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TAX TIPS AND FACTS
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ROGER A. KAHAN Certified Public Accountant, Business Advisor and Financier Serving the tax and financial needs of individuals and small to medium sized businesses Randolph, MA 02368-1865 VOICE: 781.963.RAK-1 (963-7251) E-mail: kahan@rak-1.com Copyright © 2000 Roger A. Kahan, CPA ALL RIGHTS RESERVED |
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| MEALS AND ENTERTAINMENT | |
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If you are like most of us, you know only 50% of the cost of meals and entertainment
for business purposes is tax deductible. Several years ago, I reported that the cost
of meals to employees at a staff meeting were 100% deductible and you should account
for those costs as a "Staff Meeting" and not as "Meals and Entertainment." Several
court cases have supported that position Additionally, recent cases are now
stipulating other forms of business related meals and entertainment costs to be 100%
deductible. The definition may now include (1) the costs (including the related
facilities) of recreational, social or similar activities that are mainly for the
benefit of employees who are not highly compensated; (2) costs directly related to
business meetings of employees, stockholders or directors; (3) the cost of meals that
are excluded from the employee's gross income as a de minimis fringe benefit; (4)
expenses that are included in an employee's moving expenses that are paid or
reimbursed by the employer and includable in the employee's gross income; (5) the cost
of on-site meals an employer provides to employees "for the convenience of the
employer" under the guidelines under IRC Section 119.
We suggest you arrange your expense reporting (your bookkeeping system) to include an account such as "Staff and Office Meetings." This account would be separately reported on the business income tax return and should not be subject to the 50% disallowance rule like Meals and Entertainment. The courts and the tax laws have finally caught up with us and "TAX TIPS AND FACTS". You heard it here first!
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Remember, "It's not what you make that counts, it's what you keep."
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| 12 FINANCIAL QUESTIONS TO ANSWER | |
If you have any questions about the above, call me. I am sure I can help you make decisions that will work for your future.
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| DO WHAT DO YOU DO BEST | |
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In your business or as an employee, you do some things extraordinarily well. People
pay for what you and your employees have to offer. Don't spend your valuable time
doing things you don't enjoy or fully understand. Do what you do best. Delegate the
rest to experienced employees or professionals. Sometimes, it is hardest to let go of
the tasks you least like to perform. Try it; you and your family may appreciate the
change in you.
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| ENTREPRENEURS FREQUENTLY ACT ALONE. | |
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The heads of large companies rely on their Boards of Directors for advice and counsel.
You may find unbiased business advice by forming your own advisory board of
experienced executives. Directors can be expensive and can be hard to find. A Board
of Directors can cost as much as $25,000 per year, not including liability insurance
and other fringes. However, some directors will work for "small change" with a small
business. If a small business owner is ready to create his/her own board of advisors,
the benefits may quickly outweigh the cost. You may be able to obtain expert advice
without relinquishing any control over policy, compensation and other operating or
management matters. Because a Board of Directors does not own the company, they do
not force owners into decisions, they just attempt to steer them into the right
decision.
Look to business associates, friends and family members to get your board started. DO NOT LOOK FOR "YES" PEOPLE, you know, those that always say YES to you because you are the boss. Business owners from non-competing businesses similar in type and size to yours could be great advisors to you. Look for members with a broad range of business experience.
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| CHECK THAT BLOCK | |
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Beginning with the 2001 filing season, taxpayers will be given the opportunity to
check a box on their 1040 series form and enter the name of an individual paid
tax-return preparer in order to authorize the preparer to speak to the IRS on the
taxpayer's behalf. This will provide the return preparer with "limited" authority to
speak directly to IRS Customer Service representatives about return processing
matters.
Currently a signed Power of Attorney (generally on IRS Form 2848) is required in order to discuss return preparation, refund, and payment issues with the IRS. The check-the-box provision will make communication with the IRS on simple tax return matters much easier for preparers as well as taxpayers.
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| POINTS TO PONDER | |
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Do you have limited parking in front of your store or office? Have you thought about
having you and your staff park away from your front door? This would allow your
customers (you know, the ones that pay you) to have a convenient place to park near
your store or office. Do you know you may be missing some sales because people have
too far to walk to get to your store? If you are a professional, you may be missing
important new clients.
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| DECIMALIZATION | |
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Decimalization of the U.S. securities markets is currently scheduled to begin in September (of course, this date is subject to change by the Securities and Exchange Commission). The transition to quotes and trades in decimals instead of fractions will begin with a pilot group of 10 to 20 stocks, while other stocks will continue to be quoted and traded in fractions. This process is intended to promote a smooth transition, with no disruption to the functioning of the markets. Therefore, your September month-end statement from your portfolio custodian may include securities priced in both decimals and fractions. If you have questions about decimalization, you should either call me or another investment professional.
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| INSURANCE ILLUSTRATIONS | |
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Insurance illustrations can vary greatly, depending upon which insurance carrier is
used, the variety of financial assumptions (interest/dividend rates) and health
underwriting factors. What does this mean to you, the consumer? It means that you
must ask each professional with whom you are dealing, what assumptions were made to
arrive at the numbers in your illustration. Remember that the cheapest policy is not
always the best policy. Know who you are dealing with, and know what you are dealing
with.
The Massachusetts Division of Insurance issued a license to me to act as an Individual Broker. I can now offer you support for life, disability or accident & health insurance coverage. Included in this variety of life insurance coverage are universal life, split-dollar life and fixed and variable annuities. Coverage will be placed through a major insurance carrier. Let's discuss your life, health or disability insurance needs and let me offer a quote for your next policy. I can help you with those many decisions about coverage.
