Articles From Lumsden McCormick

As the IRS intensifies its audit efforts, particularly targeting large corporations and high-income individuals, businesses must adopt proactive strategies to prepare for potential audits. By maintaining thorough documentation and understanding common audit triggers, companies can effectively manage the audit process and reduce stress. This article outlines key preparation steps and offers guidance on responding to IRS inquiries to ensure a smooth experience.

On June 27, the California legislature enacted California Revenue and Taxation Code (CRTC) section 25128.9 under S.B. 167.

Maine has amended Title 36 of the Maine Revised Statutes pertaining to the sales tax treatment of lease and rental transactions in the state.

California has enacted two important pieces of legislation that may prove adverse to businesses and individuals.

Probate is the legal process of settling an estate and transferring assets to heirs, but it can expose personal details to the public and attract unwanted attention. While the process typically takes six to nine months, it can be avoided through a revocable living trust, which keeps asset distribution private and outside of probate court. Understanding the probate process and available alternatives is crucial for effective estate planning.

State and local tax (SALT) credits and incentives programs continue to be underutilized. Despite the substantial value they can add for businesses, BDO’s 2024 CFO Outlook Survey found that just 34% of CFOs plan to optimize costs by claiming tax credits in the next 12 months.

Board independence for nonprofits goes beyond just preventing conflicts of interest. The IRS defines independence using a four-part test, and failing to meet these criteria could raise concerns from the IRS and donors. To strengthen governance, nonprofits should aim to have at least two-thirds of their board members independent, with additional precautions for audit and compensation committees.

Manufacturers can reduce their 2024 tax liability by taking advantage of key provisions from the Tax Cuts and Jobs Act, including Section 179 expensing and bonus depreciation, as well as newer incentives from the Inflation Reduction Act and CHIPS Act. Implementing strategies such as purchasing eligible assets or leveraging tax credits for R&D and advanced manufacturing before year-end can result in significant tax savings. Acting quickly is essential to maximizing these opportunities.

On July 11, Pennsylvania Gov. Josh Shapiro signed into law the 2024-2025 budget (S.B. 654), which amends several important business and individual tax provisions.

The SECURE 2.0 Act has enhanced IRA Qualified Charitable Distributions (QCDs), allowing taxpayers aged 70½ and older to make direct contributions to qualified charities with increased annual limits and new opportunities through split-interest entities. These QCDs offer significant tax benefits, such as excluding the amount from taxable income and satisfying Required Minimum Distributions (RMDs). Nonprofits can boost donations by educating donors about these advantages and clearly communicating how their contributions will be utilized to support specific initiatives.