Treasure Stock Accounting | Cost Method and Constructive Retirement Method
How to Account for Treasury Stock The two aspects of accounting for treasury stock are the purchase of stock by a company, and its resale of those shares. We deal with these treasury stock transactions next. The Cost MethodThe simplest and most widely-used method for accounting for the repurchase of stock is the cost method. […]
Establishing That Debt Is Bona Fide Debt
To claim a bad debt deduction, a corporation must establish that a debt actually exists. A bona fide debt arises from a debtor-creditor relationship based on a valid and enforceable obligation to pay a fixed or determinable amount of money [Reg. 1.166-1(c) ]. A formal loan agreement is not absolutely necessary to create a […]
Principle provisions of the MACRS “luxury” passenger autos and “listed property” rules
Code Sec. 280F depreciation deduction limitations have two major components. First, there are limitations for passenger automobiles which are labeled as “luxury” automobiles in the Code.1 Second, there are limitations for “listed property” (which includes passenger automobiles) when business use of the property is not greater than 50%.2 The principle provisions are discussed below. The Code Sec. 280F limitations were […]
Questions: Related to IRAs contribution and tax reporting.
1> Can a spouse’s SEP IRA contribution convert to Roth IRA same year? She contributed $7,000 in 2024 and convert to Roth in 2024. This conversion will make the $7,000s taxable income. 2> Supporting documents are Form 5498 contribution and Form 1099R? What if the Form 5498 is not ready by 5-31-2025? Normally Form 1099R […]
Backdoor Roth IRA Rules
Keep these rules in mind to avoid penalties: Only certain types of transfers are allowed. The conversion needs to be one of the following: 1>A rollover, where you receive the money from your traditional IRA and deposit it into the Roth IRA within 60 days. 2>A trustee-to-trustee transfer, where the traditional IRA provider sends the […]
Accountable Plan Vehicle Tax Deductions Mileage Method vs Actual Method.
If the employee is reimbursed for their business mileage, then the mileage rate includes depreciation. If employees are reimbursed for actual costs, then depreciation is an actual car expense.See in IRS Publication 463: ” If you don’t use the standard mileage rate, you may be able to deduct your actual car expenses. Actual car expenses […]
Question: How Much Paid Sick Leave Am I entitled to Per Year?
Answer: Starting on January 1, 2024, employers must generally provide 5 days or 40 hours of paid sick leave to their employees in California. The Labor Commissioner has updated the paid sick leave poster (Spanish) (Korean) (Tagalog) (Chinese Simplified) (Vietnamese) and 2810.5 employee notice (Spanish) (Korean) (Tagalog) (Chinese Simplified) (Vietnamese). All employers should post the […]
Question: installment sale capital gains from Form 8960: However, this gain is from the sale of a partnership interest that I materially participate in (as CEO) and should not be subject to the Net Investment Income Tax on passive activities, correct?
Answer: Some or all the capital gain on sale of a partnership business with active participation can be subject to NIIT. If the business had no passive activity and the partner was active in the business, and the sale included only assets which were used in the business, then all the gain is entered on […]
For Individuals Who Use Schedule C Publication 334 (2024), Tax Guide for Small Business For use in preparing 2024 Returns
Reminders Redesigned Form 1040-SS. For 2024, Schedule(s) C and SE (Form 1040) are available to be filed with Form 1040-SS, if applicable. For additional information, see the Instructions for Form 1040-SS. Form 7205, Energy efficient commercial buildings deduction. This form and its separate instructions are used to claim the section 179D deduction for qualifying energy […]
Question: What’s new for 2024, 2025?
Answer: The following are some of the tax changes for 2024. Maximum net earnings. The maximum net self-employment earnings subject to the social security part of the self-employment tax is $168,600 for 2024. There is no maximum limit on earnings subject to the Medicare part. Bonus depreciation. The bonus depreciation deduction under section 168(k) continues […]