Standard Deduction Increases While Others Are Trimmed

The Tax Cuts and Jobs Act generally took effect in 2018. Therefore, the fourth quarter of this year provides the first, real opportunity for year-end planning under what has been called the most important tax law passed in more than 30 years. Broadly, the TCJA lowered income tax rates for individuals and for businesses. As you’ll read in the November Client Bulletin, the standard deduction has been substantially increased, but many deductions have been trimmed or eliminated, and some innovative tax benefits have been introduced. Still,…

Sales Tax and the Out-of-State Buyer

If your company makes sales to out-of-state buyers, do you need to collect state sales tax? Until recently, Supreme Court decisions from the 20th-century declared that would not necessarily be the case. Example 1: ABC Corp., based in Alabama, sends a catalog to customers and prospects. A consumer who lives in Wyoming places a $100 order. Assume that ABC has neither employees nor property in Wyoming. ABC would not be required to collect Wyoming sales tax on the $100 purchase price and remit to Wyoming…

Funding Company’s Buy-Sell With Life Insurance Can Be Tricky

Among the trigger events of a small company buy-sell agreement, death of a co-owner typically is included. Example 1: Wendy Young and Victor Thomas both own 50% of YT Corp. They have a buy-sell, which calls for Wendy to buy Victor’s interest in YT if he dies. Similarly, Victor will buy Wendy’s interest in YT from her estate if she is the first to die. Small company buy-sells such as the one for YT Corp. often fall into one of two categories: Cross purchase. Wendy…

Life Insurance for More Than Just Cash Flow

  Many people think of life insurance as a product for family protection. The life of one or two breadwinners is insured; in case of an untimely death, the insurance payout can help with raising children and maintaining the current lifestyle. Once the children are able to live independently and a surviving spouse is financially secure, insurance coverage may be dropped. Such a strategy uses life insurance as a hedge against the risk of lost income when that cash flow is vital. This type of…

High-Tax States Consider SALT Countermoves

Taxpayers who itemize deductions on Schedule A of their tax return have been able to deduct outlays for state and local income tax, as well as property tax with no upper limit. (State and local sales tax may be deducted instead of income tax.) However, as of 2018, the Tax Cuts and Jobs Act of 2017 provides that no more than $10,000 of these state and local tax (SALT) expenses can be deducted on single or joint tax returns ($5,000 for married individuals filing separately).…