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Searching for Articles by Amy E. Ebeling
Amy E. Ebeling
Wausau Office
Found 13 Results.

Tasty Tax Morsel - The IRS Wants A Bite!

Posted on April 23, 2013, Authored by Amy E. Ebeling, Filed under Tax Deductions

A colleague posted the other day about including the value of employer provided meals when calculating overtime compensation. Employers often provide delicious edibles to promote healthy eating, improve morale, and foster collaboration over lunch. Employers, however, provide those meals, snacks, and beverages to employees without chewing over the tax implications. Meals provided by employers are generally taxable fringe benefits. Several exceptions, however, exclude chow from fringe benefit taxation under specific circumstances. De minimis meals, such as coffee, soda, doughnuts, or meals that have so little value, that accounting for them would be unreasonable or administratively impractical are not taxable as fringe benefits. Think of this as the Homer Simpson, "Mmm, donuts," exception. Meals provided on an employer's premises for the convenience of an employer are also non-taxable fringe benefits. Meals are provided for the convenience of the employer if the meals are provided for a substantial business reason other than to provide the employee with additional pay. Employers and the IRS have long battled Iron Chef style in Tax Court Stadium over what constitutes "a substantial business reason." Employers have argued, and many have agreed, there are real benefits for workers having unplanned, unstructured face-to-face interaction over lunch, but whether those benefits rise to the level of "a substantial business reason" is unclear. Despite spicy arguments from employers, the IRS continues to seek a bite out of employee meals. There are other exceptions to the taxation of meals as a fringe benefit so before you provide your employees their next meal, stop and mull over the tax consequence.

Punt Blocked - Former Green Bay Packers Kicker Found Guilty of Defrauding the IRS with Two Las Vegas Businessmen

Posted on May 29, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

A federal jury in Las Vegas found a former NFL punter, Joseph Prokop, and two Las Vegas businessmen guilty of defrauding the IRS and aiding in the preparation of false tax returns. The three men used two Nevada companies named the "National Audit Defense Network" and "Oryan Management and Financial Services" to promote and sell a product they called the Tax Break 2000. Tax Break 2000 was marketed as a method to claim up to $10,475 in income tax credits and deductions under the Americans With Disabilities Act (ADA). The scheme alleged that you could get a tax credit for making facilities ADA compliant with little to no cost. The tax credit, however, requires taxpayers who claim the credit to actually make building modifications to be eligible for the credit. Tax Break 2000 also came with a "Pre-Paid Audit Protection" plan on claimant's tax returns. Prokop was the marketing director for Oryan Management and Financial Services, the company prosecutors said created Tax Break 2000. Prokop played for the Green Bay Packers in 1985 as well as five other NFL teams from 1987 to 1992. Moral of the story - be wary of the tax products you see advertised (even if marketed by a former player of our coveted Green Bay Packers) including products that come with audit protections (generally, those prepaid audit defenses are worth exactly what you pay for them). Some tax products may be a great way for you and your business to save some tax dollars, but be sure to consult a trusted tax advisor before taking any action.

