new properties was also removed.

Vehicle Depreciation. The new tax bill raises the cap placed on depreciation write-offs of business-use vehicles. $10,000 for the first year a vehicle is placed in service; $16,000 for the second year; $9,600 for the third year; and $5,760 for each subsequent year until costs are fully recovered. The new limits only apply to vehicles placed in service after December 31, 2017.

What’s Staying the Same?

Student Loan Interest. You can still deduct Student Loan Interest – the deduction for this will remain max $2,500.

Medical Expenses. The deduction for medical expense was untouched. Rather, it was expanded by two years. Filers can deduct medical expenses that exceed 7.5% of their adjusted gross income for 2017 and 2018 tax years.

Teachers. Teachers will continue to deduct up to $250 to offset what they spend on resources for the classroom.

Electric Car Credit. If you drive a plug-in electric vehicle, you can still claim a credit of up to $7,500.

Home Sellers. Homeowners that sell their house and make a profit can exclude up to $500,000 (or $250,000 for single filers) from capital gains. The law still requires that it is their primary home and they have lived there for at least two of the past five years.

Tuition Waivers. Tuition Waivers, typically awarded to teaching and research assistants, will remain tax free.

What Does This All Mean?

Although doubling the standard deduction will arguably simplify the process of filing taxes for individuals, there are still deductions and credits to consider. More so, the filing for small businesses, can potentially become more complicated. Depending on your situation, it may be beneficial to review your filing status as part of an overall tax planning strategy.

Again, please keep in mind that the purpose of this article is to summarize the key provisions. Each client scenario will be different, and this has to be taken into account. The professionals in our office can answer the questions you may have regarding the individual, estate and corporate tax provisions outlined in the Republican’s tax reform bill.  Please give us a call if you have any questions.

2017 TAX REFORM: LAST-MINUTE YEAR-END MOVES IN LIGHT OF TAX CUTS AND JOBS ACT

BY Bauman Associates

Congress enacted the biggest tax reform law in thirty years, one that will make fundamental changes in the way you, your family and your business calculate your federal income tax bill, and the amount of federal tax you will pay. Since most of the changes will go into effect next year, there’s still a narrow window of time before year-end to soften or avoid the impact of crackdowns and to best position yourself for the tax breaks that may be heading your way. Here’s a quick rundown of last-minute moves you should think about making.

Lower tax rates coming.

The Tax Cuts and Jobs Act will reduce tax rates for many taxpayers, effective for the 2018 tax year. Additionally, many businesses, including those operated as passthroughs, such as partnerships, may see their tax bills cut.  The general plan of action to take advantage of lower tax rates next year is to defer income into next year.

Some possibilities follow:

  • If you are about to convert a regular IRA to a Roth IRA, postpone your move until next year. That way you’ll defer income from the conversion until next year and have it taxed at lower rates.
  • Earlier this year, you may have already converted a regular IRA to a Roth IRA but now you question the wisdom of that move, as the tax on the conversion will be subject to a lower tax rate next year. You can unwind the conversion to the Roth IRA by doing a recharacterization—making a trustee-to-trustee transfer from the Roth to a regular IRA. This way, the original conversion to a Roth IRA will be cancelled out. But you must complete the recharacterization before year-end. Starting next year, you won’t be able to use a recharacterization to unwind a regular-IRA-to-Roth-IRA conversion.
  • If you run a business that renders services and operates on the cash basis, the income you earn isn’t taxed until your clients or patients pay. So if you hold off on billings until next year—or until so late in the year that no payment will likely be received this year—you will likely succeed in deferring income until next year.
  • If your business is on the accrual basis, deferral of income till next year is difficult but not impossible. For example, you might, with due regard to business considerations, be able to postpone completion of a last-minute job until 2018, or defer deliveries of merchandise until next year (if doing so won’t upset your customers). Taking one or more of these steps would postpone your right to payment, and the income from the job or the merchandise, until next year. Keep in mind that the rules in this area are complex and may require a tax professional’s input.
  • The reduction or cancellation of debt generally results in taxable income to the debtor. So if you are planning to make a deal with creditors involving debt reduction, consider postponing action until January to defer any debt cancellation income into 2018.

Disappearing or reduced deductions, larger standard deduction.

Beginning next year, the Tax Cuts and Jobs Act suspends or reduces many popular tax deductions in exchange for a larger standard deduction.

