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How Will Your Business Respond To COVID-19? Practical Information & Financial Solutions.

Be Realistic & Plan to Thrive

As with a any “black swan” event, COVID-19 took the us all by complete surprise.

Your focus as a business owner now has to be on protecting your employees, managing your business risk, and positioning your company to survive and thrive.

The U.S. lockdown to stem the spread of the coronavirus will likely last at least 10 to 12 weeks, or until early June, Treasury Secretary Steve Mnuchin said Sunday.

What would that mean for your business and employees?

This is going to last long. Despite what anyone says, the future is uncertain.

Do not get demoralized. Prepare to thrive. But be realistic.

This eventually will end and businesses that can survive will be positioned to thrive for years to come.

Treasury Secretary Steven Mnuchin also told CNBC on last Monday there will be a surge in demand for stocks once the coronavirus threat abates.

I believe this pent-up demand will extend to small businesses since everyone currently is stuck at home or panic buying all goods and supplies.

The problem is that if your business is impacted by COVID-19 shutdowns you have to start realistically thinking about how to survive for 3 months or more with no cash flow.

Most businesses can’t survive 3 months with no sales.

As always, there will be opportunities.

We’ve seen many company’s capitalizing on opportunities from Coronavirus related contracts and other services that help people with working remote.

Inevitably, there will be some losses.

However, an appropriate response can massively lessen the downside.

Our team is there to support you every step of the way.

 If you have an opportunity or risk on the horizon and want to discuss, set up a time here or email me directly to set a time to speak.

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Properly Forecast & Manage Your Cash Flow

During good times most companies focus on the profit and loss statement.

Growing revenue and reducing costs.

During economic times like this it is crucial to focus on your balance sheet.

Cash flow is king.

Properly forecasting and managing your cash flow are skills required in our new economy.

The healthcare community is being very aggressive in fighting the Coronavirus.

Similarly, you need to be just as aggressive in managing your cash flow. 

Managing payables, receivables and other cash flow related issues is key to financial survival.

If you would like to work on cash flow forecasintg and management for your business contact our team here.

Be Ready To Pivot Your Businesses Services, Industries and Workflows

You should do is start getting creative with your business.

How can you restructure your services to function remotely?

 What new relevant services can you offer to ensure that your revenue is not impacted by COVID-19?

What industries can you help who are either are experiencing significant revenue growth or reduction?

Small Business Administration COVID-19 Disaster Assistance Loans for Economic Injury

The Small Business Administration is giving loans businesses affected by COVID-19 at a maximum for $2,000,000 per company.

The interest rate is 3.75% for small businesses.

The Federal Government has now approved small business loans in almost States.

These loans will be competitive, strict regarding financial information quality, in high demand and harder to get as funds become allocated to businesses.

How does it work?

There are significant documentation requirements including:

·        Most recent Federal income tax returns

·        Personal Financial Statement

·        Schedule of Liabilities listing all fixed debts

·        All SBA Paperwork

·        Year-end profit-and-loss statement and balance sheet

·        A current year-to-date profit-and-loss statement

·        Monthly sales figures for increases in the amount of economic injury

We are actively assisting businesses with the filing process and financial documentation. 

If your business has been financially impacted for COVID-19, including impacting sales figures, contact me and my team today to discuss the filing process and next steps.

Payroll Tax Credits

The U.S. Treasury Department, Internal Revenue Service and the U.S. Department of Labor announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.

These credits allow for paid sick leave for workers.

Family and Medical Leave

There is a credit for an employer whose employees cannot work because they are carding for a child.

The credit up to $200 per employee at a maximum of $10,000 per employee. This credit is refundable.

Emergency Paid Sick Leave

There is a credit for an employer whose employee quarantined due to COVID-19

The credit is up to $511 a day up to 10 days at a maximum of $5,110 per employee

Additionally, there is a credit for an employee that is caring for someone who quarantined due to COVID-19.

The credit up to $200 a day up to 10 days at a maximum of $2,000 per employee.

These credits generally may not exceed your quarterly payroll tax liability.

Are you ready to take this credit in the upcoming payroll tax filing deadline?

We are actively assisting businesses with the planning and compliance related to these credits. 

If your business has been financially impacted for COVID-19 related to sick employees, contact me and my team today to discuss the planning, filing process and next steps.

Future Legislation

More assistance for business owners will be announced shortly including more loans and possible cash support.

We are updating our clients weekly and often daily. Follow me here on LinkedIn for future updates.

