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Blogging Beyond the Numbers

Form 1099
Posted by: Bruce Mayer 9 hours ago
The IRS requires reporting of certain 2018 payments on a Form 1099.  This needs to be completed, sent to the recipient, to the IRS and most likely to your home state by January 31, 2019. A 1099 is only required for payments that are not paid by credit card.  There is a separate reporting system in place where the credit card processor reports all payments made on a 1099-K.  So do not issue a 1099 for ...
Posted by: Bruce Mayer 1 month ago
The new tax law was amended in March 2018 to change the patronage dividends rules but did allow them to be eligible for the 20% pass through business deduction.  Co-ops where the recipients of patronage dividends are businesses, or are individuals not paying tax due to the personal use exemption, are not affected by this change.  I will explore what some of the tax advantages are for worker co-ops now tha...
Posted by: Bruce Mayer 1 month ago
On March 23, 2018 Congress passed an amendment to the new tax law that removed the “Grain Glitch” where private grain elevators were significantly disadvantaged.  Using per unit retains, a form of patronage dividends, farmers could deduct 20% from the gross proceeds of their sales to a cooperative grain elevator but not to a privately held grain elevator.  The fix was to remove patronage dividends fro...
Calculator
Posted by: Brian Dahlk 4 months ago
When co-ops acquire new long-term debt, they often incur costs in conjunction with the process. These costs are commonly known as debt issuance costs. Such costs of obtaining financing – such as bank fees, accounting fees to prepare prospective presentations, and legal fees to draft the necessary documents – should not be expensed. In the past, these costs have usually been capitalized as an asset accou...
Posted by: Bruce Mayer 6 months ago
Through December 31, 2017, most employer expenses related to meals, entertainment, and employee transportation were considered legitimate business costs, but might have been subject to 50% deductibility for federal income tax purposes.  The new tax law reduces or eliminates many of those deductions.  The IRS has yet to issue guidance on the new rules so the ideas below may be modified once that is issued....
20%
Posted by: Bruce Mayer 10 months ago
Cooperatives that are taxed as partnerships or S-corporations fall under the general tax rules applicable to all partnerships and S-corporations.  The Subchapter T rules that apply to incorporated cooperatives do not apply to partnerships and S-corporations. Reduction in top corporate tax rate The headline change in the new tax law is the reduction in the top corporate tax rate from 35% to 21%.  That ch...
Expenses Losses
Posted by: Bruce Mayer 10 months ago
One of the ways the reduced corporate tax rate was “paid for” was by reducing the value of certain deductions.  One of these was limiting the net operating loss deduction.  Net operating losses are generated by showing a negative taxable income on an annual income tax form. Prior Tax Law for Net Operating Losses Under the prior tax law a net operating loss could be carried back two years or forward ...
percent
Posted by: Bruce Mayer 10 months ago
The new corporate tax rate was the headline change made by this new tax law.  That rate is, of course, a flat 21% on all taxable income. Not all businesses will realize a tax rate benefit from the new tax law changes. The prior rules taxed corporate net income at only 15% for the first $50,000, with higher graduated rates beyond that amount.  So a corporation with a taxable income of exactly $50,000 w...
car dashboard
Posted by: Bruce Mayer 10 months ago
Purchases of equipment, vehicles and other business property that is not buildings and real estate are eligible for more rapid write-offs.  These rules are changed on a regular basis so for the most part this is just an adjustment of how fast things can be written off. The two area we will discuss are bonus depreciation and expensing of items (Section 179).  We will also discuss several reasons why taking...