Your McCarthy Update
Plus Year-End Tax Planning Guides for Individuals & Businesses
Marty McCarthy, CPA, CCIFP
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Focused on You. Dedicated to Your Success.
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November 30, 2020
Year-end Tax Planning
As we wrap up 2020, year-end tax planning has never been more crucial. This year brought challenges and disruptions that significantly impacted your personal and financial situations – COVID-19, economic relief measures, new tax laws, and political shifts. Now is the time to take a closer look at your current tax strategies to make sure they are still meeting your needs and take any last-minute steps that could save you money. Here are tax planning strategies for individuals and small businesses.
We are here to help you take a fresh look at the health of your tax and financial well-being. Please contact us at your earliest convenience to discuss your tax situation so we can develop a customized plan.
Accounting and Tax News
(Accounting Today) IRS issues final regs on 1031 exchanges. The IRS and the Treasury Department issued final regulations related to Section 1031 like-kind exchanges. The new regs address the definition of real property, as well as the receipt of personal property that is incidental to real property received in a like-kind exchange. “Real property” now includes land and, generally speaking, anything permanently built on or attached to land, and also includes anything that is characterized as real property by the applicable state and local laws. Read more.
(Financial Planning) How to reduce estimated tax penalties with IRA distributions. As many taxpayers are aware, U.S. income taxes are a pay-as-you-go system. Accordingly, taxpayers are generally required to pay their income tax liability throughout the year as they earn their income, with any amounts owed upon the filing of an income tax return serving merely as a truing up between what the taxpayer thought they’d owe (and paid in taxes throughout the previous year) and what they actually owe. Read more.
Construction News
(Market Watch) New-home construction surges to post-Great Recession high in October, driven by rise in single-family starts. Americans are looking to buy homes in the suburbs, but construction firms cannot keep pace with demand. Read more.
COVID-19 Related News
(Accounting Today) Businesses reassess leases and accounting amid coronaviruses. Nearly one-third of companies are reducing their overall real estate footprint as a result of the COVID-19 pandemic, with 31 percent of companies renegotiating leases for more favorable terms, according to a new report. LeaseQuery, a provider of lease-accounting software, found that finance leaders cited exit clauses (35 percent) and contract duration (29 percent) as the main reasons for negotiating lease terms for next year as the pandemic rages across the country, forcing many employees to work from home and local businesses to shut down. Read more.
(Accounting Today) IRS clarifies deductibility of PPP loan expenses. The IRS and the Treasury Department have issued more guidance to clear up the tax treatment of expenses when a loan from the Small Business Administration’s Paycheck Protection Program hasn’t been forgiven by the end of the year. Learn why.
(Construction Dive) How office construction will change post-pandemic. A new study points to how office design and construction will evolve because of the coronavirus pandemic. The research from architecture firm Leo A Daly found that in coming months and years, more office tenants will require flexible workspaces. The study said that the pandemic will cause companies to retrofit their office spaces to accommodate an increased reliance on decentralized work such as working from home. Read more.
(New Jersey Business) COVID Clarity: Business Lessons Learned During Uncertain Times. A business owner recently related his experience navigating his company through challenges he never foresaw. The past months, he said, have taught him a lot about leading his people, managing finances, connecting to customers and importantly, learning about himself as a business leader. Read more.
(New Jersey Business) NJEDA Expands Discounts, Extends Deadline for PPE Access Program. Businesses and organizations with 100 or fewer employees can apply for nearly 70% discounts on PPE purchases. Read more.
(Philadelphia Business Journal) Small businesses hit with another PPP tax change. The IRS has added a new wrinkle to the Small Business Administration's Paycheck Protection Program. The new guidance, issued November 18, offers additional details on an earlier IRS decision from April 30 that decreed that normally tax-deductible items will no longer be deductible if they were paid for with PPP funds. Now, the tax agency has specifically prohibited any small business that has a reasonable expectation of PPP loan forgiveness from deducting those expenses in its 2020 taxes — even if it takes until 2021 or 2022 to reach actual forgiveness, or if the business has yet to even fill out a forgiveness application. Read more.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at Richard.Higgins@MCC-CPAs.com. I can be reached at Marty.McCarthy@MCC-CPAs.com. As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
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