Using the Right Entity is Key to Successful Agribusiness

Posted on November 15, 2017, Authored by Amy E. Ebeling, Filed under Ag-Visor

Are you using the right business entity for your farm or other agribusiness?  I have worked with too many clients who have paid additional tax dollars or have been unable to achieve their succession planning goals due to their entity structure.  Learn from their mistakes.  Selecting and using the right entity is essential to a successful, profitable business.  An entity structure impacts legal liability, taxation, management or control, succession planning or transfer options, and a number of other issues.  Therefore, it is prudent that careful consideration be given to each of these issues before selecting an entity structure.  These issues should also be regularly re-evaluated to ensure the entity selection remains appropriate for ongoing business operations.  What are the entity structure options? In Wisconsin there are several different legal entity structures generally available to agribusinesses.  Only two of those structures, however, are generally recommended for use by agribusinesses – the business corporation and the limited liability company.  Both of these entity structures offer the most liability protection, receive favorable tax treatment, provide flexibility with respect to management, and furnish a variety of business planning or transfer options. How can an entity structure protect me from liability? Protection from legal liability is one of the greatest advantages of using a legal entity, but not all entities provide liability protection.  Certain entity structures can protect your personal assets from the creditors of your business operations.  For example, if an employee or independent contractor is injured on your farm, a proper legal entity could protect your personal assets from an injury lawsuit against your farm.  Again, business corporations and limited liability companies are best suited to provide legal liability protection.  Business owners should steer clear of sole proprietorships and certain partnerships as they do not provide any liability protection. The key to liability protection for business corporations and limited liability companies is adherence to the entity structure.  To adhere to the entity structure, the owners must engage in activities that show the business operation is separate from the owners, such as (1) keeping separate bank accounts so personal assets/fund are not co-mingled with business assets/funds; (2) making business decisions in accordance with the procedures set forth in the entity documents; and (3) keeping and maintaining records concerning those decisions and other business activities.  If the entity structure is not respected, the business will simply be treated as an “alter ego” of the owner and the liability protection will cease. Which entities provide favorable tax treatment? The most favorable tax treatment depends on the activities of the business and the desires/wishes of the owners.  Some entities are eligible for pass-through taxation in which only the owners pay the tax on the business’s income.  Other entities are subject to double taxation (i.e., both the entity and the owner pay tax on the income), but those entities may have more favorable tax rates, tax deductions, or fringe benefits.  For example, owners of pass-through entities generally pay self-employment tax on all business income, while double taxation entities pay lower employment taxes on salaries paid to owner‑employees.  Again, flexibility is key and both business corporations and limited liability companies may be taxed as either pass-through or double taxation entities, and which tax status is best depends on your particular circumstances. How can an entity help control management decisions? Management of a business is one of the largest factors in selecting an entity structure because the entity’s structure determines who has power over decisions, the amount of decision-making power of each owner, and what decisions, if any, can be made by non-owners.  For example, some owners may only own non-voting interests and have no ability to participate in management of the business.  Ownership structures with limited control can aid in the education and development of future owners of an agribusiness without putting the business at risk.  Careful consideration should be given to the management structure of an entity to ensure that the business is protected from poor decision-making. Succession planning or transfer options. Planning for the transition of an agribusiness is a complicated process that requires weighing legal, economic, and family dynamics factors.  Unfortunately, the transition process can be further complicated by the entity structure currently utilized by the business.  Certain entities provide more flexibility when transferring ownership from one generation to the next.  Selection and continued use of an entity structure should be carefully reviewed as current owners age and consider succession planning options and/or transfers to the next generation. In the end, choosing an entity structure is a thoughtful process that requires weighing the pros and cons.  Do not pay additional tax dollars or be forced to liquidate your operation because of your entity selection.  Choose carefully and seek the assistance of your trusted advisors when necessary.   Reprinted with permission by Badger Common'Tater

Revisit Your Choice of Entity - Is Pass-Through Taxation Right For You?

