IRS Going After Golf Courses for Tax Deduction

Golf Course Easement3It’s getting much tougher to successfully claim a charitable deduction for a conservation easement.  Unfortunately, this will further erode the construction of new golf course projects in 2016 and beyond.

Typically, a new golf course project will make consideration plans to conserve and protect the natural habitat of fish, wildlife, and natural ecosystem by preserving open space for the scenic enjoyment of the general public.   These easements often amount to sizeable charitable deductions which help offset the investment.

Although the IRS has lost several conservation easement cases regarding golf courses, they turned the tide in 2003 and 2005 and have become more aggressive fighting these situations.  In 2003 and 2005, the IRS went to Tax Court over two North Carolina golf course easements.  In both instances, the IRS disagreed with the taxpayers over charitable deductions.   The court, the IRS stated that “fairways, tee boxes and greens … are sodded or planted with 419 Bermuda and Tidwarf, which are Golf Course Easement2nonnative grasses and consequently do not provide a relatively natural habitat for the pitcher plants and Venus flytraps.”  Additionally, the court found that the use of pesticides, insecticides, fungicides, herbicides and fertilizers not only does not preserve the natural habitat, but actually “injures or destroys” the habitat. And, being part of a gated community that is not open to the general public does not provide scenic enjoyment for the general public.  In both cases, the IRS won.

In 2009, a coastal Alabama golf course project, Kiva Dunes, won a three year court battle which vindicated their $28.7M tax break in exchange for leaving 141 acres of land undeveloped.  This setback created a round of legislative changes aimed at banning golf course easements altogether.  Fortunately, this effort was blunted by the golf industry.

Since the beginning of 2014, there have been 19 cases heard in US Tax or federal district court regarding conservation easements for golf courses.

If you are seeking to minimize your tax obligations legally, call 404-504-7051 and ask for John Charles Roe.

 

Roe CPA is a Georgia licensed CPA Firm with two convenient office locations, Atlanta and Norcross.  We work with all types of businesses and also have specialty services in golf course accounting, restaurant accounting, and real estate accounting.

Business Start-up Costs — What’s Deductible?

Start Up2Launching a new business takes hard work — and money. Costs for market surveys, travel to line up potential distributors and suppliers, advertising, hiring employees, training, and other expenses incurred before a business is officially launched can add up to a substantial amount.

The tax law places certain limitations on tax deductions for start-up expenses.

  • No deduction is available until the business becomes active.
  • Up to $5,000 of accumulated start-up expenses may be deducted in the tax year in which the active business begins. This $5,000 limit is reduced (but not below zero) by the excess of total start-up costs over $50,000.
  • Any remaining start-up expenses may be deducted ratably over the 180-month period beginning with the month in which the active business begins.

Example. Gina spent $20,000 on start-up costs before her new business began on July 1, 2015. In 2015, she may deduct $5,000 and the portion of the remaining $15,000 allocable to July through December of 2015 ($15,000/180 × 6 = $500), a total of $5,500. The remaining $14,500 may be deducted ratably over the remaining 174 months.

Instead of deducting start-up costs, a business may elect to capitalize them (treat them as an asset on the balance sheet). Deductions for “organization expenses” — such as legal and accounting fees for services related to forming a corporation or partnership — are subject to similar rules.

If you would like to minimize your taxes legally, call 404-504-7051 and ask for John Charles Roe.

 

Roe CPA is an Atlanta CPA Accounting firm with two convenient office locations, Buckhead and Norcross.  We service self employed business owners of all types.  For additional complexity, we have specialty services in restaurant accounting, hotel accounting, real estate accounting and entertainment accounting.

Why Hire a Real Estate CPA Firm

Real Estate - BuckhdThe real estate industry is very different from other industries, especially when it comes to accounting and tax issues.

The tax incentives for real estate are very different than other industries.  The timing of expenses, specialized services like cost segregation and 1031 exchanges, debt restructuring and tax deferral strategies can have huge consequences.  For instance, a real estate CPA firm can pull together these strategic pieces that will improve your bottom line that a local generalist can’t replicate.