I will continue to keep you updated on the most important tax and financial information as we get through these times together. 

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How Real Estate Syndicators Are Impacted By Tax Law Changes To Business Interest

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

Tax reform, also known as the Tax Cuts and Jobs Act (TCJA), was enacted at the end of 2017, resulting in considerable changes to the federal tax code including a new limitation on the business interest deduction.

Business interest expense was generally deductible under the previous law. Beginning in 2018, however, the business interest deduction may be limited to the sum of a taxpayer’s business interest income for the tax year and thirty percent of the taxpayer’s adjusted taxable income for the tax year.

Syndicators can elect out of this limit by electing to be a real estate trade or business for tax purposes. The drawaback then is that real property has to follow a longer depreciation schedule. And may not be eligible for 100% bonus or accelerated depreciation on property with useful lives of 5,7, or 15 years.

Syndications can be a powerful tax planning tools ,but can also have negative tax consequences if you’re not careful. Be sure to speak with a qualified CPA before investing or starting a syndication.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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How To Calculate Depreciation On Rental Portfolios

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

How To Calculate Depreciation On Rental Portfolios

If you own a rental property and want to take advantage of the tax breaks one of the most useful tax tools at your disposal is depreciation. Rental property depreciation allows investors to write off the structure and improvements to the property over a period of time. This is non-cash expense that you can use as a write-off on your taxes. Depreciation is one of the biggest benefits to real estate investing because it can reduce reportable net income and therefore, your taxes

Depreciation is the loss in value to a building over time due to age, wear and tear, and deterioration. You can also include land improvements you’ve made and items inside the property that are not part of the building like appliance and carpeting. You can only depreciate the improvements to the structure itself – not the land.

Depreciation deductions are spread out over the useful life of a property. The IRS allows an owner to depreciate the value of the home over a 27.5 year period. The time periods of depreciation can be adjusted based on the components of the property which can offer even larger tax planning opportunities. We cover this in other articles here.

It is important for all real estate investors to deeply understand depreciation and how it applies to their portfolio. There are many tax planning opportunities available related to depreciation.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Can I invest in a syndication using a 1031 Exchange?

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

Do you have a rental property that you’re looking to sell using 1031 exchange?

There is a common misconception that you can simply do a 1031 exchange directly into a syndication. However, this is not possible because when you invest in a syndication, you are purchasing part of an entity that owns real estate not the real estate itself.

A viable option as an alternative which can use a 1031 exchange is a tenant in common structure or Delaware Statutory Trust . While these options are similar to syndications, they are not syndications.

Delaware Statutory Trust are derived from Delaware Statutory law as a separate legal entity and formed as private governing agreements for the purposes of managing, administering, investing and or operating real, tangible and intangible property; or business or professional activities for profit that are carried on by one or more individuals who act as trustees for the benefit of a party who is entitled to a beneficial interest in the trust property. Delaware Statutory Trusts are not new, in 2004, the IRS came out with an official Revenue Ruling detailing how a DST could be structured in such a way that it would qualify as a property replacement vehicle for 1031 Exchanges.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Why Do People Love The Tax Benefits of Rental Portfolios

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

For most, tax season is a time of year they do not enjoy. We understand that most people do not like taxes and most definitely do not like paying them. Real estate investors enjoy great advantages in building wealth and passive income while keeping tax liabilities down. There are even greater benefits for those who expand real estate investments or get started with real estate investing in 2018.

Depreciation

This is a non-cash deduction that spreads the cost of an asset over multiple years. This paper expense can protect other income from taxes and reduce your tax bill.  The Tax Cuts and Jobs Act has opened a new window of opportunity for investors and property buyers to enjoy a 100% first-year bonus depreciation deduction. This break is retroactive for 2017 tax filings on property acquired and in service by September 2017. This break will be available until 2022, when it begins to be reduced by 20% per year until phased out.

Leverage

Many investors use debt leverage to buy real estate. Leverage magnifies the profits mentioned above. The interest on debt is deductible as a business expense.

To raise cash most investors consider selling investments. This leads to taxes or complicated procedures to minimize taxes. Another option is t pull capital out of an investment tax-free by refinancing.

Reduced Pass-Through Taxes

Pass-through income from business entities such as LLCs now gets a 20% deduction on qualified income. This allows successful existing real estate firms to expand and enjoy better profitability while making it more appealing and advantageous to launch new real estate startups or get started in real estate investing through legal entities like limited liability companies.

