As the year comes to a close, we want to thank our clients, colleagues, and community for your trust and partnership. Your continued support means the world to us.
We celebrated with an early Christmas lunch and wish you and your loved ones a joy, peace, and prosperity-filled season. Here’s to a successful and bright new year ahead!
Warm regards,
The Ullrich Delevati Team
During this season of thanks, we want to extend our sincerest gratitude and appreciation for you, our valued clients, associates, and friends!
We are more grateful than ever for your trust in us to handle your finances. We feel incredibly blessed by your continued support and appreciate the opportunity to work with you and your company!
We cannot thank you enough for your association and wish you and your teams all the best this holiday season.
Happy Thanksgiving from all of us at Ullrich Delevati, CPAs!
If you and your employees are traveling for business this summer, there are a number of considerations to keep in mind. Under tax law, in order to claim deductions, you must meet certain requirements for out-of-town business travel within the United States. The rules apply if the business conducted reasonably requires an overnight stay.
Note: Under the Tax Cuts and Jobs Act, employees can’t deduct their unreimbursed travel expenses on their own tax returns through 2025. That’s because unreimbursed employee business expenses are “miscellaneous itemized deductions” that aren’t deductible through 2025.
However, self-employed individuals can continue to deduct business expenses, including away-from-home travel expenses.
Rules that come into play
The actual costs of travel (for example, plane fare and cabs to the airport) are deductible for out-of-town business trips. You’re also allowed to deduct the cost of meals and lodging. Your meals are deductible even if they’re not connected to a business conversation or other business function. Although there was a temporary 100% deduction in 2021 and 2022 for business food and beverages provided by a restaurant, it was not extended to 2023. Therefore, there’s once again a 50% limit on deducting eligible business meals this year.
Keep in mind that no deduction is allowed for meal or lodging expenses that are “lavish or extravagant,” a term that’s been interpreted to mean “unreasonable.”
Personal entertainment costs on the trip aren’t deductible, but business-related costs such as those for dry cleaning, phone calls and computer rentals can be written off.
Mixing business with pleasure
Some allocations may be required if the trip is a combined business/pleasure trip, for example, if you fly to a location for four days of business meetings and stay on for an additional three days of vacation. Only the costs of meals, lodging, etc., incurred for the business days are deductible — not those incurred for the personal vacation days.
On the other hand, with respect to the cost of the travel itself (plane fare, etc.), if the trip is primarily business, the travel cost can be deducted in its entirety and no allocation is required. Conversely, if the trip is primarily personal, none of the travel costs are deductible. An important factor in determining if the trip is primarily business or personal is the amount of time spent on each (although this isn’t the sole factor).
If the trip doesn’t involve the actual conduct of business but is for the purpose of attending a convention, seminar, etc., the IRS may check the nature of the meetings carefully to make sure it isn’t a vacation in disguise. Retain all material helpful in establishing the business or professional nature of this travel.
Other expenses
The rules for deducting the costs of a spouse who accompanies you on a business trip are very restrictive. No deduction is allowed unless the spouse is an employee of you or your company, and the spouse’s travel is also for a business purpose.
Finally, note that personal expenses you incur at home as a result of taking the trip aren’t deductible. For example, let’s say you have to board a pet while you’re away. The cost isn’t deductible. Contact us if you have questions about your small business deductions.
After more than 20 years of service, we’re excited (and a little devastated) to say good-bye to Jerilyn (Jeri) Ferguson!
She brought her accounting acumen to Ullrich Delevati, CPAs in 2000, with abundant knowledge and experience in both the private sector and charitable organizations. And since her first days, she has sought to understand the client’s point of reference and provided practical guidance on issues and challenges that are unique to not-for-profit clients. A Certified QuickBooks ProAdvisor in both the Desktop and Online platforms since 2005, Jeri had offered comprehensive assistance with all aspects of the software, both to our clients and our internal team.
Jeri has been an integral part of our team and she will truly be missed by the entire UDCPAs family!
Before she officially retires and heads off to Washington to enjoy being closer to her family, we had a chance to treat her to a celebratory lunch. Here are some pics of our special time together.
We cannot thank Jeri enough for her years of service, dedication, and friendship and we wish her all the best in her retirement!
Adding a new partner in a partnership has several financial and legal implications. Let’s say you and your partners are planning to admit a new partner. The new partner will acquire a one-third interest in the partnership by making a cash contribution to it. Let’s further assume that your bases in your partnership interests are sufficient so that the decrease in your portions of the partnership’s liabilities because of the new partner’s entry won’t reduce your bases to zero.
