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What To Do If You Have Not Reported Your Crypto Trades On Last Year’s Tax Return

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service and technology companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

According to the personal financial service Credit Karma, only about 0.04 percent (or 100 citizens out of 250,000) of United States citizens reported their cryptocurrency transactions to the IRS as of February 13.

Back in March of 2014, the IRS began providing some guidance for the taxation of Bitcoin, one of the most popular and mainstream cryptocurrencies. Because of these guidelines, cryptocurrencies are treated as property rather than currency.

Like all taxed property, when you report cryptocurrency to the IRS, what you owe will be based off of the price you bought it at, the price you sold it at, and the change in value between when you bought and sold it. Many experts believe this is not the ideal designation for cryptocurrencies,and may even become a deterrent in their adoption.

The IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find substantial error, they can decide to go back up to six years or more. If you did not report your cryptocurrency transactions properly in prior years the best course of action is to file an amended tax return.

Step 1: Calculate Your Tax Liability

When preparing your tax return, you are going to have to figure out your taxable income from cryptocurrencies for the year. This involves figuring out how much of your crypto assets were converted into non-crypto assets like cash or goods and services as well as other cryptocurrencies. Your cryptocurrency holdings aren’t taxable. Anytime you sold cryptocurrency or used it to buy something, have capital gains exposure.

You’ve already got records of most of those transactions, either on the blockchain or from your wallet provider, but converting it to dollars can be a real hassle since you’ll need to run the value of the cryptocurrency against the price of the crypto at the time of the transaction. First thing’s first, you’ll want to download all transaction data from the exchanges you use, which are usually available as CSV files. Some exchanges like Coinbase send users form 1099-K if they have received at least 20,000 US dollars cash sales of crypto related to at least 200 transactions in a calendar year. However, if you don’t use an exchange, do your best to document every transaction.

If doing cryptocurrency tax is proving to be a challenging feat, you should consider enlisting the services of a qualified CPA at a  professional tax firm such as Camuso CPA.

Step 2: Amend your return

Once you have determined your capital gains liability, you should download a current IRS Form 1040X, Amended U.S. Individual Income Tax Return. This form comes with easy-to-follow instructions and requires you to only include new or updated information.

Step 3: Mail in your amended return

After preparing your amended tax return to reflect your cryptocurrency transactions they will be mailed to the IRS along with all applicable tax payments.

While paying taxes can at times be painful, it is very important that you include your crypto-trading activity with your tax return. A lot of traders are convinced that because of the anonymous, decentralized nature of Blockchain and crypto transactions, that there is no way for the government to see or know that they are making money trading/buying/selling cryptocurrency. Unfortunately for these people, this is just not true. The Blockchain is a distributed public ledger, meaning anyone can view the ledger at anytime. Figuring out an individual’s activities on that ledger essentially comes down to associating a wallet address with a name. You can bet that the IRS is only gearing up to become proficient at doing that.

Ultimately, if you choose not to file your gains/losses, you will be committing blatant tax fraud to which the IRS can enforce a number of penalties, including criminal prosecution, five years in prison, along with a fine of up to $250,000.

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

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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 Charlotte Business Owners Need to Know About 2018 Tax Changes

Here at Camuso CPA, we offer a wide array of tax services for small business owners in Charlotte including tax preparation and tax planning. Financial service and technology companies are transitioning from employee driven revenue models to information driven revenue models.

Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics. Be sure to contact our team today for any immediate tax needs or questions.

On 22 December 2017, the President signed tax reform legislation known as the Tax Cuts and Jobs Act (TCJA). 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 these changes impact small business owners.

THE NEW CORPORATE TAX RATE IS LOWER — AND PERMANENT

The new corporate tax rate is 21 percent. And this change will live on past 2025, which is when most of the other tax-law changes are set to expire. The new rate is also a flat tax, meaning it’s the same for all C corporations — that’s different from the previous corporate tax rates, which were 15, 25, 34 and 35 percent.