Second, working with a CPA Firm that works with a wide variety of real estate clients enables them to add more value to your day-to-day business and key business decisions.  If warranted, they can bring specialized services to the table that a local generalist can’t possibly provide.  In other words, working with a regional CPA Firm that works with the right specialists reduces the risk of making business mistakes, missing key tax incentives, and add value immediately to you.

Third, having a small team of accountants that specializes in real estate accounting reduces your annual costs because their depth of knowledge on the subject matter is deeper and without having to charge you more.

As in any industry, there are economies of scale that can be gleaned by working with a specialist.  It is important to let specialists and experts handle matters that require additional expertise and can save you money.  A real estate business can benefit from specialized services when it comes to tax planning, capital spending, budgeting, accounting and estate planning.

And after you hire the best CPA Firm for your industry, you’ll soon realize how easy they make it appear on the surface.

To learn more, call 404-504-7051 and ask for John Charles Roe.

 

Roe CPA is a licensed CPA Firm in Atlanta.  Our clients include property management, real estate investment trust companies, and developers.  Our real estate accounting expertise also applies to our hotel property and restaurant owner operators.

 

Cam Newton Loses Super Bowl Check

Cam NewtonBy now, we all know how frustrating Cam Newton was by losing the Super Bowl.  To make matters worse, he actually lost money since the Super Bowl was held in California and he is subject to “jock taxes.”  Technically, he has to pay the state of California more than his Super Bowl check.  Learn the details.

 

Office Space Decisions – Atlanta Biz Owners

Buy or lease?

Office SpaceIt’s a decision many small businesses face. Owning real estate certainly can have advantages, including the opportunity to build equity. But many small businesses in need of space choose the rental route instead.

Cash Flow Considerations

By leasing, a company can avoid taking on debt to acquire a property. Less debt on the balance sheet may allow the company to finance other things, such as receivables or inventory and equipment purchases. And the upfront cash commitment needed to enter a lease agreement may be much lower than the down payment required for a property purchase.

Shopping Tips

If your business is looking around for the right rental location, here are a few suggestions to keep in mind. Not all of these tips are appropriate for all businesses, but some may help you get a lead on a good spot — and a good deal.

  • Find an eager landlord. Rental spots that have been on the market for a while could have some negative features, but they may be worth a look. If you find a location that suits you, you might also find a landlord who is anxious to negotiate.
  • Think about the term. A long-term lease locks in your rental rate — and that can be an advantage if you expect the market to trend upward. But leasing for short periods is often less expensive than leasing for longer periods. If your business is in its formative years, significant changes may lie ahead, so a short-term arrangement could be more practical, too. Adding an “option to renew” clause can help keep your costs down and your options open.
  • Divide and conquer. Could you make do with two smaller spaces instead of one large space? The more flexible you can be, the better your chances of finding a good deal.
  • Check rental comps. Commercial property markets can be very localized. Rents may vary considerably between one locality and another just a few miles away. Unless you’re limited to a specific location, compare rates in several areas.

If you are tired of overpaying taxes, call 404-504-7051 and ask for John Charles Roe.

 

Roe CPA is a tax accountant with two convenient office locations, Lenox Square and Norcross.  We service self employed business owners of all types.  For additional complexity, we have specialty services in restaurant accounting, hotel accounting, real estate accounting and entertainment accounting.

Top Tax Mistakes Made by Atlanta Restaurants

Rest TipsKeeping a restaurant up and running and profitable is no easy task. It is estimated that one in five restaurants will close within two years time, so it’s no wonder that tax issues can be pushed to the side when you’re working hard just to keep the doors open. Unfortunately, these five top tax mistakes can cause even more damage if not correctly quickly.

Tip Reporting

Tips may keep your wait staff happy, but the IRS still wants their cut. There are specific rules and requirements that both your employees and you have to follow. For example, the total tip income reported for a pay period must equal at least 8% of sales. In addition, it is your responsibility to collect and report social security, Medicare, and income tax on tips.