Not as simple as it seems
Although the entry of a new partner appears to be a simple matter, it’s necessary to plan the new person’s entry properly in order to avoid various tax problems. Here are two issues to consider:
First, if there’s a change in the partners’ interests in unrealized receivables and substantially appreciated inventory items, the change is treated as a sale of those items, with the result that the current partners will recognize gain. For this purpose, unrealized receivables include not only accounts receivable, but also depreciation recapture and certain other ordinary income items. In order to avoid gain recognition on those items, it’s necessary that they be allocated to the current partners even after the entry of the new partner.
Second, the tax code requires that the “built-in gain or loss” on assets that were held by the partnership before the new partner was admitted be allocated to the current partners and not to the entering partner. Generally speaking, “built-in gain or loss” is the difference between the fair market value and basis of the partnership property at the time the new partner is admitted.
The most important effect of these rules is that the new partner must be allocated a portion of the depreciation equal to his share of the depreciable property based on current fair market value. This will reduce the amount of depreciation that can be taken by the current partners. The other effect is that the built-in gain or loss on the partnership assets must be allocated to the current partners when partnership assets are sold. The rules that apply here are complex and the partnership may have to adopt special accounting procedures to cope with the relevant requirements.
Keep track of your basis
When adding a partner or making other changes, a partner’s basis in his or her interest can undergo frequent adjustment. It’s imperative to keep proper track of your basis because it can have an impact in several areas: gain or loss on the sale of your interest, how partnership distributions to you are taxed and the maximum amount of partnership loss you can deduct.
Contact us if you’d like help in dealing with these issues or any other issues that may arise in connection with your partnership.
There’s a new IRS form for business taxpayers that pay or receive certain types of nonemployee compensation and it must be furnished to most recipients by February 1, 2021. After sending the forms to recipients, taxpayers must file the forms with the IRS by March 1 (March 31 if filing electronically).
The requirement begins with forms for tax year 2020. Payers must complete Form 1099-NEC, “Nonemployee Compensation,” to report any payment of $600 or more to a recipient. February 1 is also the deadline for furnishing Form 1099-MISC, “Miscellaneous Income,” to report certain other payments to recipients.
If your business is using Form 1099-MISC to report amounts in box 8, “substitute payments in lieu of dividends or interest,” or box 10, “gross proceeds paid to an attorney,” there’s an exception to the regular due date. Those forms are due to recipients by February 16, 2021.
1099-MISC changes
Before the 2020 tax year, Form 1099-MISC was filed to report payments totaling at least $600 in a calendar year for services performed in a trade or business by someone who isn’t treated as an employee (in other words, an independent contractor). These payments are referred to as nonemployee compensation (NEC) and the payment amount was reported in box 7.
Form 1099-NEC was introduced to alleviate the confusion caused by separate deadlines for Form 1099-MISC that reported NEC in box 7 and all other Form 1099-MISC for paper filers and electronic filers.
Payers of nonemployee compensation now use Form 1099-NEC to report those payments.
Generally, payers must file Form 1099-NEC by January 31. But for 2020 tax returns, the due date is February 1, 2021, because January 31, 2021, is on a Sunday. There’s no automatic 30-day extension to file Form 1099-NEC. However, an extension to file may be available under certain hardship conditions.
When to file 1099-NEC
If the following four conditions are met, you must generally report payments as nonemployee compensation:
We can help
If you have questions about filing Form 1099-NEC, Form 1099-MISC or any tax forms, contact us. We can assist you in staying in compliance with all rules.
We are pleased to announce exciting changes to our firm’s Partnership. As our founder, Marcus Ullrich, passes the torch of full-time Managing Partner role to Partner, Anthony Delevati, two senior staff members, Lisa Martinez Dunham and Vivian Plank, will join as Partners. Marcus Ullrich will continue to serve his present clients as an active Partner, and Jim Engstrom will remain as a Principal for the West Sacramento Office.
This expansion of our Partnership strengthens our ability to provide you and our growing client base with the exemplary service and uncompromising quality we’re known for. We are well-poised for the future, and we look forward to growing more with our community.
Exciting Partnership Changes at Ullrich Delevati, CPAs
Founder, Marcus Ullrich, is passing the torch of full-time Managing Partner role to Anthony Delevati, as two senior staff members, Lisa Martinez Dunham and Vivian Plank, join the Partnership. Marcus Ullrich will continue to serve his present clients as an active Partner, and Jim Engstrom will remain as a Principal for the West Sacramento Office.
What it Means For You: This expansion of our Partnership strengthens our ability to provide you and our growing client base with the exemplary service and uncompromising quality we’re known for. We are well-poised for the future, and we look forward to growing more with our community.
Want to Learn More: To learn more about how Ullrich Delevati, CPAs can help provide financial clarity for your business or personal ventures, email info@udcpas.com, call 530-666-6671, or visit our website www.udcpas.com.