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| Many accountants view their goal as minimizing their clients' taxes. NOT ME! I like to see my clients pay more taxes - because their earnings and profits are increasing dramatically. I can make a major difference in achieving those profits. Talk to me and find out more. | |
| FEATURES WANTED | ||
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We want to feature clients in future editions of TAX TIPS AND FACTS. If you would like a FREE spot to tell
us about your company, its products or services, send a brief story about your company, an overview of
company products and future plans. We may edit the information and include it in a future edition. Send
the information to Roger A. Kahan, CPA via mail, E-mail or FAX it.
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| INTERNET ACCESS | |
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We are kahan@RAK-1.com (that is a "one" and not a small
"L") and an active user of the INTERNET. You can E-mail us from any service connected to the
NET. Our Internet provider is The Xensei Corporation of
Quincy. For more information about Xensei and high quality web hosting solutions,
call me at (781) 963-RAK-1 or Xensei at
(888) 740-7007, e-mail info@xensei.com.
TAX TIPS AND FACTS will appear on our World Wide Web page, at http://www.rak-1.com making it available to the rest of the WORLD.
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| CERTIFIED? | |
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Your doctor is certified. Your lawyer is certified. Is your accountant certified? If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters? If your accountant isn't a CPA, it's time to seek professional help.
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| INDIVIDUAL RETIREMENT ACCOUNTS | |
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You may contribute annually to both a traditional IRA and a ROTH IRA. If you
contribute to more than one IRA, remember that your total annual contribution to all
your IRAs combined may not exceed $2,000 or 100% of your compensation (as an employee
or a self-employed), whichever is less. Your eligibility and income level should be
considered before contributing. Please consult with us for details.
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| Roger A. Kahan is a Certified Public Accountant, Business Advisor and Financier with an office in Randolph, serving the tax and financial needs of individuals and small to medium sized businesses almost anywhere in the United States. And with the advent of the Internet, professional consultation extends to several other countries. Roger is always seeking additional clients and professionals wishing to save money and better manage their own, a friend, a relative or a client's personal or business life. Please let us know if we can use your name in an introductory letter to the prospective client. Thank you. | |
| BANKS WANT TO LEND MONEY! | ||
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Planning for the future is a lot like planting a tree. You've got to do it today if you want your family to enjoy
it tomorrow.
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| WE NEED YOUR SUPPORT | |
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If you like our work, recommend us to a friend. If you are not happy with our work, please call me and let's talk about it. We will both appreciate it.
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| ALTERNATIVE MINIMUM TAX | |
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The Alternative Minimum Tax was created many years ago to prevent the wealthy from
escaping federal taxation through various deductions and credits. However, it was not
indexed for inflation and is now hitting many of the "not-so-rich" in the tax
pocketbook. The AMT snares more taxpayers than originally planned.
A recent Internal Revenue Service report may offer fresh momentum to congressional efforts to overhaul the AMT. Call, write or email your congressman asking for relief from the Alternative Minimum Tax.
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| IRA ROLLOVER TRAP | |
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When you make a trustee-to-trustee direct IRA rollover, be doubly sure that the
transferred funds actually get deposited into an IRA account AND the transfer is
completed within 60 days.
We heard that a brokerage firm that received an IRA rollover, and mistakenly deposited it into a regular brokerage account where it sat for eight months before the error was discovered. Internal Revenue Service law says the amount transferred became the property of the IRA's owner, resulting in a substantial tax - even though it was the custodian and not the taxpayer that made the mistake. You should verify that the transferred funds actually arrived into the proper IRA account. Be sure the rollover check is made payable to: "The new custodian, FBO your name." (FBO stands for "For Benefit Of"). This way the check cannot be negotiated for anyone else's account in error.
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| WHY DO I NEED A CPA? | |
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CPAs do much more than just prepare tax returns and "count beans." A Certified Public Accountant can assist
with
all of your personal financial planning needs to help you achieve your goals. Whether you're saving to buy a house, send your children to college or secure your retirement, you need a member of the Massachusetts Society of CPAs to assist you. Roger A. Kahan is an active member of the Massachusetts Society of CPAs and maintains the financial planning licenses and experience to help you.
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| DEFER INCOME | |
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Instead of paying periodic cash interest, US Treasury Bills are sold at a discount and
redeemed at face value upon maturity. The difference between their higher redemption
value and what you pay for them is your interest. Because you receive no income from
Treasury Bills until they mature, you can use them to defer income. Six month
Treasury Bills acquired after June 30 defer income into 2001. I can help you purchase
Treasury Bills. Call me.
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| REFUND CHECKS | |
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The Internal Revenue Service is still holding refund checks for 1998 and 1999 after
being returned to it by the post office. If you haven't received your refund call the
IRS automated refund information phone number listed in the 1040 instructions or call
1-800-829-1040.
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No one is required to pay more in taxes than the law demands. If you pay
too much, you have less resources to meet your other financial goals. We
can help find tax deductions and credits, and help you plan so your taxes
will be as low as possible, year after year. And we can also assist you
with business and estate tax planning.
TAX TIPS AND FACTS is published periodically by Roger A. Kahan, CPA. Subscription is free to clients, prospective clients and friends of Roger A. Kahan, CPA. If you know of someone interested in a subscription to TAX TIPS AND FACTS allowing him or her to obtain valuable comments on national, Massachusetts or local tax issues, call (781) 963-RAK-1. The information contained in this publication has been obtained from sources I believe to be reliable at the time of writing, but I do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by me of the purchase or sale of any securities or other investment. This material, or any portions thereof, may not reproduced without prior written permission of Roger A. Kahan, CPA. |
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