Articles From Lumsden McCormick

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.

Self-directed IRAs can enhance traditional and Roth IRAs' benefits by allowing investments in alternative assets, potentially offering higher returns. However, they come with significant risks and tax implications that require careful management. Individuals considering self-directed IRAs should evaluate these factors to optimize their estate planning strategies.

Nonprofit boards must evolve as their organizations grow, transitioning from a focus on daily operations in the early years to strategic governance as the nonprofit matures. Key strategies include diversifying board membership, establishing committees, and maintaining a balance between new ideas and experienced guidance. Implementing term limits can help keep the board dynamic and open to change.

As July marks the midyear point, manufacturers have a prime opportunity to reassess their tax strategies and implement measures to reduce their 2024 tax liabilities. Tailored to the unique circumstances of each business, the following seven tax-reduction strategies can help optimize financial outcomes and ensure compliance with current tax regulations.

Borrowing from a closely held corporation at lower rates than commercial lenders can be financially beneficial, but it is essential to establish a legitimate loan agreement with proper structuring and documentation to mitigate risks such as reclassification by the IRS as additional compensation or taxable dividends.

This article discusses five essential elements for effective estate planning, which are holistic coordination, current beneficiary designations, trust funding, correct asset titling, and ongoing plan review.