{"id":35733,"date":"2021-01-15T14:18:23","date_gmt":"2021-01-15T19:18:23","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?p=35733"},"modified":"2021-01-18T11:30:04","modified_gmt":"2021-01-18T16:30:04","slug":"gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/","title":{"rendered":"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon"},"content":{"rendered":"
\"\"
Laurie A. Stillwell is a CPA with offices in Saratoga Springs.<\/figcaption><\/figure>\n

By Susan Elise Campbell
\nThe fourth quarter of any fiscal year is a busy time for CPAs. But this year, advising clients is posing more than the usual challenges.
\n\u201cIt is difficult enough for CPAs to get out of 2020, much less plan for 2021, when passing laws pertaining to deductions, depreciation and taxes is delayed,\u201d said Laurie A. Stillwell, a CPA in Saratoga Springs.
\n\u201cMy biggest fear professionally is that it is difficult to advise clients on how to move forward from a business and personal tax perspective,\u201d she said. \u201cI have never been busier, but I want to be proactive and that is nearly impossible.\u201d
\n\u201cIt has been the busiest year-end in 10 years because of uncertainty with taxes and the economy,\u201d said Paul A. Curtis, CPA, a founding partner of CMJ, LLP in Queensbury. \u201cOur firm was in a rush to close business sales because the new administration is thinking of eliminating the maximum 20 percent capital gains rate and raising personal income tax rates.\u201d
\n\u201cA company that has grown to a million dollar business pays $200,000 under the current tax code but may have a $400,000 tax bill if they wait to cash in next year,\u201d he said, which is why CMJ closed six major transactions in December. Uncertainty scares businesses to death.\u201d
\nOne issue that was clarified when the CARES Act and supplemental appropriations were signed on Dec. 27 is what would happen if small businesses were unable to repay their loans under the Payroll Protection Program.
\nMany businesses in Stillwell\u2019s practice have taken out PPP loans since they became available under the stimulus and relief package enacted last March, she said. The loans had to be used to pay salaries, insurance, overhead and other specific expenses to help qualifying businesses retain staff and stay afloat.
\n\u201cThe Treasury Department said in the original legislation carried forward that if the borrower defaults and meets criteria for the PPP loan to be forgiven, the small business does not have to pay tax on the cancelled debt,\u201d she said.
\nStillwell cited some of the PPP guidelines. The goal of the loan is to retain workforce and keep the business viable. If staff drops too much, the Small Business<\/p>\n

\"\"
Paul A. Curtis, CPA, founding partner of CMJ, LLP in Queensbury.<\/figcaption><\/figure>\n