1031 Tax-Deferred Exchange

A 1031 Exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another by deferring the tax consequence of a sale. The transaction is authorized by 1031 of the IRS Code. Executing and completing a 1031 exchange requires meeting specific criteria.

Installment Sales

When a taxpayer sells a capital asset on an installment note with the buyer making payments over time can choose to spread the income from the sale over the life of the installment note. Spreading the capital gains income over multiple years can reduce the amount of tax compared to reporting the entire gain in one year.

The key benefit of the installment sale strategy is spreading capital gains income over time.

Retirement Account Investments And Contributions

IRAs and 401k retirement plans are incredible tools to build wealth while minimizing taxes. Taxpayers can self-direct these to invest in real estate rather than tradition investment vehicles. While self-directed IRAs are a great tax planning tool, there are many pitfalls and strict rules to be aware of.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Qualified Opportunity Zones: What Investors Should Know About Tax Benefits

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

What is an Opportunity Zone?

An Opportunity Zone is a community nominated by the state and certified by the Treasury Department as qualifying for this program. As of June 14, 2018, the department certified zones in all 50 states, Washington, D.C., and U.S. territories.  

How does this program work?

To defer a gain, a taxpayer has 180 days from the date of the sale or exchange of appreciated property to invest the realized gain into a Qualified Opportunity Zone Fund. The fund then invests in Qualified Opportunity Zone Property.

The taxpayer may invest the return of principal as well as the recognized capital gain, but only the portion of the investment attributable to the capital gain will be eligible for the exemption from tax on further appreciation of the Opportunity Zone Investment. The Opportunity Zone program allows for the sale of any appreciated assets, such as stock with a reinvestment of the gain into an Opportunity Zone Fund. There is no requirement to invest in a like-kind property to defer the gain.

Qualified Opportunity Zone Fund

A Qualified Opportunity Zone Fund is any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified opportunity zone property (other than another qualified opportunity fund) that holds at least 90 percent of its assets in qualified opportunity zone property.

What To Know About Tax Implications

It is important to note that the tax cannot be deferred indefinitely – only until 2026. Any tax due on capital gains invested in the fund within the 180-days is deferred until the fund is divested, or December 31, 2026, whichever occurs first. Qualifying for deferral does not require an intermediary, and the taxpayer has 180 days from a sale to invest the gains into an Opportunity Zone Fund.

The new program offers a deferral of short or long-term capital gains tax due, a potential reduction of short and long-term capital gains tax due, and lastly a potential permanent exclusion from taxable income for any capital gains generated in any qualified investment made in the Opportunity Zone Funds.

If investment in the fund is held at least 5 years, there will be a 10 percent basis step up, while if the investment is held at least 7 years, the basis step up will be 15 percent. If the investment in the fund is held for at least 10 years, the taxpayer is exempt from paying any capital gain on the sale of the newly created opportunity zone fund investment.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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What Rising Property Taxes Means for Charlotte Apartment Owners and Renters

Mecklenburg County will be issuing 365,000 property tax valuations this January. This will impact not only apartment owners and real estate owners but also renters.

While property taxes typically have the biggest up-front impact on homeowners, who get the bills directly, this year’s revaluation is raising property values far more for commercial properties. That could mean higher property taxes for those apartments when bills go out in July, and apartment owners are likely to pass at least some of that increased cost to tenants.

According to the U.S. Census, almost half of the residents in Charlotte rent. The county plans to finish its initial revaluation of every property in Mecklenburg by the end of the year. Some of the commercial properties that are likely to see the biggest tax increases since the 2011 revaluation appear to be older apartments, many of which have been bought by investors in recent years.

If you searching for local CPA firms in Charlotte to assist you with reporting income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from real estate on your taxes or any other service provided by a certified accountant, Camuso CPA can help.

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How Real Estate Investing Impacts Investors Tax Rate

Investors focus on real estate for a variety of reasons. There are great tax benefits for real estate investors and most investors agree that, while supplemental, they invest to reduce their tax burden.

After consulting and strategizing with hundreds of investors, I’ve come to realize that most don’t actually know how real estate investing impacts tax rates. Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning.

Effective Tax Rate – What Is it?

The effective tax rate is defined at the tax liability divided by total net income. Your federal tax liability is found on Line 63 of Form 1040. However, if you hold a W-2 job, you also need to factor in your share of FICA taxes (7.65% of your gross wages). Lastly, you should also factor in your state tax liability. The combination of these three taxes will yield your total tax. You will then divide your total tax by gross wages plus net income from trades, businesses, and investments. Note that net income does not equal net taxable income. The result will be your effective tax rate.

