Articles From Lumsden McCormick

For nonprofit events, securing sponsorships is crucial for financial success. Start planning early, align sponsors with your mission, and offer varied exposure opportunities to attract and retain sponsors. Building long-term relationships with sponsors can lead to ongoing support, but be mindful of potential tax implications.

There are various tax obligations to handle when shutting down a business due to economic challenges. Filing final tax returns, paying outstanding taxes, cancelling an Employer Identification Number (EIN), and issuing final wage and tax statements to employees are some of the many responsibilities of business owners face when closing their doors.

A dynasty trust allows individuals to preserve and protect substantial wealth for multiple generations, potentially avoiding federal gift, estate, and generation-skipping transfer (GST) taxes. It can be established during one's lifetime or through a will and offers significant tax benefits and flexibility in designating beneficiaries. While irrevocable, it provides a lasting legacy with various protections and conditions for descendants.

Excess benefit transactions can lead to severe IRS penalties and loss of tax-exempt status for nonprofits. Ensuring reasonable compensation for insiders and diligently documenting transactions is crucial for compliance. Additionally, avoiding loans to insiders can help prevent scrutiny and maintain donor trust.

Investing in automated equipment can enhance efficiency, quality, and brand image for manufacturers, while also addressing skilled labor shortages and improving employee morale. However, it involves significant initial costs, ongoing training, maintenance, and cybersecurity considerations.

The IRS on June 21 announced in IR-2024-171 a revised draft version of Form 6765, Credit for Increasing Research Activities. These revisions, influenced by comments received from external stakeholders, come after the IRS’s ongoing efforts to impose stricter documentation requirements on taxpayers claiming the research credit.

A buy-sell agreement is essential for businesses with co-owners, as it provides financial protection, ensures ownership stability, and helps avoid IRS complications. This agreement outlines how a co-owner's share will be handled in case of events like death or disability, often funded through life insurance to facilitate the buyout process. Properly drafted agreements safeguard the interests of all parties involved and ensure smooth transitions.

Outsourcing HR tasks can help understaffed and overworked nonprofit organizations manage expanded responsibilities such as benefits administration and compliance. While outsourcing may reduce costs and improve efficiency, it requires careful consideration of potential downsides and thorough vetting of service providers. Establishing a monitoring system ensures the new arrangement meets the organization's needs.

A Family Advancement Sustainability Trust (FAST) can help with your estate planning goals, such as minimizing taxes and preparing heirs to manage wealth responsibly. Typically funded through life insurance, a FAST provides a structured governance system with various committees to manage investments, distributions, and administrative tasks. Establishing a FAST can also help bridge leadership gaps and support the personal development of younger family members. Consult an estate planning advisor for detailed guidance.

Understanding the tax implications of selling business property is crucial due to the complex rules involved, particularly regarding long-term capital gains and recapture rules. Different types of property, such as Section 1245 and Section 1250 properties, have specific tax treatments that must be carefully considered. For detailed guidance on specific transactions, professional consultation is recommended.