Federal and State Tax Compliance and Consulting
With the enactment of the Tax Cuts and Job Act (TCJA) and the constant changes to Federal and State filing requirements, tax compliance and strategic planning have never been so complex and overwhelming. Our team of specialists employs a thorough understanding of tax law not only to meet filing obligations but create a plan tailored to our client’s goals and the minimization of tax liability.
State Income Tax Nexus and Apportionment
A business with out-of-state customers or employees may become subject to income tax filing requirements in multiple states. State income tax filing requirements must be re-evaluated on a regular basis due to constant changes in state laws. Businesses who fail to file when deemed to be doing business in the state may have penalties imposed on them. Our professionals will determine where the business needs to file income tax returns and what income may or may not be taxed in each state.
Basis Tracking and Step-Ups
Each partner in a partnership is required to track their basis to determine a taxable amount when distributions are made or an interest is transferred or sold. Partnerships have the option to make a Section 754 election, which allows a new partner’s share of basis in assets to be increased to fair market value. The 754 election can attract new investors by warranting them a fair share of interest. Proper allocation of partnership value and appropriate elections will benefit partners in the long-run and may help to avoid various compliance issues.
International Income, Currency, and Withholdings
Businesses with foreign partners or shareholders may be subject to additional reporting requirements when distributing earnings, and some foreign recipients are subject to U.S. withholding rules. Businesses with related entities in other countries may be required to pay tax on repatriated earnings. Income from other countries needs to be reported in American currency. We can navigate the complex rules of foreign investing or help plan for future diversification of investors.
The IRS released guidance involving cryptocurrency transactions in 2017 and has begun to scrutinize taxpayers who hold cryptocurrency. Cryptocurrencies are to be treated as intangible investments and are subject to capital gains taxes calculated on a FIFO basis. Miners should report coins received as business income. While coin-to-currency and mining transactions may seem simple to report, coin-to-coin trades, hard forks (chain splits), and exchange of coin for goods or services require the taxpayer to “impute” a sale or exchange transaction to report a capital gain or loss. With IRS letters going to cryptocurrency investors, taxpayers should take extra steps to ensure compliance with existing guidance.
Industry-Specific Rules and Elections
Dealers of securities, traders, and financial institutions are subject to a variety of industry-specific rules. Typical services for such industries include mark-to-market elections, special allocations of income and loss for investors, and wash sale determinations. We will establish a compliance plan and determine potentially beneficial elections to minimize each client’s future tax liability.