Category: Tax
Tax consequences of compensation clawbacks for issuers and executives
Corporate executives with lucrative contracts may face "clawbacks," where previously paid compensation is reclaimed due to policy violations, breaches of agreement, or legal infractions. This situation triggers tax considerations both for the company initiating the clawback and the executives affected....
New IRS proposal could affect timing of inherited IRA distributions
If you've inherited an IRA in 2020 or later, take note: the wait-until-the-tenth-year approach to distributing the account might no longer work. Most have interpreted the IRS' regulation of the 2019 SECURE Act to mean that an IRA inherited in...
SR Client Question: Is a salary advance taxable?
Some employers allow employees to request a salary advance, receiving their paycheck earlier than the standard payday. For example, if a paycheck is issued on the 1st of the month instead of the usual 15th, the advance received on the...
“Staked” cryptocurrency value may no longer be taxed as income
A recent settlement offered to taxpayers who filed a suit against the IRS may indicate a change in how staked cryptocurrencies are taxed. Previously, staking income was treated similarly to interest income. Many crypto exchanges were handling it like that...
SR Client Question: Do I issue a Form 1099 to a law firm collecting fees for my medical practice?
When a medical practice or another business hires a law firm or third party on a contingent basis to collect overdue fees or invoices, it triggers obligations under two distinct sections of the tax code. If the law firm or...
SR Client Question: Are disability benefits paid out under an employer group disability plan taxable to the employee?
If an employer offers group term disability insurance as a fringe benefit to employees, any benefits received under this plan are typically taxable to the employee. However, according to IRS Revenue Ruling 2004-55, the employer has the option to design...
SR Client Question: Do I need to pay tax on the sale of an asset paid out over many years in the year it’s sold or as I collect the installments?
Installment payments received for assets, such as proceeds from a stock sale spread out over several years or a seller-financed mortgage, allow the seller to defer recognizing the income tax liability over the period the payments are received. Under IRS...
SR Client Question: How do I handle taxes for my Health Savings Account (HSA)?
If you have a high deductible health insurance plan (HDHP), you're eligible to contribute to a Health Savings Account (HSA) up to the annual maximum limit. Often, employers also contribute to an HSA, but your total contributions cannot exceed this...
IRS offers ways to determine Reasonable Compensation in Not-for-Profit and For-Profit entities
The IRS routinely encounters contentious issues in business tax audits, particularly regarding the appropriateness of compensation paid to owners/employees. For example: Businesses that compensate employees who are also shareholders may inadvertently classify payments that should be dividends as compensation. This...
SR Client Question: Do I owe Michigan sales tax when I buy a vehicle from a business I own?
The transfer of vehicles from a business entity to the owner of the business is addressed in Revenue Administrative Bulletin 1991-1 and makes, in most instances, the transfer or "sale" of a vehicle from a business to its owner exempt from owing State...