Estate Taxes
POSTED: 2010-02-11
Congress has not yet acted to change or modify the estate tax repeal that impacts individual estates associated with 2010 deaths. The estate tax repeal includes changes to income tax basis rules for property inherited from a decedent, as a result some heirs could face higher combined state and income tax costs. Also wills that use formula clauses designed to take advantage of estate tax laws may produce unfavorable tax consequences when there is no estate tax.
Interns
POSTED: 2010-02-10
Chelsey and Rebecca will be working a part time schedule that fits around their classes to assist us with income tax returns and possibly some financial statement work during our current busy filing season.
We look forward to their youthful enthusiasm and hope the experience is rewarding for both of them as well as the firm.
Possible New Round of $10,000 state tax credits coming
POSTED: 2010-01-06
Gov. Arnold Schwarzenegger proposed a new round of $10,000 state tax credits this morning for buyers of new and existing homes in California.
He proposed setting aside $200 million for the credits - twice what was allocated last year for tax credits given to more than 10,600 buyers of newly built homes.
The credit could be combined with an $8,000 federal tax credit that expires April 30.
The proposal was part of the governor's job creation strategy outlined in his annual State of the State speech to a joint session of the state Legislature.
The state's homebuilding industry has long pushed for an extension of the credit that last year helped it trim its supply of excess inventory. Builders competing with cheap bank repos have seen fewer sales the past two years than at any time during the half century California has been keeping records.
Homebuyer Credit extension and NOL relief passes House
POSTED: 2009-11-05
Here's a summary of the tax changes in the Baucus-Reid substitute amendment to H.R. 3548:
o Any business could elect an up to 5-year carryback for net operating losses (NOLs) incurred either in 2008 or 2009, but not both (at the election of the taxpayer). Businesses would be able to offset 50% of the available income from the fifth year and 100% of all income in the remaining four carryback years. Small businesses that already elected to carry 2008 NOLs back 3, 4, or 5 years under the American Recovery and Reinvestment Act could elect to carry back losses from 2009. Additionally, the 90% limitation on the use of any alternative tax NOL deduction attributable to carrybacks of the applicable NOL for which an extended carryback period is elected would be suspended. The NOL provision would not be available to Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or to a taxpayer if the federal government acquired an equity interest (or right to acquire such an interest) in the taxpayer under the Emergency Economic Stabilization Act of 2008.
o The first-time homebuyer credit, set to expire on November 30 under current law, would be expanded and liberalized as follows (the changes generally would apply for residences bought after the enactment date):
(1) The credit would sunset on Apr. 30, 2010, but for those who enter into a written binding contract before May 1, 2010 (to close on the purchase of a principal residence before July 1, 2010), the credit would sunset on June 30, 2010.
(2) The credit would only be available for homes with a purchase price of $800,000 or less (currently there's no price ceiling).
(3) A taxpayer could elect to treat the purchase as made on December 31 of the calendar year preceding the purchase for purposes of claiming the credit on the prior year's tax return.
(4) No District of Columbia first-time homebuyer credit would be allowed to any taxpayer with respect to the purchase of a residence if the national first-time homebuyer credit is allowable to that taxpayer (or the taxpayer's spouse) with respect to the purchase.
(5) The credit would not be restricted to first-time homebuyers. It could be claimed by taxpayers who have owned and used the same residence as their principal residences for any 5 consecutive-year period during the 8-year period ending on the date of the purchase of the subsequent principal residence (i.e., the one that would qualify them for a credit). However, the homebuyer credit for these “long-time residents” could not exceed $6,500.