Administration, which is \u201cthe rulemaker on this program,\u201d may not forgive the entire balance due.
\n\u201cThere are a fair number of exceptions, exclusions, client protections and safe harbors built into the regulations,\u201d she said. \u201cThese try to provide targeted relief for companies, although sometimes it is just not feasible to keep a business open.\u201d
\nAs an even bigger concession for struggling businesses, the new law makes actual expenses paid with PPP loan proceeds deductible.
\n\u201cThere has never been anything like a 100 percent tax-free loan,\u201d said Curtis. \u201cThis has a major impact on all businesses, no matter what size.\u201d
\nOn a loan of $100,000, for example, the savings to a business could be $10,000 or more, Stillwell said.
\nThere is an extensive list of tax credits and deductions businesses rely on that the CARES Act carried into 2021.
\n\u201cThese are habitually extended a year at a time, which is a band-aid approach,\u201d said Stillwell.
\n\u201cOne extension we were looking for is the provision in the original CARES Act that allows employers to defer some of this year\u2019s payroll tax, which is their portion of Social Security and Medicare, into 2022,\u201d she said. \u201cDepending on how the company files taxes, this can help provide cash flow for the business.\u201d
\nThe Qualified Business Income Deduction was also extended.
\n\u201cThis is a deduction put in place in the last minutes of 2017 and effective for 2018,\u201d said Curtis. \u201cWhen the tax on C Corporations was reduced from 39 percent to a flat tax of 21 percent, it was not fair to S Corporations and partnerships, which are subject to ordinary personal income tax rates.\u201d
\nThe QBID is a 20 percent reduction in taxable profit, Curtis said, \u201cwhich somewhat reduces taxes for individuals with small businesses.\u201d
\nThe fourth quarter is typically busy for CPAs because it is the time when they may be advising clients on re-establishing their business as a Subchapter S Corporation from a C Corporation in order to eliminate double taxation.
\n\u201cC Corporations pay a flat tax and then dividends to the owners are taxed up to 24 percent,\u201d said Curtis.\u00a0\u201cWhether to make the transition has much to do with the owner\u2019s exit strategy.\u201d
\nCurtis said it is \u201calmost impossible to sell corporate stock.\u201d That is because a new owner inherits all of the known, and unknown, assets and liabilities of the company, such as a lawsuit that does not emerge until after the purchase, he said.
\n\u201cRisk is reduced with an S Corporation because you can pick and choose which assets and liabilities you want,\u201d said Curtis.
\nTo enact the sale of a C Corporation\u2019s assets, the owners have to liquidate and pay a dividend, when double taxation enters the picture. Both the company and its share owners are subject to tax, whereas partners of an S Corporation are subject to only one level of income tax, and personal income tax rates were trimmed greatly by the last administration, Curtis said.
\n\u201cChanging the filing status to an S Corporation can result in a 19 percent net tax reduction to business owners,\u201d\u00a0Curtis said. \u201cA C Corporation still makes sense for smaller, high-growth companies but mature companies, with their higher cash flow for payouts, should consider changing how they file.\u201d
\nNow is the time CPA firms are gearing up for tax season and Curtis said moving last year\u2019s personal income tax filing deadline from April to July greatly helped firms get through their backlogs last season.
\n\u201cWe did a straight-out crunch, with half the staff working three days and the other half another three days, and we were busy with extensions through the fall,\u201d he said. \u201cI suspect the federal government will extend the due date again and hope to hear soon.\u201d
\nWhile the upcoming administration has hinted that personal income tax rates may be going back up and the maximum capital gains tax rate may be done away with, the future is cloudy.
\n\u201cMy crystal ball broke back in April,\u201d said Stillwell.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Susan Elise Campbell The fourth quarter of any fiscal year is a busy time for CPAs. But this year, advising clients is posing more than the usual challenges. \u201cIt is difficult enough for CPAs to get out of 2020, much less plan for 2021, when passing laws pertaining to deductions, depreciation and taxes is […]<\/p>\n","protected":false},"author":196,"featured_media":35734,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-35733","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-tax-business-planning"],"yoast_head":"\r\nGearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"By Susan Elise Campbell The fourth quarter of any fiscal year is a busy time for CPAs. But this year, advising clients is posing more than the usual challenges. \u201cIt is difficult enough for CPAs to get out of 2020, much less plan for 2021, when passing laws pertaining to deductions, depreciation and taxes is […]\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/\" \/>\r\n<meta property=\"og:site_name\" content=\"Saratoga Business Journal\" \/>\r\n<meta property=\"article:published_time\" content=\"2021-01-15T19:18:23+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2021-01-18T16:30:04+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg\" \/>\r\n\t<meta property=\"og:image:width\" content=\"720\" \/>\r\n\t<meta property=\"og:image:height\" content=\"1110\" \/>\r\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\r\n<meta name=\"author\" content=\"jessewinters\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"jessewinters\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/\",\"name\":\"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal\",\"isPartOf\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg\",\"datePublished\":\"2021-01-15T19:18:23+00:00\",\"dateModified\":\"2021-01-18T16:30:04+00:00\",\"author\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg\",\"contentUrl\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg\",\"width\":720,\"height\":1110,\"caption\":\"Laurie A. Stillwell is a CPA with offices in Saratoga Springs.\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website\",\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/\",\"name\":\"Saratoga Business Journal\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae\",\"name\":\"jessewinters\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g\",\"caption\":\"jessewinters\"},\"url\":\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/author\/jessewinters\/\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/","og_locale":"en_US","og_type":"article","og_title":"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal","og_description":"By Susan Elise Campbell The fourth quarter of any fiscal year is a busy time for CPAs. But this year, advising clients is posing more than the usual challenges. \u201cIt is difficult enough for CPAs to get out of 2020, much less plan for 2021, when passing laws pertaining to deductions, depreciation and taxes is […]","og_url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/","og_site_name":"Saratoga Business Journal","article_published_time":"2021-01-15T19:18:23+00:00","article_modified_time":"2021-01-18T16:30:04+00:00","og_image":[{"width":720,"height":1110,"url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg","type":"image\/jpeg"}],"author":"jessewinters","twitter_card":"summary_large_image","twitter_misc":{"Written by":"jessewinters","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/","name":"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon - Saratoga Business Journal","isPartOf":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage"},"image":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage"},"thumbnailUrl":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg","datePublished":"2021-01-15T19:18:23+00:00","dateModified":"2021-01-18T16:30:04+00:00","author":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae"},"breadcrumb":{"@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#primaryimage","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg","contentUrl":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-content\/uploads\/sites\/48\/2021\/01\/corporate-tax-story-stillwell-c.jpg","width":720,"height":1110,"caption":"Laurie A. Stillwell is a CPA with offices in Saratoga Springs."},{"@type":"BreadcrumbList","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2021\/01\/gearing-up-for-tax-season-cpas-handle-challenges-and-changes-on-the-horizon\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/"},{"@type":"ListItem","position":2,"name":"Gearing Up For Tax Season, CPAs Handle Challenges And Changes On The Horizon"}]},{"@type":"WebSite","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#website","url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/","name":"Saratoga Business Journal","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae","name":"jessewinters","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g","caption":"jessewinters"},"url":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/author\/jessewinters\/"}]}},"_links":{"self":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts\/35733"}],"collection":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/users\/196"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/comments?post=35733"}],"version-history":[{"count":1,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts\/35733\/revisions"}],"predecessor-version":[{"id":35736,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/posts\/35733\/revisions\/35736"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/media\/35734"}],"wp:attachment":[{"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/media?parent=35733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/categories?post=35733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/wp-json\/wp\/v2\/tags?post=35733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}