100% Bonus Depreciation… while supplies last!

With year end approaching, we felt it would be appropriate to remind our clients of the 100% Bonus Depreciation deduction that is expiring at the end of 2011. For all eligible assets placed in service before December 31, 2011, you may deduct 100% of the cost on your tax return. That is a full, 100% deduction for major equipment, computers, and other business use assets. Bonus Depreciation is not subject to the typical limitations that Section 179 expense is subject to. For instance, Bonus Depreciation can create a loss that can be carried back to prior years to claim a refund. Bonus Depreciation is also not subject to dollar limitations on assets placed in service like the Section 179 deduction is. Read more

Personal use of employer provided cell phones nontaxable

In an unusual move, the IRS recently issued Notice 2011-72 determining personal use of employer provided cell phones is not taxable to the employee. Additionally, no record-keeping of usage is required. This is in stark contrast to many other provisions of the Internal Revenue Code that have strict record-keeping and substantiation requirements. Read more

IRS Updated Audit Technique Guide for Exams of Consultants

The IRS has recently updated its audit technique guide for exams of independent consultants. With the explosive growth of the consulting industry over the past decade, especially here in Silicon Valley among tech companies, the IRS is now focusing its efforts more closely on these types of audits. Read more

FBAR Quiet Disclosure Criminal Prosecution

The US has recently decided to criminally prosecute an HSBC customer who made a “quiet” disclosure of his foreign bank accounts for the 2003 through 2008 tax years. A “quiet” disclosure is when a taxpayer files amended returns and pay tax for previously unreported offshore income without otherwise notifying the IRS or participating in a voluntary disclosure program. Read more

FTB imposing penalties for failure to pay electronically

The FTB has begun assessing penalties on certain taxpayers who fail to make tax payments electronically. Affected taxpayers are those who, since January 1, 2009, have incurred either a total California tax liability greater than $80,000 or any individual estimated tax or extension payment more than $20,000.

The law has been in effect since 2009 but for the past two years the FTB has not assessed any penalties, giving taxpayers time to understand and comply with the new rules. The penalty for failing to make a payment electronically is 1% of the payment amount, which can result in substantial penalties for taxpayers with large liabilities or payments. Read more