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European and State Governments Squeezing Businesses for tax Dollars!

European governments are attacking American businesses trying to get as much tax money as possible. The latest leader in this witchhunt is France. They are not only going after companies for large civil taxes but they are at going after the businesses and the employees of the business for criminal penalties and possibly jail. Leading the list are Google, McDonald's and Bookings.com. All these companies have some relationship to France by having services sold through subsidiaries, but the French do not care about legal structures of business. They just want their tax!

This sounds a lot like many State governments. New Jersey is always trying to find "nexus" to pull in out-of-state businesses as being subject to New Jersey taxes. Also any business located in New Jersey is subject to grueling sales and use tax audits and lengthy appeals and court hearings. It is a real problem particularly when the company tries to handle it themselves or have an accountant represent them i…

New tax Law Changes Business Loss Deductions

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TCJA changes some rules for deducting pass-through business losses
It’s not uncommon for businesses to sometimes generate tax losses. But the losses that can be deducted are limited by tax law in some situations. The Tax Cuts and Jobs Act (TCJA) further restricts the amount of losses that sole proprietors, partners, S corporation shareholders and, typically, limited liability company (LLC) members can currently deduct — beginning in 2018. This could negatively impact owners of start-ups and businesses facing adverse conditions.
Before the TCJA
Under pre-TCJA law, an individual taxpayer’s business losses could usually be fully deducted in the tax year when they arose unless:
The passive activity loss (PAL) rules or some other provision of tax law limited that favorable outcome, orThe business loss was so large that it exceeded taxable income from other sources, creating a net operating loss (NOL).After the TCJA
The TCJA temporarily changes the rules for deducting an individual taxpayer’…

Reimbursements for Employee Business Expenses

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Deducting Business Travel with Vacation

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Can you deduct business travel when it’s combined with a vacation?

At this time of year, a summer vacation is on many people’s minds. If you travel for business, combining a business trip with a vacation to offset some of the cost with a tax deduction can sound appealing. But tread carefully, or you might not be eligible for the deduction you’re expecting.
General rules Business travel expenses are potentially deductible if the travel is within the United States and the expenses are “ordinary and necessary” and directly related to the business. (Foreign travel expenses may also be deductible, but stricter rules apply than are discussed here.) Currently, business owners and the self-employed are potentially eligible to deduct business travel expenses. Note:Under the Tax Cuts and Jobs Act, employees can no longer deduct such expenses. The potential deductions discussed below assume that you’re a business owner or self-employed.
Business vs. pleasure Transportation costs to and from the l…

IRS Audits of Businesses

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IRS Audit Techniques Guides provide clues to what may come up if your business is audited
IRS examiners use Audit Techniques Guides (ATGs) to prepare for audits — and so can small business owners. Many ATGs target specific industries, such as construction. Others address issues that frequently arise in audits, such as executive compensation and fringe benefits. These publications can provide valuable insights into issues that might surface if your business is audited. What do ATGs cover? The IRS compiles information obtained from past examinations of taxpayers and publishes its findings in ATGs. Typically, these publications explain: The nature of the industry or issue,Accounting methods commonly used in an industry,Relevant audit examination techniques,Common and industry-specific compliance issues,Business practices,Industry terminology, andSample interview questions. By using a specific ATG, an examiner may, for example, be able to reconcile discrepancies when reported income or exp…

New Tax Act changes affecting Small Business

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A review of significant TCJA provisions affecting small businesses

Now that small businesses and their owners have filed their 2017 income tax returns (or filed for an extension), it’s a good time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.

Corporate taxation
Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21%Repeal of the 20% corporate alternative minimum tax (AMT)Pass-through taxation
Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025New 20% qualified business income deduction for owners — through 2025Changes to many other tax breaks for …

How Long Should Businesses keep tax documents?

Tax document retention guidelines for small businesses You may have breathed a sigh of relief after filing your 2017 income tax return (or requesting an extension). But if your office is strewn with reams of paper consisting of years’ worth of tax returns, receipts, canceled checks and other financial records (or your computer desktop is filled with a multitude of digital tax-related files), you probably want to get rid of what you can. Follow these retention guidelines as you clean up.
General rules

First, Scan everything!If your documents are not already kept in electronic format, scan everything into PDF files Scanners are cheap and so is storage. It is better to have it and not need it than need it and not have it!

Retain records that support items shown on your tax return at least until the statute of limitations runs out — generally three years from the due date of the return or the date you filed, whichever is later. That means you can now potentially throw out records for the …

Net Operating Losses can be useful at tax time!

A net operating loss on your 2017 tax return isn’t all bad news When a company’s deductible expenses exceed its income, generally a net operating loss (NOL) occurs. If when filing your 2017 income tax return you found that your business had an NOL, there is an upside: tax benefits. But beware — the Tax Cuts and Jobs Act (TCJA) makes some significant changes to the tax treatment of NOLs.
Pre-TCJA law -the old law
Under pre-TCJA law, when a business incurs an NOL, the loss can be carried back up to two years, and then any remaining amount can be carried forward up to 20 years. The carryback can generate an immediate tax refund, boosting cash flow.
The business can, however, elect instead to carry the entire loss forward. If cash flow is strong, this may be more beneficial, such as if the business’s income increases substantially, pushing it into a higher tax bracket — or if tax rates increase. In both scenarios, the carryforward can save more taxes than the carryback because deductions …