Posted on May 16, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

Did you pay more tax on the income generated by your business or investments in 2013 than in years past? With the 2013 tax year in the books, we are getting our first look at the impacts of the American Taxpayer Relief Act of 2012 and the 3.8% net investment income tax enacted by the Affordable Care Act. With the filing of their 2013 returns, many taxpayers are realizing they are paying higher taxes and should now be asking the question, "Do I have the right entity for my business or investment holdings?" As you may know, C corporation entities are taxed at corporate tax rates and income earned by pass-through entities, such as limited liability companies and S corporations, is passed through to the individual owners and taxed at individual rates. If you recall, the American Taxpayer Relief Act of 2012 was passed into law on January 1, 2013, and signed into law by President Obama on January 2 following the heated debate over taxes and the so-called "Fiscal Cliff." Among other things, the American Taxpayer Relief Act of 2012 increased income tax rates for certain individuals, raised the top tax rate for capital gains and dividends from 15% to 20%, and reinstated phase-outs for certain deductions. Additionally, the Patient Protection and Affordable Care Act, as amended by the Health Care and Reconciliation Act of 2010, imposed the additional 3.8% tax on net investment income of individuals and trusts and estates. As a result of these changes, the top individual income tax bracket is at least 4.6% more than the top corporate income tax bracket, but that difference could be much more with limited individual deductions and the 3.8% net investment income tax. Recognizing the disparity between applicable individual income tax and corporate tax rates, it is clear that many taxpayers need to revisit their choice of entity. Some taxpayers may pay less tax by utilizing a corporation entity rather than a pass-through entity such as a limited liability company because income will be taxed at a lower rate. Whether a taxpayer would benefit from such tax rate leveraging is an important question and, in true lawyer fashion, the answer is, "it depends." As you may have guessed, the "choice of entity" decision is a complicated one that not only involves a complex tax analysis but also an analysis of a variety of non-tax factors. First, before we can even start crunching the numbers (don't worry, I won't even mention the algebraic equation sitting on my desk right now that sets forth the formula for the number crunching), we need to have an understanding of a variety of factors. For example, what are the plans with respect to the earnings in the entity? Will the entity retain the earnings and reinvest them or will the earnings be paid out to the owners? Next, what are the long term plans for entity ownership? Will the current owner own the entity until death? If so, capital gains tax on corporate stock could be eliminated, thereby offsetting the disincentive effect of the second level of tax on distributed C-corporation earnings. Did I lose you yet? I've only scratched the surface when it comes to the tax analysis of the "what entity is best?" question and there are many non-tax factors to also consider (never let the tax tail wag the economic dog). The point is, now is the time to revisit and re-ask, "What entity is best for me?" While the answer to the question "what entity is best" is not a straight forward one, it is a question that the Ruder Ware attorneys are happy to help you answer by considering all tax and non-tax issues. Follow Amy on Twitter @AmyTaxEsq

IRS Announces Recognition of Legally Married Same-Sex Couples

Posted on August 30, 2013, Authored by Amy E. Ebeling, Filed under Tax Deductions

Earlier today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced that all legally married same-sex couples, regardless of where they live, will be recognized for federal tax purposes, including income, estate, and gift taxes. The Supreme Court of the United States' decision on June 26, 2013 declaring the federal Defense of Marriage Act (DOMA) to be unconstitutional raised questions with respect to federal treatment of same-sex couples living in states that do not recognize same-sex marriage. Prior to the Supreme Court's ruling, lawfully married same-sex couples were forced to declare themselves as "unmarried" when filing federal tax returns. Following the declaration of DOMA as unconstitutional, same-sex couples whose marriages were recognized by their state of residency could file jointly married federal tax returns and qualify for other federal benefits requiring marriage such as social security. It was unclear, however, how the IRS and other government agencies would treat same-sex couples living in one of the 37 states where same-sex marriages are not recognized. Today, the IRS announced that all legal marriages would be recognized for federal tax purposes. The announcement clarifies that the place of marriage trumps the state of residency in determining whether same-sex couples are legally married for tax purposes. Same-sex couples now may legally marry in one state and freely move to another state knowing that their federal tax filing status will not change.

No More Marijuana Taxes!