Here’s what you can do about this right now:

  • Individuals (as opposed to businesses) will only be able to claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the total of
    1. State and local property taxes;
    2. State and local income taxes.

To avoid this limitation, pay the last installment of estimated state and local taxes for 2017 no later than Dec. 31, 2017, rather than on the 2018 due date. But don’t prepay in 2017 a state income tax bill that will be imposed next year – Congress says such a prepayment won’t be deductible in 2017. However, Congress only forbade prepayments for state income taxes, not property taxes, so a prepayment on or before Dec. 31, 2017, of a 2018 property tax installment is apparently OK.

  • The itemized deduction for charitable contributions won’t be chopped. But because most other itemized deductions will be eliminated in exchange for a larger standard deduction (e.g., $24,000 for joint filers), charitable contributions after 2017 may not yield a tax benefit for many because they won’t be able to itemize deductions. If you think you will fall in this category, consider accelerating some charitable giving into 2017.
  • The new law temporarily boosts itemized deductions for medical expenses. For 2017 and 2018 these expenses can be claimed as itemized deductions to the extent they exceed a floor equal to 7.5% of your adjusted gross income (AGI). Before the new law, the floor was 10% of AGI, except for 2017 it was 7.5% of AGI for age-65-or-older taxpayers. But keep in mind that next year many individuals will have to claim the standard deduction because many itemized deductions have been eliminated. If you won’t be able to itemize deductions after this year, but will be able to do so this year, consider accelerating “discretionary” medical expenses into this year. For example, before the end of the year, get new glasses or contacts, or see if you can squeeze in expensive dental work such as an implant.

Other year-end strategies.

Here are some other last minute moves that can save tax dollars in view of the new tax law:

  • The new law substantially increases the alternative minimum tax (AMT) exemption amount, beginning next year. There may be steps you can take now to take advantage of that increase. For example, the exercise of an incentive stock option (ISO) can result in AMT complications. So, if you hold any ISOs, it may be wise to postpone exercising them until next year. And, for various deductions, e.g., depreciation and the investment interest expense deduction, the deduction will be curtailed if you are subject to the AMT. If the higher 2018 AMT exemption means you won’t be subject to the 2018 AMT, it may be worthwhile, via tax elections or postponed transactions, to push such deductions into 2018.
  • Like-kind exchanges are a popular way to avoid current tax on the appreciation of an asset, but after Dec. 31, 2017, such swaps will be possible only if they involve real estate that isn’t held primarily for sale. So if you are considering a like-kind swap of other types of property, do so before year-end. The new law says the old, far more liberal like-kind exchange rules will continue apply to exchanges of personal property if you either dispose of the relinquished property or acquire the replacement property on or before Dec. 31, 2017.
  • For decades, businesses have been able to deduct 50% of the cost of entertainment directly related to or associated with the active conduct of a business. For example, if you take a client to a nightclub after a business meeting, you can deduct 50% of the cost if strict substantiation requirements are met. But under the new law, for amounts paid or incurred after Dec. 31, 2017, there’s no deduction for such expenses. So if you’ve been thinking of entertaining clients and business associates, do so before year-end.
  • The new law suspends the deduction for moving expenses after 2017 (except for certain members of the Armed Forces), and also suspends the tax-free reimbursement of employment-related moving expenses. So if you’re in the midst of a job-related move, try to incur your deductible moving expenses before year-end, or if the move is connected with a new job and you’re getting reimbursed by your new employer, press for a reimbursement to be made to you before year-end.
  • Under current law, various employee business expenses, e.g., employee home office expenses, are deductible as itemized deductions if those expenses plus certain other expenses exceed 2% of adjusted gross income. The new law suspends the deduction for employee business expenses paid after 2017. So, we should determine whether paying additional employee business expenses in 2017, that you would otherwise pay in 2018, would provide you with an additional 2017 tax benefit. Also, now would be a good time to talk to your employer about changing your compensation arrangement—for example, your employer reimbursing you for the types of employee business expenses that you have been paying yourself up to now, and lowering your salary by an amount that approximates those expenses. In most cases, such reimbursements would not be subject to tax.

Please keep in mind that we’ve described only some of the year-end moves that should be considered in light of the new tax law. If you would like more details about any aspect of how the new law may affect you, please do not hesitate to call.