Structuring Deposits

Because many restaurants deal in cash, it can be tempting to deposit less than $10k at a time to avoid having to fill out a Currency Transaction Report, (CTR). Too often, business owners feel that filing a CTR will raise a red flag, but the opposite is actually true.

If you structure your deposits, so they are less than $10K, you will quickly gain the attention of the IRS and possibly other government agencies. In addition, avoiding the CTR is a felony.

Employee Classification

It can be tempting to classify your employees as independent contractors to avoid taxes, but this will catch up to you. A business owner can’t make this type of classification on their own. The IRS rule comes down to whether or not your employee is under your control and direction. If so, they are an employee and not an independent contractor. To classify them incorrectly can lead to heavy penalties.

Not Paying Employment Taxes

If  you’re having trouble paying vendors or your lease payments, it may seem like a good option to put off paying employment taxes. This is always a mistake. You will be liable for IRS penalties not only as a business but also as an individual. This debt cannot be discharged in a bankruptcy.

Unorganized Record Keeping

This is one area where the pain comes from losing possible deductions instead of being penalized by the government. By keeping good records, you can take full advantage of business tax deductions. This can be the difference between being in the black or falling back into the red.

If you are tired of overpaying taxes and worrying about tax compliance, then call 404-504-7051 and ask for John Charles.

 

Roe CPA makes life easier for hospitality businesses, everything from tax compliance to financial reporting to accounts payable.  Our hospitality accounting expertise helps us better service hotels, restaurants, brew pubs, bars, and golf courses.

3 Tasks Atlanta Entrepreneurs are Better Outsourcing

OutsourceAs a business owner, it can be difficult to delegate important tasks. When you complete them yourself, you know they will be done correctly and in a timely manner. Even so, if you want your business to grow, and keep expenses low, there are three tasks that you should consider outsourcing.

Website and Graphic Design

By outsourcing your website and graphic design, you will have access to an expert in the field, on demand. The person or company you outsource to will have the equipment, experience, training and knowledge to provide you with design concepts that would otherwise be beyond your reach.

You will also receive a professional product which is doubly important as your website is your online business card. This is one area that you want and need a professional’s assistance.

Payroll

As your company grows, the complexities of your payroll grow as well. In addition to saving time and money, payroll is one area of your business that the government takes great interest in. Payroll specialists make it their job to stay current in government regulations which means they will keep you and your company compliant.

In addition, payroll companies can provide you and your employees with an added layer of security. This can reduce the risk of embezzlement, identity theft, and interference, by an employee, with company records for financial gain.

Accounting and Tax Returns

Much like payroll, your accounting and tax returns are not an area of your business where you can afford errors. Without specialized tax knowledge, you run the risk of missing deductions leading to paying higher taxes than necessary or to making errors that result in penalties.

One of the main benefits of outsourcing any task is that while you may pay more per hour for the task to be completed, you will save much more money, in the long run, than if you hired a full-time employee when you take into consideration salary, benefits, taxes, health insurance, as well as the overhead to provide space for the employee to work. In the end, outsourcing can be a cost efficient way to expand your business.

If you’d like to learn more about outsourced accounting and outsourced payroll, call 404-504-7051 and ask for John Charles Roe.  Our initial consultation is free.

 

Roe CPA is a Georgia licensed certified public accounting firm with offices in Buckhead and Norcross.  We service all types of businesses.  For additional expertise, we have specialties in restaurant accounting, hotel accounting and real estate accounting.

 

Tax Treatment for Bitcoin Payments

BitcoinIf you’ve paid attention to the news the last few years, you will have heard of Bitcoins. In fact, you may even have considered accepting them as payment for services or product sales. Before you do, you’ll want to make sure you have an understanding of how the IRS treats Bitcoin payments.

First, it’s important to be aware of the fact that the IRS does not consider Bitcoins, which are virtual currency, as a legitimate state-backed currency. Instead, they see Bitcoins as property.

This means that the tax rules that apply to property transactions will also apply to payments received in Bitcoins. When a person, or business acquires property, they are required to record the fair market value of the property. This will become the owner’s basis for the property.

