Casualty and Theft Losses: Find the Silver Lining in Dark Clouds
We’re in the midst of hurricane season now, but the eastern and southern shores aren’t the only parts of the country at risk for catastrophic events. Mudslides, earthquakes and wildfires often plague the West Coast, tornadoes may touch down across the Great Plains and Midwest, and low-lying areas near rivers and tributaries across the country…
Do You Allow Employees to Work from Home?
These days, many businesses have some employees who work from home — either occasionally or on a full-time basis. Keep in mind that telecommuting employees of federal government contractors are required to follow appropriate labor timekeeping policies and procedures. If your government contracting business allows employees to work from home, be aware that these telecommuters…
Insurance Issues for Government Contractors to Consider
Are you self-insured? You may be under a related Federal Acquisition Regulation (FAR) and not even know it. The FAR addresses the allowability of insurance in FAR 31.205-19 Insurance and Indemnification. Among other conditions, F 31.205-19 (c) requires that self-insurance costs be measured, assigned and allocated in accordance with Cost Accounting Standard (CAS) 416 (48…
Can Pension Benefits Be Deducted as Alimony?
When married couples split up, the terms of the divorce or separation agreement can have a major tax impact. For example, any amounts paid for alimony are deductible by the payor and taxable to the recipient. On the other hand, other amounts required to be paid under the agreement, such as child support and property…
Leaving IRA Money to Charity: A Tax-Smart Strategy
These days, many people have a large percentage of their wealth in the form of traditional IRA accounts. In most cases, this is because significant distributions have been rolled over tax-free from qualified retirement plans to these IRAs. A lot of people also have charitable intentions. If this sounds familiar, there’s a tax-saving strategy you…
Understand Your Social Security Retirement Benefits
For years, people have questioned the viability of the Social Security system going forward. In July, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds. The report projects that the combined asset reserves of the Old-Age, Survivors and Disability Insurance (OASDI) Trust Funds…
IRS Ground Rules for Charity Gaming
Games of chance like bingo and raffles are often synonymous with tax-exempt organizations. However, the income from such “gaming” activities operated by charities is not automatically tax-free. The IRS has provided more insight into the key rules in this area in its Publication 3079, Tax-Exempt Organizations and Gaming. Background: A tax-exempt organization doesn’t have to…
Do You Have a Deductible Business Loss or a Nondeductible Hobby Loss?
There’s a fine line between businesses and hobbies under the federal tax code. If you engage in an unincorporated sideline — such as a marketing director by day and an artist on the nights and weekends — you may think of that side activity as a business and hope to deduct any losses on your…
Indemnity Provisions: Shift Liability from One Party to Another
Companies seeking to avoid liability from other parties can include broad indemnity provisions in their contracts in hopes of shifting financial responsibility for injuries to another party. The advantage of such provisions was highlighted in one case involving an indemnity agreement between two South Carolina construction companies working on a project together. Hightower Construction Company…
How C Corporations Can Pass the Reasonable Compensation Test
When a C corporation’s shareholder-employees are given generous salaries and benefits, the corporation should be prepared to fight IRS claims that some of the compensation payments are actually disguised dividends, which were paid according to stock ownership. Specifically, the IRS will argue that the corporation can’t justify compensation amounts that exceed what’s ordinarily paid by…