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Many Investments are Eligible for Tax Rule

Author: Jenny Shilling

Regardless of your tax bracket, long-term capital gains are only taxed at 15 percent federally. This special tax treatment applies to just about any investment that you make that you hold for at least one year. While stock and mutual fund investors have benefited from this for years, many other types of investments can also take advantage of this tax rule:

• The profit on the sale of a personal residence, including vacation homes and time-share interests is only taxed at 15 percent. 

• Profits on the sale of put and call options or other derivative investments held in your personal account. Be careful to ensure that the derivative that you buy has a life of over one year, though.

• Non-collectible personal autos or other personal property items. While most of these items go down in value, some, such as jewelry, can go up in value.

• Closely-held stock or ownership shares of LLCs or LLPs.

• Land or real estate held for investment purposes by you, your family, or a company of which you own a portion.

• Country club or golf club memberships.

• Business assets held by a sole proprietorship, general partnership, LLC or S corporation that are sold for a profit.

While this favorable capital gains tax treatment can be a windfall for many investors, it is not without some danger. Some of the deductible items identified here can also be subject to special recapture taxes on any part of their value that was written off as amortization or depreciation. in addition, profits on the sale of collectible items are also taxed at a higher rate.

Due to these complexities, the best thing to do is to involve a tax planner as early as possible before you make investments or sales of valuable items. The Tax Office, Inc. can help you to properly categorize the sale of your assets and ensure that you take full advantage of the extremely low capital gains tax rates. Contact us today to learn more.

Why Tax Planning Should be a Year Round Priority

Author: Keith Huggett

Obviously, your business finances are a year-round priority. For example, you don't wait until the end of the year to address a pile of bills that is several months old. Similarly, you pay your employees on at least a monthly basis, and probably more often.

So with money matters on the calendar every day, why would you treat your income tax obligations any differently?

It's critical that you keep taxes in mind 365 days a year. Proper tax planning not only optimizes savings, but it also decreases your chance of an audit. You don't have to have a tax return on your desk and calculate your current obligation every day, but there are things you can do throughout the year to make tax time smoother, faster -- and more comprehensive.

Here are four tax planning tips that will be helpful for your business.

• Make taxes an ongoing, high-priority concern. When purchasing anything for your business, ask yourself not only whether you need it and can afford it, but also, What are the tax implications?

• Keep thorough records. If there is any possibility a purchase or expense may impact your tax return, keep a receipt and any other pertinent documentation. It's easier to shred unnecessary paper than to recreate something you lost or threw away.

• Use QuickBooks to streamline accounting processes and year-end reporting. Automated processes and electronic records make tax planning easier and minimize the opportunities for errors. QuickBooks won't do your taxes for you, but it can provide comprehensive reports of tax-related transactions.
• Educate employees to be tax-conscious. Any employee with access to expense accounts or financial records should understand the need for precise documentation. Those with decision-making power must also understand the downstream results of their actions.

We can help you reduce your chances of an audit, set up your ongoing tax planning objectives and minimize your tax obligation as we prepare your returns. Contact us at The Tax Office for a free consultation today, and to learn about the full range of business and personal accounting services we offer.