LLC Members Could Soon Be Subject to Self-Employment Tax

Margaret Amsden, CPA, MST | Shareholder - Tax Services | Self-Employment TaxInternal Revenue Code Section 1402(a) defines “net earnings from self-employment” as:

  • Gross income an individual receives from any trade or business, plus
  • An individual’s distributive share of income or loss from a partnership in which he or she is a partner, unless a specific exclusion applies.

Such an exclusion is located in IRC Section 1402(a)(13) which generally provides that the distributive share of partnership income or loss is excluded from the net earnings from self-employment if the partner receiving the distribution of income is a Limited Partner.

Estate Planning: What is it, and Why do you need it?

Margaret Amsden, CPA, MST | Shareholder - Tax Services | Estate PlanningEstate Planning, What is it?

Estate Planning, as defined by Black’s Law Dictionary, is “That branch of the law which, in arranging a person’s property and estate, takes into account the laws of wills, taxes, insurance, property, and trust so as to gain maximum benefit of all laws while carrying out the person’s own wishes for the disposition of his property upon his death.”

This is a very broad definition and quickly identifies that there are many disciplines that need to be considered to make sure that the plan addresses all the issues. It also helps to point out that preparing and implementing a plan will likely require the services of:

Eight Questions Answered About SSARS 21: Statement on Standards for Accounting and Review Services: Clarification and Recodification

Kevin Johns, CPA | Shareholder - International Accounting | SSARS 21: Accounting and Review StandardsNew SSARS 21 pronouncement brings new options to financial reporting

Effective for years ending after December 15, 2015, accountants in pubic practice will have new options available when working with their clients in regards to their financial reporting. Statement on Standards for Accounting and Review Services 21 (or “SSARS 21”) was issued to help clarify and revise the standards for reviews, compilations, and engagements to prepare financial statements. The following outlines key questions and answers to consider when analyzing the impact of this pronouncement.

Committee of Sponsoring Organizations Framework (COSO) and How It Applies to Closely Held Businesses

Julie Killian, CPA, CGMA | Principal - Assurance Services | Committee of Sponsoring OrganizationsCommittee of Sponsoring Organizations

Due to heightened corrupt practices throughout businesses in the early to late 1970s, the US Securities and Exchange Commission partnered with the US Congress to enact rules that would cover the internal control structure in companies throughout the United States. As a result, the private sector initiated what is called the Committee of Sponsoring Organizations of the Treadway Commission (otherwise known as “COSO”) to provide a framework that would help implement a strong system of internal controls in mid-1985.

5 Low-Tax Jurisdiction Strategies for Small- and Medium-Sized Businesses

Sarah Russell, CPA, MBA | Shareholder - International Tax | Low-Tax Jurisdiction Strategies for SMEsThere has been much publicity lately regarding large multi-national companies and their offshore tax planning strategies, which has led many business owners to wonder how they could employ similar strategies. This article will focus on things small- to medium-sized business owners should know when considering tax planning strategies related to offshore expansion.

Most small- to medium-sized entities (SMEs) have relatively simple tax structures when opening a foreign subsidiary. When expanding into international markets, SMEs with a foreign subsidiary typically treat the entity as a controlled foreign corporation, foreign partnership, or a disregarded entity. This article does not get into the differences between these structures, however it will give you a high level overview as well as reporting requirements.

New Report from the US Department of Labor Indicates High Percentage of Deficient Employee Benefit Plan Audits

Julie Killian, CPA, CGMA | Principal - Assurance Services | Employee Benefit Plan Audit

Clayton & McKervey, P.C. is committed to audit quality. We dedicate considerable resources to making sure our audits meet the highest standards. The importance of commitment to quality has been highlighted with the recent release of the US Department of Labor’s (DOL) Audit Quality Study.

The DOL recently released its report of results from a nationwide study conducted on the quality of employee benefit plan audit work performed by certified public accounting firms. The study looked at a sample of 400 retirement plan audits by 232 CPA firms for the 2011 Form 5500 annual filing (plan years beginning in 2011). There are approximately 80,000 benefit plan filings made per year with the DOL.

Required Documentation for Business Meals and Entertainment, Travel

Margaret Amsden, CPA, MST | Shareholder - Tax Services | Meals and Entertainment ExpensesThere are certain things businesses must keep in mind when deducting meals and entertainment expenditures. While there are often several questions posed to us, the two most common include:

  • What is deductible?
  • What do I need to keep in terms of records?

Meals and Entertainment Expenditures

Generally, to qualify as a deduction, an expenditure must meet all of the following criteria:

  • It must not be lavish or extravagant. Consider: Is it reasonable given the facts and circumstances?
  • The taxpayer or taxpayer’s employee must be present when the meals are furnished or the entertainment occurs.

June 30 Due Date: Report of Foreign Bank and Financial Accounts (FBAR)

Suzanne Tuson, CPA, MST | Shareholder - International Tax Services | FBAR ReportingIf you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing Form FinCEvN 114, Report of Foreign Bank and Financial Accounts (FBAR).

The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.

Why Estate Planning is Essential for International Entrepreneurs

Margaret Amsden, CPA, MST | Shareholder - Tax Services

Estate planning is not an easy process. When considering the issues that need to be addressed and the questions that need to be answered, it is easy to become overwhelmed. Perhaps not surprisingly, this process becomes even more difficult when viewed from an international perspective.

An essential part of estate planning is understanding the taxation of wealth transfers. In the United States, wealth transfer taxes include:

  • Gift tax
  • Estate tax
  • Generation skipping transfer tax