Articles From Lumsden McCormick

Choosing the right inventory accounting method, such as FIFO or LIFO, is crucial for manufacturing businesses as it significantly affects taxes, net income, and financial reporting. Careful consideration of your company's specific needs and circumstances is essential when selecting the appropriate method.

The tax implications of real estate gains can vary based on factors like property type, ownership structure, and depreciation. While long-term capital gains are generally taxed at 15% or 20%, certain gains, particularly those involving depreciation, may be taxed at higher rates. Additionally, the 3.8% Net Investment Income Tax (NIIT) and state taxes could also apply.

The upcoming presidential and congressional elections could significantly alter the tax landscape for U.S. businesses, as many provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025. Potential outcomes range from the complete expiration of these provisions to their extension or replacement with new tax laws. The future impact on your business will depend on the election results and subsequent legislative changes.

A power of appointment in your estate plan provides flexibility by allowing a designated beneficiary to adjust trust distributions and modify beneficiaries based on current circumstances. There are two types of powers: general, which includes property in the holder’s taxable estate, and limited, which does not but may result in higher capital gains taxes for heirs. 

A board retreat offers a valuable opportunity for nonprofit organizations to focus on critical issues away from daily distractions, fostering strategic thinking and collaboration. Effective planning involves aligning goals, choosing relevant topics, and creating a detailed agenda. Post-retreat, it's essential to summarize decisions and develop an action plan to ensure actionable outcomes and ongoing progress.

Capital campaigns can be successful for nonprofits of any size with proper planning, strong leadership, and clear communication. Early major gifts and a compelling message are crucial to gaining support and achieving fundraising goals. Addressing financial aspects and overcoming common myths are key to launching a successful campaign.

Drop shipments occur when a retailer takes an order and directs a wholesaler to ship the product directly to the customer. However, depending on the facts and circumstances, such as location and nexus status for all parties involved, how property is delivered, and how the title to property passes, the responsibility and requirement to charge and collect sales tax can change.

When launching a manufacturing company, it's essential to consider the tax implications of start-up costs. Eligible expenses can be deducted or amortized over time, with potential tax benefits depending on the total amount. Understanding these tax treatments helps ensure a strong financial foundation for your new business.

Website costs for businesses are subject to general tax rules, with specific considerations for hardware and software. Hardware costs can be deducted with bonus depreciation or under Section 179, with limits and phaseouts for each. Purchased software and license fees are generally deductible as ordinary business expenses. Payments to third-party developers are also deductible. Start-up website costs can be partially deducted or amortized, depending on the total amount. For precise guidance on handling these expenses, consult with a tax professional.

When choosing between traditional and Roth 401(k) contributions, consider both current and future tax implications as well as estate planning goals. Traditional 401(k)s offer immediate tax deductions but are subject to required minimum distributions (RMDs), potentially reducing the amount passed to heirs. Roth 401(k)s, while funded with after-tax dollars, allow for tax-free withdrawals and are exempt from RMDs starting in 2024, making them a valuable tool for estate planning.