Posted on June 25, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

I can't help but write a puff piece about the recent lawsuit filed in a Denver District Court earlier this week. In the lawsuit, the attorney is asking the court to block marijuana taxes in Colorado, claiming the state's tax system violates the Fifth Amendment, which protects people from self-incrimination. The attorney argues that when marijuana growers and sellers pay their taxes, they are effectively incriminating themselves under federal law, which still bans marijuana. The lawsuit cites the supremacy clause of the United States Constitution, arguing "federal law is supreme over, and preempts, state or local law." Thus, the argument is that the Fifth Amendment right to protect oneself from incrimination is supreme or preempts Colorado's tax laws (or that the federal law is higher than the state law). Some legal experts are, however, concerned the strict interpretation of that argument could mean Colorado's own court may need to rule that the state's laws allowing marijuana sales are illegal. The court's ruling and reasoning behind their ruling will certainly be interesting considering it may set precedent for taxpayers not to pay tax on income earned through illegal activities. Although we don't have to worry about pot taxes in Wisconsin, the outcome of this case could impact taxation by all states of unlawful activities. We will keep you informed of any developments here on Tax Deductions, but no promises the pot puns will get any better. Follow Amy on Twitter @AmyTaxEsq

Wausau and Other Wisconsin Taxpayers Beware of Tax Jail Scam

Posted on June 19, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

I received a telephone call from a prospective client yesterday. Let's call her Suzie. Suzie called me asking for guidance on how to handle a phone call she received from the IRS. The caller stated on Suzie's voicemail that Suzie had 2 hours to return the call and resolve her tax issues or the police would be at her door to throw her in jail. As you would assume, Suzie was a bit upset by such a threat and immediately contacted a tax professional to figure out what she should do. I've been working with the IRS for a number of years and I have never heard of the IRS making such a threat (coordinating local police to arrest someone for overdue taxes is likely a bit too ambitious for a government agency), but when it comes to the IRS and taxes, you can never be too careful. I asked Suzie if she had any reason to believe she had a tax issue and of course, Suzie said no. I, however, instructed Suzie to call the IRS (and, yes, sit on hold for the better part of an hour) and simply confirm with the IRS that all is well with her taxes. Suzie called the IRS at the number I provided to her (1-800-829-1040), not the number left on her voicemail. Suzie confirmed all is well with her taxes and the IRS stated that other taxpayers have received similar threatening phone calls. Moral of the story -- Wisconsin taxpayers, please be wary of anyone contacting you claiming to be the IRS or alleging that you have taxes due. I urge you to contact the IRS directly or work with a tax attorney to confirm and resolve any tax issues. Follow Amy on Twitter @AmyTaxEsq

Who needs a Tax Extenders Bill? It's only June!

Posted on June 5, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

Over the past few years, we have all become accustomed to tax deductions, credits, and reduced rates expiring. We have also become accustomed to our elected officials debating until the very last minute about whether to extend sunsetting tax provisions. I am eager to report that 2014 will be no different - a senate bill to renew $85 billion in various tax breaks for individuals and businesses is likely stalled in the U.S. Senate until after the November elections. Senate Bill 2260 titled EXPIRE (Expiring Provisions Improvement Reform and Efficiency) Act was introduced on April 28, 2014. The Bill moved through the Senate Finance Committee and the Senate moved to consider the Bill without amendments in mid-May. The Bill sought to extend approximately 50 temporary tax provisions known in Congress as the "tax extenders." The tax extender provisions covered a variety of deductions and credits relating to homeownership, charitable giving, education, business research, depreciation, energy, and corporate taxation, including international taxation of business and the Work Opportunity Tax Credit. The tax extenders expired at the end of 2013 and the Bill sought to renew them through 2015. This week Senate Majority Leader Harry Reid stated that due to Republican outrage over not being allowed to offer amendments to the Bill, the Bill would likely sit until after the November elections. A majority of 60 votes is required to end debate on any bill in the Senate. On May 15, the vote of 53-40 left the Bill open for debate. All GOP members except one voted against ending debate in protest of Reid's refusal to consider amendments to the Bill. Reid stated yesterday that the Bill is likely deadlocked until November. So, once again, the taxpayers (and those of us who work in the tax industry) are left to wait out Congress. There is nothing like the passing of a new tax bill to put everyone in the holiday spirit. Follow Amy on Twitter @AmyTaxEsq