(6) The modified AGI-based phaseout would be liberalized. The credit would begin to phase out for individuals with modified AGI above $125,000 ($225,000 for joint filers); currently the phaseout begins at $75,000 and $150,000 respectively.
o To help combat abuse of the homebuyer credit, the amendment would include in IRS's mathematical error authority any omission of the homebuyer credit recapture (this would apply for homes bought on or after the enactment date). This authority allows IRS to summarily assess mathematical or clerical errors without conducting an audit. Additionally, the credit would not be available to taxpayers who can be claimed as a dependent, or to those under age 18. New documentation requirements also would apply along with prohibitions against certain intrafamily purchases.
o The homebuyer-credit recapture requirement would be waived for military personnel, including members of the Foreign Service and intelligence community, forced to sell as a result of an official extended duty of service. Additionally, military personnel serving outside the U.S. for at least 90 days in 2009 or 2010 would have one additional year to qualify for the homebuyer credit.
o Code Sec. 132(n) would be amended to ensure that certain payments to military members under the Defense Department's Homeowner's Assistance Program (HAP) are exempt from tax.
o The application of the Code Sec. 864 worldwide allocation of interest would be delayed until tax years beginning after 2017.
o For tax years beginning after 2010, the base penalty for failure to file a partnership or S corporation return would be increased by $106 (from $89 to $195).
o For returns filed after 2010, there would be a new electronic return filing requirement for specified tax return preparers (all return preparers except those who neither prepare nor reasonably expect to prepare 10 or more individual income tax returns in a calendar year).
o Large corporations (those with assets of at least $1 billion) would be required to increase by 33 percentage points the required payment of estimated tax otherwise due in July, August, or September of 2014.
Key Ratios
POSTED: 2009-09-17
Sureties, banks, and other creditors measure your business�s financial strength by reviewing financial
trends and numerical relationships using the information presented on your financial statements. To do
this, they typically calculate a variety of financial ratios. Comparing ratios from current periods to ratios
from prior periods and to industry standards provides insight into your company�s financial health and the
potential risk of extending or guaranteeing credit.
Reviewing your firm�s financial ratios with us on a regular basis can help you better manage your
company�s finances. Some of the ratios that can be important include:
Profitability ratios, such as gross profit margin, return on assets, and return on equity. These
ratios show how effectively your company is using its resources and curtailing costs to produce
profits.
Liquidity ratios, such as the current ratio. Liquidity ratios measure your firm�s ability to pay off
short-term obligations as they become due.
Underbilling ratios, such as the underbillings to equity ratio. This ratio measures the percentage
of your company�s net worth represented by work performed but not yet billed. A ratio greater
than 20% is considered unusual and would be a cause for concern. The underbillings to working
capital ratio reveals the percentage of your working capital that is composed of underbillings.
Backlog ratios indicate how long it will take to complete work under contract (number of months
in backlog) and the remaining gross profit not yet earned on contracts that haven�t been
completed (backlog gross profit).
Asset utilization ratios measure the efficiency of your company�s use of its assets. For example,
your fixed asset ratio will show to what extent fixed assets make up your company�s equity. If the
percentage seems too high, creditors and sureties may regard your company�s investment in fixed
assets as excessive.
Debt utilization ratios allow you to measure your company�s liabilities in relation to its asset base
and earnings ability. For example, if your company has a high debt-to-equity ratio, it means that
your company is financing its assets using a large amount of borrowed funds.
Pearlman Association
POSTED: 2009-09-09
In an educational program titled "Raking the Coals - Post Default Mitigation Opportunities" Mr. Huhn will participate on a panel with another CPA and a lawyer to present and discuss accountants duties and responsibilities to third parties and how to interpret and identify trends and potential causes of action from review and analysis of a contractor's financial statements.
The Pearlman Association is now in its 13th year of hosting educational and recreational events for Surety claims professionals in the Seattle area.
CARS
POSTED: 2009-06-23
The so called "cash for clunkers" program is a government program that helps you purchase a new, more fuel efficient vehicle when you trade in a less fuel efficient vehicle. The program is scheduled to be in effect mid July. Trade in a vehicle that gets 18 MPG or less, purchase your new vehicle, and recieve a $3,500 or $4,500 credit at the dealer. Complete details are available at http://cars.gov/
Ask a CPA
POSTED: 2009-03-31
Visit the Cal CPA Education Foundation website via our link
for answers to questions in the following categories:
College
Employment
Home/Property
Individuals/Families
Insurance
Managing Credit
Marriage/Divorce
Money Management
Retirement/Estate Planning
Saving/Investing
Tax Tips
Business Owners
Accounting/Operations
Business Management
Disaster Planning
Employment
Entity/Structure
Insurance
Tax
Technology
click here...