THE CORPORATE AMT IS ELIMINATED

Similar to the individual alternative minimum tax, corporate AMT was an additional way to calculate taxes to help ensure corporations paid a minimum amount of tax. Eliminating the corporate AMT also means getting rid of some of the tax liabilities for corporations that used to factor into the AMT calculation.

PASS-THROUGH BUSINESSES GET A LARGE DEDUCTION

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%.

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.

Taxpayers should consider evaluating the choice of entity used to operate their businesses. The 21-percent reduced corporate tax rate may increase the popularity of corporations. However, factors such as the new 20-percent deduction for pass-through income, expected use of after-tax cash earnings, and potential exit values will significantly complicate these analyses. The potential after-tax cash benefits ultimately realized by owners could make choice-of-entity determinations one of the most important decision taxpayers will now make.

NOL CARRYBACKS ARE ELIMINATE AND CARRYFORWARDS REDUCED

Previously, businesses were able to offset current taxable income by claiming net operating losses (NOLs), generally eligible for a two-year carryback and 20-year carryforward.  Now NOLs for tax years ending after 2017 cannot be carried back, but can be indefinitely carried forward. In addition, NOLs for tax years beginning in 2018 will be subject to an 80-percent limitation. Companies will have to track their NOLs in different buckets and consider cost recovery strategy on depreciable assets in applying the 80-percent limitation.

ACCOUNTING METHOD CHANGES

Under the new law, accrual basis taxpayers must now recognize income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement.

However, new provisions also provide favorable methods of accounting that were not previously available. That, coupled with the reduction in tax rates, creates a favorable and unique environment for filing accounting method changes.

2018 will see the first significant tax reform since 1986. This reform affects everything in the economy as well as everyone in the country. The ways it will affect individuals, couples, corporations and small business owners will vary, but everyone will see changes in 2018.

If you are searching for local CPA firms in Charlotte to assist you with taxes, contact Camuso CPA. Whether you need tax preparation services, personal or business tax planning for the new tax law changes, Camuso CPA can help.

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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 2018 Tax Law Changes Affects Real Estate Investors

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

In our Tax Topics & Guides segment, we are taking a more in depth approach in covering all things tax, real estate and finance.

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%.

   

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

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Charlotte Office Developers in Amenities Arm Race to Attract Tenants

Companies looking to attract talent are now offering top amenities, a modern office space and a healthy work environment with a sense of community. Firms are willing to pay a higher rate for office space if it provides a place that employees want to work. One of the trends we have observed this year in commercial office space is enhancing the work environment.

According to a recent Pew Research Center analysis, millennials have become the largest generation in the U.S. workforce. To attract today’s workers, office users are offering an abundance of amenities. Companies are now providing gaming lounges and even napping rooms, coffee shops with baristas and onsite bars with wine and craft beer on tap.

There has also been a shift toward a more open office layout with collaborative break-out areas. With this shift, companies offer phone rooms for private calls and quiet rooms with comfortable couches where employees can unplug from the highly productive work area. Employees are also more health conscious today and typically prefer standing desks, adjustable seats, bike storage, on-site gyms with showers and healthy snacks in the break room.

Developers recognize these trends and are building new office spaces in Charlotte loaded with amenities such as rooftop patios with gardens, collaborative work areas, food delivery services, outdoor walking trails and convenience services such as a concierge, dry cleaning and personal package drop-off areas.

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 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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As Rental Rates Rise, Charlotte South End Office Development Surges

South End is undergoing substantial office construction, showing very high demand compared to other Charlotte markets.

Average office rental rates in Midtown and South End have jumped from $24.68 per square foot, to $33.38. A 35-percent increase in 5 years, according to JLL.

South End is an area of interest due to the multi-family boom over the last ten years and the amenities that have come to the area.

Office construction in Uptown still out paces South End, but total vacancy rates are about 5 percent higher, according to JLL.

Charlotte is undergoing an intense rewrite of its development rules, which will take years to complete and will address future city planning in areas spanning from building heights to tree ordinances, urban street design to floodplains, erosion control to transportation.

The real estate forecast in the Charlotte, North Carolina area bodes well for the 2018 housing market and beyond.

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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