TAX+BUSINESS ALERT
News for your business and your life. | Hawkins Ash CPAs
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In this Edition
October 20, 2020
Is It Time for a Cost Segregation Study?
PODCAST: PPP Loan Forgiveness for Loans Less Than $50,000
Talking About the Sandwich Generation
Register Today: Payroll and Year-End Reporting Webinar
Tax Calendar
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Is It Time for a Cost Segregation Study? |
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Because of the economic impact of the COVID-19 crisis, many companies may want to conserve cash and not buy much equipment this year. As a result, you may not be able to claim as many depreciation tax deductions as in the past. However, if your company owns real property, there’s another approach to depreciation to consider: a cost segregation study.
Depreciation Basics
Business buildings generally have a 39-year depreciation period (27.5 years for residential rental properties). Typically, companies depreciate a building’s structural components — including walls, windows, HVAC systems, plumbing and wiring — along with the building. Personal property (such as equipment, machinery, furniture and fixtures) is eligible for accelerated depreciation, usually over five or seven years. And land improvements, such as fences, outdoor lighting and parking lots, are depreciable over 15 years.
Often, businesses allocate all or most of their buildings’ acquisition or construction costs to real property, overlooking opportunities to allocate costs to shorter-lived personal property or land improvements. Items that appear to be “part of a building” may in fact be personal property. Examples include removable wall and floor coverings, removable partitions, awnings and canopies, window treatments, signs and decorative lighting.
Pinpointing Costs
A cost segregation study combines accounting and engineering techniques to identify building costs that are properly allocable to tangible personal property rather than real property. Although the relative costs and benefits of a cost segregation study will depend on your particular facts and circumstances, it can be a valuable investment.
It may allow you to accelerate depreciation deductions on certain items, thereby reducing taxes and boosting cash flow. And, thanks to the Tax Cuts and Jobs Act, the potential benefits of a cost segregation study are now even greater than they were a few years ago because of enhancements to certain depreciation-related tax breaks.
Worth a Look
Cost segregation studies have costs all their own, but the potential long-term tax benefits may make it worth your while to undertake the process. Contact our firm for further details.
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Contact: Charles Wendlandt, CPA
Phone: 715.384.1986
Email: cwendlandt@hawkinsashcpas.com
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PODCAST:
PPP Loan Forgiveness for Loans Less Than $50,000
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The Small Business Administration (SBA) has provided a simpler and more streamlined forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less: Form 3508S. In this podcast, Jeff Dvorachek shares more about what this means for qualifying borrowers. |
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Talking About the Sandwich Generation |
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The term “sandwich generation” was originally coined to describe Baby Boomers caught between caring for their aging parents and their children. Now the term applies to whichever generation happens to be grappling with the problem. If you’re in the middle part of the sandwich, one thing that can help is having one or more honest discussions about the situation.
When preparing for such a discussion, start with the “bottom” part of the sandwich: your children. Assuming they’re still in their formative years, make them your top priority. At this stage, you’ll still have most of the control over the decisions affecting their lives. These involve personal choices that are different for every family.
The “upper” half of the sandwich can be more problematic. Depending on their health status and other factors, including finances, your parents may resist your efforts to assist them. They may be oblivious to changes or dismissive of your concerns. And their attitude might range from being cooperative to highly resistant.
To initiate a family meeting, invite all the key players — your parents, siblings and, as appropriate, their spouses, at the least. In the “old normal,” the gathering would have best been held face-to-face. In light of the COVID-19 pandemic, however, you may want to consider an online video chat instead.
What should you discuss? Cover the entire tax and financial planning gamut. The dialogue should be frank and honest. Many issues can be sensitive, and emotions can run high, so be prepared for some handwringing or pushback.
You probably won’t be able to accomplish all your objectives in a single session. Consider meeting again with as many of the other parties as possible. In fact, you might broaden the circle to include your CPA or attorney.
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Contact: Judy Haven, CPA
Phone: 262.404.2112
Email: jhaven@hawkinsashcpas.com
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Payroll and Year-End Reporting Webinar |
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Thursday, December 3
12 noon - 2 p.m.
As an employer, you know that year-end payroll processing and reporting is a complex undertaking that adds to the stress of closing the books for the year. To help ensure a smooth, error-free year and get the latest information register for this webinar with Accounting Services Manager Debbie Denny.
Debbie will address compliance issues of year-end payroll processing and reporting, and bring you up-to-date on the latest changes that affect the close of 2020 and the beginning of 2021. Topics covered in the two-hour webinar will include:
- Fringe benefits
- W-2 add backs
- ACA reporting
- Independent contractor issues
- 1099 rules and due dates
- Families First Coronavirus Response Act (FFCRA)
- Coronavirus Aid, Relief and Economic Security (CARES) Act
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This calendar notes important tax deadlines for the fourth quarter of 2020:
November 2
The third quarter Form 941 (“Employer’s Quarterly Federal Tax Return”) is due today and any undeposited tax must be deposited. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until November 10 to file the return.
- If you have employees, a federal unemployment tax (FUTA) deposit is due if the FUTA liability through September exceeds $500.
November 16
If the monthly deposit rule applies, employers must deposit the tax for payments in October for Social Security, Medicare, withheld income tax and nonpayroll withholding.
December 15
Calendar-year corporations must deposit the fourth installment of estimated income tax for 2020.
- If the monthly deposit rule applies, employers must deposit the tax for payments in November for Social Security, Medicare, withheld income tax, and nonpayroll withholding.
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More Resources from CPA-HQ |
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WEDC Small Business Grant Phase 2
These $5,000 grants are available to Wisconsin small businesses. Apply before Nov. 2.
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How to Ditch the USB Drive
Our secure, online portal provides an easy-to-use and secure method to transfer files between you and your accountant, and this includes QuickBooks files. Here’s how it works.
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Health Savings Accounts: An Overview
The tax benefits of Health Savings Accounts (HSAs) apply to a wide range of age groups and income levels. But did you know that you can take an HSA even if you take the standard deduction?
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Part of your business. Part of your life. | www.HawkinsAshCPAs.com |
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