Articles From Lumsden McCormick

A Qualified Personal Residence Trust (QPRT) allows homeowners to transfer their residence into a trust, reducing their taxable estate while continuing to live in the home for a specified term. After the term, the property passes to designated beneficiaries, though the homeowner may need to pay rent if they remain in the home. This estate planning tool can help minimize taxes and facilitate the transfer of assets to heirs.

Charitable pledges are promises to donate in the future and must be carefully accounted for by nonprofits. Unconditional pledges can be recognized as revenue immediately, while conditional pledges require specific criteria to be met before recognition. Proper documentation, present value accounting, and integrating pledges into your fundraising strategy can strengthen donor relationships and support long-term financial planning.Charitable pledges are promises to donate in the future and must be carefully accounted for by nonprofits. Unconditional pledges can be recognized as revenue immediately, while conditional pledges require specific criteria to be met before recognition. Proper documentation, present value accounting, and integrating pledges into your fundraising strategy can strengthen donor relationships and support long-term financial planning.

An LLC offers business owners the liability protection of a corporation while allowing for the tax benefits of a partnership. Members can avoid personal liability for business debts and enjoy pass-through taxation, with the flexibility to allocate tax benefits and fewer restrictions compared to an S corporation. For small to mid-sized businesses, this structure can provide both legal and financial advantages.

When a spouse passes away, the surviving spouse must decide whether to file a joint or separate tax return for the year of death. Filing jointly can offer benefits such as lower tax rates and larger credits, but it's important to consider the potential impact on deductions and other factors. Consulting a tax professional can help determine the best filing option.

Nonprofit and for-profit accounting differ significantly in focus and reporting. While for-profit organizations prioritize profitability and shareholder returns, nonprofits emphasize financial stability and transparency in support of their mission. These differences are reflected in their respective financial statements, such as the income statement versus the statement of activities, and the balance sheet versus the statement of financial position.

Manufacturers operating across state lines must understand their multistate tax liabilities, determined by whether their activities establish a nexus in each state. The U.S. Supreme Court's Wayfair decision and updated Multistate Tax Commission (MTC) guidelines have broadened the definition of nexus, making it essential for businesses to evaluate their tax obligations in each jurisdiction through a nexus study.

Partnerships and multi-member LLCs benefit from pass-through taxation, but they must adhere to complex federal tax rules. Properly drafted partnership and LLC operating agreements are essential for addressing key tax-related issues, including special tax allocations and distributions for covering tax liabilities. Seeking professional guidance can ensure compliance and optimize tax benefits.

Life insurance is a crucial component of estate planning, offering an immediate source of wealth and liquidity to address your family's financial needs after your passing.

Nonprofit organizations often face challenges when managing restricted donations, making it essential to implement clear procedures and maintain accountability to ensure funds are used as intended. Encouraging unrestricted gifts provides greater flexibility, and it’s important to handle donor relationships with care, especially when restrictions are involved.

While the cash method can offer significant tax benefits for qualifying businesses, some companies might find the accrual method more advantageous. It's crucial to assess which accounting method best suits your business’s needs to maximize tax benefits.