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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments
The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial
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Will Inflation Hurt Stock Returns? Not Necessarily
Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on
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Maximize Your Charitable Impact with These Four Strategies
As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There
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Small Business Qualified Stock’s Tax Benefits
Certain tax benefits are available to those who start or invest in startups. It can be challenging to determine, however, if you’re eligible to do so, since not every founder or investor can take advantage of the same benefits.
One avenue for potential tax advantages is known as qualified small business stock. These apples to shares of a C corporation with less than $50 million in total assets at the time the investment was originally made. This means that other forms of businesses, such as partnerships, S corporations, and LLCs, do not qualify.
Eligible sectors for business include manufacturing and technology, but typically not professional services, finances, agriculture, and hospitality. In order to reap the possible tax-free benefits of the sale of this stock, the shares must have been held for at least five years from the date they were originally acquired. If these shares were gifted to you by someone else, the period that the other person owned them also counts towards the five-year plan.
A few other requirements applicable to the sale of stock under these rules, such as:
- The shares must have been acquired directly from the company rather than the secondary market
- The gross assets of the. Business cannot exceed $50 million
- The company in question must be legitimately involved in a qualified business or active trade, which means that 80% of the assets must be used in the active conduct of a business not meeting the terms of exclusions
Several business activities/industries are excluded, and these are:
- Companies involves in performance arts, consulting, actuarial science, engineering, law, health, architecture, accounting, brokerage/financial
- Farming
- Oil or gas production or extraction
- Banking, financing, leasing, and insurance
- Hotels, restaurants, and similar companies
- Any company in which the principal asset is the skill or reputation of at least one employee
Do you own shares in a C corp where you could potentially sell them tax free? Set up a time to speak with our financial team to learn more.