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Blogging Beyond the Numbers

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Posted by: Brian Dahlk 2 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 4 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....
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Posted by: Bruce Mayer 8 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 8 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 ...
car dashboard
Posted by: Bruce Mayer 8 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...
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Posted by: Bruce Mayer 8 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...
Posted by: Bruce Mayer 2 years ago
We have been involved in the Food Cooperative (FCI) Initiative annual conference, Up & Coming, for four years.   Bruce has been giving and refining a presentation on Taxes and Accounting for Start-Up Food Cooperatives.  In 2014, FCI coordinated putting the presentation on You Tube. The presentation has been slightly modified since the presentation in 2014. Here is the current PowerPoint for th...
Tax Deadline
Posted by: Bruce Mayer 2 years ago
The Internal Revenue Service has changed the due dates for a number of returns relevant to cooperatives. The primary driver for this was moving up the partnership due date so that K-1s are made available to individuals in time to file their 1040 without extensions. A secondary issue was moving back the corporation due date one month. Most corporations extend their returns so the initial due date is less imp...
Calendar
Posted by: Bruce Mayer 2 years ago
Cooperatives sometimes consider changing their year end to a new month or to a 52-53 week year ending on the same month. Most cooperatives seem to start up with a December year end. Larger food cooperatives gravitate to a June year end. One general guideline on choosing a year end is that the year should end on the strongest quarter or begin on the weakest quarter. Beginning on a weaker qu...
Posted by: Bruce Mayer 2 years ago
The rules for accounting for leases in a set of financial statements in accordance with GAAP (Generally Accepted Accounting Principles) will change significantly starting in 2020. The logic for making the change is that balance sheets are currently very different for businesses that own a building compared to businesses that rent a building. To enhance comparability between businesses the Financial Accounti...