EMAIL SAYING EMPLOYEES WILL HAVE TO PAY INCOME TAX ON EMPLOYER PROVIDED HEALTH INSURANCE IS SPAM

I have received about a dozen emails saying that according to an email that is going around, in 2011 employer provided health insurance would no longer be tax-free. This just shows the power and the danger of the instant information Internet society. This information is wrong.

The truth is that in 2011 the employer must report to the IRS on the W-2 the amount of health insurance, but that amount will NOT be taxed as income in 2011. The e-mail is a hoax. Presumably, the reason Congress required the value to be shown on W-2s is to give workers a better appreciation of the amount spent to cover them or to get information on what it is costing them to allow this tax-free fringe benefit.

QUOTE OF THE WEEK

"The boss drives people; the leader coaches them. The boss depends on authority; the leader on good will. The boss inspires fear; the leader inspires enthusiasm. The boss says 'I'; the leader says 'we'. The boss fixes the blame for the breakdown; the leader fixes the breakdown. The boss says 'go'; the leader says 'let's go!'"
--H. Gordon Selfridge

REPAYMENT OF LOAN TO SHAREHOLDER FROM S CORPORATION CREATED INCOME TAX

There is really nothing new here but it goes to show why year-end income tax planning for S corporations is so important. In a recent Appeals Court case (Nathel, 2nd Cir.) the owners of an ailing S corporation lent money to the S corporation. Since before the loan the company’s losses exceeded the owners’ basis in the corporation’s stock, they would not have been able to deduct the loss. By making a loan they created basis and the owner was able to deduct the loss. Think of it like this, you lend $100,000 to your S corporation but the loss is $40,000, so now your basis in the loan is $60,000 - not $100,000. Under IRS rules, the excess loss is applied to reduce the tax basis in the loans.

When the corporation repaid the owners’ loans, the owners’ basis in the loans was still less than the principal amount. The court ruled that the owners owed ordinary income tax on the difference between the loan payoff amount and their tax basis in the loans. This recoups the extra S firm losses that their advances allowed them to deduct.

With a little tax planning at the end of the year, this problem could have been anticipated and quite possibly planned around.

NEW LAWS THAT MAY IMPACT YOUR BUSINESS

Below is a card we sent out to some of our clients who may be impacted by new legislation. If you think you may be impacted, please discuss this issue with your accountant.

Congress has recently passed two laws that may reduce your taxes. The rules on these two bills are somewhat complicated, so rather than send you all of the detail, I am letting you know the basics. If you think that you might be impacted, contact our office and we will let you know if you qualify and what you need to do to keep more money in your pocket.

HIRE BILL - The primary focus of the HIRE program is to give companies incentive to hire. There are two main points focused on that. The first is a break from paying Social Security taxes for the remainder of 2010 on any new workers they hire, if they have been unemployed for at least 60 days. If you have any new hires after 2/03/10, you may qualify. Contact us.

HEALTH CARE BILL - I know that you may have received a card from the IRS on this. If you have less than 25 full-time equivalent employees and you pay for at least 50% of their health insurance, the government will reimburse you up to 35% of the premium. If you think you might qualify, contact us.

Larry Kopsa, CPA

ONLY 1 WEEK LEFT TO REGISTER FOR OUR FREE WEBINAR

WASHINGTON - AFFECTING YOUR SMALL BUSINESS

Monday, June 21, 2010

12:00 PM - 1:00 PM CDT

There is a lot going on in Washington right now, so allow Larry Kopsa CPA to show you his ‘crystal ball’ on how the following may affect your business:Health Care Reform, PCI (if you take credit cards and you don’t know about this make sure you tune in!), CAP and Trade, Value Add Tax, New Tax Laws, Hire Act, and the Union Check Card. In this one hour webinar, Larry will show you how these items could potentially affect your bottom line.

System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP, 2003 Server or 2000

Macintosh®-based attendees
Required: Mac OS® X 10.4.11 (Tiger®) or newer

Reserve your Webinar seat now at:
https://www1.gotomeeting.com/register/591528289

HOW MUCH OIL HAS LEAKED INTO THE GULF OF MEXICO?

Check out this site for more information:
http://www.pbs.org/newshour/rundown/2010/05/how-much-oil-has-spilled-in-the-gulf-of-mexico.html

IDEA BEING FLOATED TO PUT SENIOR CITIZENS IN JAIL

"Let's put the seniors in jail, and the criminals in a nursing home. This way the seniors would have access to showers, hobbies, and walks, they'd receive unlimited free prescriptions, dental and medical treatment, wheel chairs etc. and they'd receive money instead of paying it out.

They would have constant video monitoring, so they could be helped instantly if they fell, or needed assistance. Bedding would be washed twice a week, and all clothing would be ironed and returned to them.

A guard would check on them every 20 minutes, and bring their meals and snacks to their cell. They would have family visits in a suite built for that purpose. They would have access to a library, weight room, spiritual counseling, pool, and education.

Simple clothing, shoes, slippers, PJ's and legal aid would be free, on request. Private, secure rooms for all, with an exercise outdoor yard, with gardens. Each senior could have a PC, a TV, radio, and daily phone calls.

There would be a board of directors, to hear complaints, and the guards would have a code of conduct that would be strictly adhered to.

The "criminals" in the nursing home would get cold food, be left all alone and unsupervised. Lights off at 8 pm, and showers once a week. Live in a tiny room, and pay $5,000 per month and have no hope of ever getting out. Justice for all. Yeah…I think I’ll take jail!!!"