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Raise Hell: Help Lawmakers Make PPP Expenses Tax Deductible

As you read this, it’s likely that your lawmakers are working on the next Payroll Protection Program (PPP) package. And hopefully, in this next package they will include a provision that allows you to deduct business expenses that you pay with your PPP money. Let’s explain. In the CARES Act, Congress said:For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income.From what we know, lawmakers thought this meant that the PPP loan... Read More

The tax implications of employer-provided life insurance

Does your employer provide you with group term life insurance? If so, and if the coverage is higher than $50,000, this employee benefit may create undesirable income tax consequences for you. “Phantom income” The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. But the employer-paid cost of group term coverage in excess of $50,000 is taxable income to you. It’s included in the taxable wages reported on your Form W-2 — even though you never actually receive it. In other words, it’s... Read More

Even if no money changes hands, bartering is a taxable transaction

During the COVID-19 pandemic, many small businesses are strapped for cash. They may find it beneficial to barter for goods and services instead of paying cash for them. If your business gets involved in bartering, remember that the fair market value of goods that you receive in bartering is taxable income. And if you exchange services with another business, the transaction results in taxable income for both parties. For example, if a computer consultant agrees to exchange services with an advertising agency, both parties are taxed on the fair market value of the services received. This is the amount they... Read More

IRS lists “dirty dozen” tax scams of 2020 Every year, the IRS compiles a list of common tax scams (the “dirty dozen”) thattaxpayers may encounter during the year. (IRS. gov) This year, the “dirty dozen” list focuses on scams that target individual taxpayers, with special emphasis on aggressive and evolving schemes related to COVID-19 tax relief, including Economic Impact Payments (EIPs). The IRS urges taxpayers and tax professionals to be aware of these scams and not to engage with potential scammers online or on the phone. This year’s “dirty dozen” scams list includes:Phishing scams. According to the Information Release, taxpayers... Read More

Launching a business? How to treat start-up expenses on your tax return

While the COVID-19 crisis has devastated many existing businesses, the pandemic has also created opportunities for entrepreneurs to launch new businesses. For example, some businesses are being launched online to provide products and services to people staying at home. Entrepreneurs often don’t know that many expenses incurred by start-ups can’t be currently deducted. You should be aware that the way you handle some of your initial expenses can make a large difference in your tax bill. How expenses must be handled If you’re starting or planning a new enterprise, keep these key points in mind: Start-up costs include those incurred... Read More

Re-evaluate your company’s competitiveness in a changed economy

Just about every business owner’s strategic plans for 2020 look far different now than they did heading into the year. The COVID-19 pandemic has changed the economy in profound ways, forcing many companies to recalibrate suddenly and severely. As your business moves forward in this uncertain environment, it’s important to re-evaluate competitiveness. You may have lost an edge that previously existed, or you may have the opportunity to gain one. Here are some critical elements to consider. Objectively assess leadership More than likely, you and your management team have had to make some difficult decisions over the last few months.... Read More
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