Once the property is sold or exchanged, if the fair market value of the property has increased, then the owner will have a taxable gain. On the other hand, if it has decreased in value, the owner will have a loss.

This means that if a business owner sells a product today and receives Bitcoins worth $100 but then converts them to dollars next week and the value has increased to $120, they will have a gain of $20 that will be taxed as capital gains.

This becomes even more complicated when multiple Bitcoin transactions take place. Each transaction needs to be tracked separately and each will have its own gain or loss depending on the current valuation of Bitcoins when they are converted to dollars.  The amount of paperwork and record-keeping becomes significant.

There are a couple of workarounds for this. First, each transaction can be converted to dollars immediately. Secondly, there are now Bitcoin merchant service providers that will deal with all of the backend record-keeping that is necessary. This allows businesses to accept Bitcoins without ever actually dealing with them.

The IRS ruling treating Bitcoins as property turned the Bitcoin world and those who want to accept them on their heads, but technology and even the IRS will eventually catch up to the new reality of virtual currencies, but it may take awhile.

If you are tired of overpaying taxes, call 404-504-7051 and ask for John Charles Roe.

 

Craft Brewery Sells for $1 Billion

Ballast PointWhen a craft brewery that most of us have never heard of sells for $1 billion dollars, then you realize that it’s no longer a tiny niche business.

Craft beer accounted for 11% of U.S. beer sales in 2014 and market share is rapidly increasing. Just this week, the owner of Corona and Modelo, Constellation Brands, purchased Ballast Point for roughly $1 billion.

Ballast Point started selling beer commercially in 1996 and growing at a rate of 80% over the past two years. According to Brewer’s Assn, it is the 31st largest craft brewer in the country. Ballast Point is available for sale in 30 states and Sculpin IPA is their hot seller. Overall, Ballast Point produces approximately 300,000 barrels annually and the sale does not include Ballast Point Spirits, which makes rums and whiskeys.

Ballast SculpinTo put this into perspective, Constellation Brands will be paying 20 times Ballast’s revenue in 2014. And if Ballast’s revenue increases 100% in 2015, then the multiple is 10 times revenue, which is still a stiff premium.

And while demand for craft brews explodes, demand for watered down national brands like Bud, Miller, and Coors is flat which is creating a trend towards consolidation. For example, AB InBev’s takeover of SABMiller for $107B.

While the acquisition of craft brews is nothing new, the valuation on this purchase is eye opening.

Roe CPA is an Atlanta CPA Firm servicing all types of business owners that would like to sell their business for $1B or more.  If you are searching for an accountant to help you with the next phase of growth, call 404-504-7051 and ask for John Charles Roe.  Our initial consultation is free.

For additional expertise, Roe CPA Firm has a concentration amongst restaurant owners, brew pubs and lodging businesses.

Why you should contribute more to your 401(k) in 2015

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Contributing to a traditional employer-sponsored defined contribution plan, such as a 401(k), 403(b) or 457 plan, offers many benefits:

  • Contributions are pretax, reducing your modified adjusted gross income (MAGI), which can also help you reduce or avoid exposure to the 3.8% net investment income tax.
  • Plan assets can grow tax-deferred — meaning you pay no income tax until you take distributions.
  • Your employer may match some or all of your contributions pretax.

For 2015, you can contribute up to $18,000. If your current contribution rate will leave you short of the limit, consider increasing your contribution rate through the end of the year. Because of tax-deferred compounding, boosting contributions sooner rather than later can have a significant impact on the size of your nest egg at retirement.

If you’ll be age 50 or older by December 31, you can also make “catch-up” contributions (up to $6,000 for 2015). So if you didn’t contribute much when you were younger, this may allow you to partially make up for lost time. Even if you did make significant contributions before age 50, catch-up contributions can still be beneficial, allowing you to further leverage the power of tax-deferred compounding.

Have questions about how much to contribute? Contact us. We’d be pleased to discuss the tax and retirement-saving considerations with you.