Real Estate Benefits

The largest benefit for real estate investors results in additional non-cash deductions that they can take against their rental income such as depreciation and amortization. These benefits can be furthered increased through cost segregation studies.

Many real estate investors may see an increase in total tax and think that real estate is not offering its promised tax benefits. But that’s clearly not the case. Thanks to the real estate generating income that was not taxed, our effective tax rate drops meaning you are paying less in tax per dollar earned.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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How Tax Reform Impacts Real Estate Investors Tax Rates

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning.

While the full implications of the Tax Cuts and Jobs Act are still unraveling, a number of tax-planning opportunities have presented themselves. Here we will outline how performing cost segregation studies can lead to permanent tax savings.

On 22 December 2017, the President signed tax reform legislation known as the Tax Cuts and Jobs Act (TCJA). This is primarily known for reducing corporate tax rates to 21%, but the new Section 199A provides non-corporate taxpayers with a potential 20% deduction against taxable income, which, when applicable, effectively discounts the maximum 37% non-corporate rate to 29.6%.

How Does It Work

The 20% discount requires a complicated formulaic deduction equal to: (1) 20% of newly defined qualified business income plus (2) 20% of the sum of (a) REIT dividends and (b) publicly traded partnership income. For taxpayers with income over certain minimal thresholds, the 20% of qualified business income deduction is limited to the greater of: (a) 50% of the W-2 wages paid by the qualified business, or (b) 25% of the W-2 wages paid by the qualified business, plus 2.5% of the unadjusted basis of depreciable property held by the business.

These limitations are calculated at the individual level and the statutory language indicates that the limitation is to be applied separately for each qualified trade or business that the taxpayer is engaged in.

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Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Tax Reform Increases Cost Segregation Benefits for Real Estate Investors

Here at Camuso CPA PLLC, cost segregation is just one of the services that we provide at our firm. For those of you who are unfamiliar with the term, cost segregation is simply the act of identifying the assets of a business, their value, and then classifying those assets in regards to the federal tax code. It can be beneficial for many businesses and investors.

While the full implications of the Tax Cuts and Jobs Act are still unraveling, a number of tax-planning opportunities have presented themselves. Here we will outline how performing cost segregation studies can lead to permanent tax savings.

Overview Of Tax Changes

The 2017 Tax Cuts and Jobs Act (TCJA) has created a number of tax-planning opportunities, some even with permanent tax savings. One of the more exciting opportunities is the permanent tax savings that may be realized by doing cost segregation on existing buildings acquired after Sept. 27, 2017, and placed in service prior to Dec. 31, 2017.

In the past, taxpayers were not allowed to take bonus depreciation on used assets, but this restriction is removed for acquisitions after Sept. 27, 2017. As a result, personal property that was acquired as part of such a building may be eligible for immediate expensing by claiming 100 percent bonus depreciation.

While the greatest opportunity may exist for facilities acquired and placed in service in late 2017, a cost segregation study can still create opportunities to accelerate deductions if a taxpayer has made built, or renovated facilities earlier in 2017 or in prior years. A cost segregation study would create a “catch up” of depreciation deductions on the 2017 tax return for those facilities placed in service in 2016 and earlier — and allow the taxpayer to benefit from the tax rate savings at higher rates.

Benefits

Bonus depreciation significantly increases the value of completing a cost segregation study. Due to the reduction of corporate tax rates in 2018, taxpayers should review their current real estate holdings to determine if a “look-back” or retroactive cost segregation study should be performed now so that they may claim missed depreciation benefits on their 2017 tax return when taxed at a higher rate.

Regardless of a taxpayer’s structure, the new tax law provides a large benefit for any owner or investor of a used property. To maximize savings, it’s critical to consider a cost segregation study to identify all qualifying assets. Savvy taxpayers will determine their ability to use the new bonus depreciation provisions and will assess when and how to implement them as a part of their overall tax strategy.

Cost segregation studies aren’t something a business can do internally, but rather need a CPA for. And not just any CPA at that. The IRS Cost Segregation Audit Techniques Guide states:

“Preparation of cost segregation studies requires knowledge of both the construction process and the tax law involving property classifications for depreciation purposes. In general, a study by a construction engineer is more reliable than one conducted by someone with no engineering or construction background. Experience in cost estimating and allocation, as well as knowledge of the applicable tax law, are other important criteria.”

Here at Camuso CPA, we do have the ability to offer cost segregation studies to our clients. If you are interested into how this service might benefit your business, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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