Tax Articles

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.

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.

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 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.

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.