And of course we are happy to discuss any of the topics of interest to you.
The American Recovery and Reinvestment Act of 2009
POSTED: 2009-02-26
Individuals and Families
"Making Work Pay" credit. The new law provides an individual tax credit in the amount of 6.2% of earned income not to exceed $400 for single returns and $800 for joint returns in 2009 and 2010. The credit is phased out at adjusted gross income (AGI) in excess of $75,000 ($150,000 for married couples filing jointly). The credit can be claimed as a reduction in the amount of income tax that is withheld from a paycheck, or through a credit on a tax return. Under the credit, workers can expect to see perhaps $13 a week less withheld from their paychecks starting around June. Next year, the extra take-home pay will go down to around $7.70 per week.
Economic recovery payment. The new law provides for a one-time payment of $250 to retirees, disabled individuals and Social Security beneficiaries and SSI recipients receiving benefits from the Social Security Administration and Railroad Retirement beneficiaries, and to veterans receiving disability compensation and pension benefits from the U.S. Department of Veteran's Affairs. The one-time payment is a reduction to any allowable Making Work Pay credit. To read more about what the stimulus package can possibly do for you, click here.
Yet another super-smart senior accountant has joined JHS
POSTED: 2008-12-08
The hits keep coming! JHS welcomes our newest senior-level staff accountant, Patricia Carey. After graduating from Saint Mary's College, Patricia worked as a senior accountant at another local CPA firm. She also brings a wealth of knowledge and experience from a stint as the controller at a local home builder. Give us a call to hear how JHS's strategic accounting superstars can use their experience to give you an edge!
Year End Tax Letters
POSTED: 2008-12-05
Our annual year end tax planning letters are in circulation and will be arriving in mailboxes throughout December. Full copies of both the small business and personal tax advice letters are easily accessible on our website.
Please follow the News & Events link at the top of this page and then "click" on JHS Newsletter for the complete text of both letters.
They can also be accessed directly as follows
http://www.jhs.com/downloads/2008JHSYearEndLetter-Business.pdf
http://www.jhs.com/downloads/2008JHSYearEndLetter-Individual.pdf
JHS galaxy of super-stars is growing in Orange County
POSTED: 2008-10-29
JHS is excited to announce the addition of Janet Bravo to our Orange County office. Janet brings an impressive resume and training including a stint at a small CPA firm in Santa Ana. PLUS, she's working on completing her MBA from Keller Graduate School in Accounting and Financial Management. Furthermore, we are also looking forward to judging the future bakeoff between Janet and our resident bakery-master Sarah.
If you would like to see what the overachievers at JHS can do for you, please contact us at jhscpa@jhs.com
Staff Accountants Speak in Chico
POSTED: 2008-10-28
JHS Staff Associates, Rory George and Keith West spoke to the Chico State Accounting Society at a recent Tuesday evening business meeting at the northern California university. Presenting the topic, "Observations on the first year in a CPA firm" the gentlemen initiated a lively discussion throughout their power point presentation and responded to numerous inquiries from the Society members and other accounting students in attendance.
An officer of the Society commented afterward that the presentation was one of the best this year.
Please contact cparecruiter@jhs.com for a copy of the power point file.
Danville Life magazine interviews JHS partner Mike Huhn
POSTED: 2008-06-05
Danville Life magazine interviews JHS partner Mike Huhn for Danville's 150th anniversary edition. See the full article here: http://newspaperads.contracostatimes.com/SS/Page.aspx?secid=47068&pagenum=7&sstarg=&facing=false&
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