Wisconsin Extends Net Operating Loss Carryforwards to 20 Years and Allows Additional Credits Against Alternative Minimum Tax

Posted on March 15, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

Recently enacted Wisconsin legislation contained a number of significant changes to our state's corporation franchise and income tax laws that may affect your business's tax liability. For instance, among other important changes, net business loss, carry forwards under the corporation franchise, and income taxes were extended from 15 years to 20 years, applicable to tax years beginning after 2013. The new legislation also allows the following credits to be claimed against the alternative minimum tax (AMT), manufacturing and agriculture credit (for tax years beginning after 2012), the historic rehabilitation credit (for tax years beginning after 2013), and the research credit (for tax years beginning after 2013). In addition, provisions concerning the job's tax credit were amended to clarify that a business must increase employment in Wisconsin in order to be eligible for the credit. Previously, the law did not specify that the increase to employment had to be within the state. As always, our office is available to help you understand the changes in the law as they apply to your business. Please reach out to your preferred Ruder Ware attorney or tax accountant to discuss potential planning strategies that can help you take advantage of the changes and minimize any possible tax increases.

Taxpayers Have Rights???

Posted on June 11, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

Taxpayer Bill of Rights - On Tuesday, the Internal Revenue Service (IRS) unveiled the new and improved "Taxpayers' Bill of Rights." Unbeknownst to most taxpayers, the Internal Revenue Code actually sets forth rights of taxpayers (who knew!). The IRS touts that the new Bill of Rights will make it easier for taxpayers to understand their rights when dealing with the IRS. The new Bill of Rights will be sent with all IRS notices including an audit or collection notice. Follow Amy on Twitter @AmyTaxEsq

Final Regulations on the 3.8% Net Investment Tax

Posted on November 26, 2013, Authored by Amy E. Ebeling, Filed under Tax Deductions

The IRS issued final regulations on the 3.8% Net Investment Income Tax on November 26, 2013. The 3.8% Net Investment Income Tax was enacted as part of the Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. The Net Investment Tax affects individuals, estates and trusts, beginning January 1, 2013. Please watch Tax Deductions for more information as we analyze these final regulations from the IRS (just in time for the holiday season)!

2014 Inflation Adjustments - You May Gift $14,000 Tax-Free (Grandma, are you reading this?)

Posted on January 2, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

The Internal Revenue Service announced in October 2013 the annual inflation adjustments for a variety of tax provisions including tax rates, standard deductions, limitations for itemized deductions, and exclusion amounts. Fortunately for children and grandchildren alike, a taxpayer may gift $14,000.00 per year per person without paying any taxes. Accordingly, a married couple with three children could gift each child $28,000.00 thereby reducing their estate by $84,000.00 without paying a dime in tax. Tax-free gifting is a great way to reduce your estate to ensure it is below taxable thresholds upon your passing. Please contact your favorite Ruder Ware estate planning attorney to learn more about tax-free and tax-deferred estate planning techniques.

Royal Flush! FBARs Due June 30th

Posted on June 18, 2014, Authored by Amy E. Ebeling, Filed under Tax Deductions

This is your reminder that your Foreign Bank and Financial Accounts Reports (FBARs) are due on June 30th. If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account exceeding certain thresholds, you must report such accounts annually to the IRS by electronically filing a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts. When you file your FBAR, do not forget to include your online poker accounts and maybe your Bitcoin exchange account. In a recent court decision, a judge held that online poker accounts need to be reported on FBARs if poker sites are owned by foreign entities and function as banks (meaning, one may deposit, withdraw, or transfer money). Also, although we do not have a court decision, commentators are recommending that taxpayers report their Bitcoin exchange accounts on FBARs. (Please do not ask me how Bitcoins work because like the rest of the world, I still haven't quite figured them out.) Follow Amy on Twitter @AmyTaxEsq