When an IRA holds a nontraditional asset such as an interest in a private hedge fund, the Taxpayer must be extremely careful to provide the annual value for that interest to the custodian and to follow the rules in rolling that nontraditional asset to a new IRA. Failing to do so can result in significant tax implications. […]
Tag: tax planning
Selling a Business: Plan Carefully for Assumed Liabilities and Deferred Compensation
In determining the sales price in an acquisition, the seller must determine how assumed liabilities will be treated and either adjust the sales price accordingly or plan to allow the deduction to occur prior to sale. […]
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Taxpayer Can’t Use 2020 Crypto Losses to Offset Prior-Year Gains | Kim v. Commissioner
Virtual currencies can have large swings in values from year to year. Where large gains are recognized in one year that are then followed by large losses in a following year, under the annual accounting principle and the Internal Revenue Code the Taxpayer cannot use a capital loss in a future tax year to offset capital gains in a previous tax year. […]
Avoiding Dividend Reclassification: Key Tax Takeaways for Closely Held C-Corporations | Clary Hood, Inc. v. Commissioner, 69 F.4th 168 (4th Circuit)
This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation. […]
Tax Complications of an Earnout: How Earnouts Trigger Tax Considerations in M&A Deals
An earnout is a contractual mechanism in acquisitions that provide for contingent additional payments from the buyer of the company to the seller’s shareholders. Earnouts are usually received if the business that is acquired meets certain financial or other milestones after the acquisition is closed. […]
The Critical Role of Tax Treatment and Structuring in International M&A
There can be additional complexities involved in cross-border acquisitions. It is important to understand the tax treatment in each country in order to ensure the acquiror and target receive the desired result. Techniques for acquisitions in one country can be different than in the other and the resulting tax implications can be significant even if unintended. […]
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How Assets are Reported on the Balance Sheet
The information found on a company’s balance sheet is among the most important information for a business leader, regulator, or potential investor to understand. Without this knowledge, it can be challenging to know whether a company is struggling or thriving […]
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The Balance Sheet: A Key Financial Statement
Whether you are a business owner, employee, or investor, understanding how to read and understand the information on a balance sheet is an essential financial accounting skill. […]
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Typical Types of Accruals on the Balance Sheet
The revenues that a company has not yet received payment for and expenses that companies have not yet paid are called accruals. There are four types of accruals that are typically recorded on the balance when the company follows the accrual method of accounting. […]
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Accrual Method of Accounting
Accrual basis accounting is a method of accounting that records transactions when they occur, not when cash is received or paid out. The accrual method of accounting is used to recognize revenue and expenses in the fiscal year they are earned or incurred. […]
