Minnesota Voluntary Disclosure Program

Most of the latest news surrounding taxes has focused on the Tax Cuts and Jobs Act of 2017, commonly known as tax reform. The changes included in tax reform have far reaching consequences for both business and individual taxpayers, including how tax rates are determined, available deductions, expensing, bonus depreciation and a host of other matters. Although important, it’s essential to remember that tax reform applies only to federal taxes and not state.

 

<< Click to Read a Tax Reform Bill Overview >>

 

Alternative Minimum Tax Calculations

The alternative minimum tax (AMT) was enacted back in 1969 to ensure high-income individuals do not take advantage of multiple tax breaks and avoid paying federal tax. However, in recent years, the AMT has been imposed on many middle-income taxpayers. The Tax Cuts and Jobs Act (TCJA) retains the individual AMT, but AMT exemptions and phaseout thresholds have been increased for 2018 through 2025.

Tax Reform Impact Hospitality Companies

The tax reform bill signed at the end of last year brought significant changes for many businesses and individuals, including an overall cut in tax rates. Those in the hospitality industry are generally optimistic about the changes, expecting both an increase in consumer spending and the ability to invest in people, technology, development and other improvements in their businesses because of anticipated lower tax liability. Specific provisions in the tax law affect the hospitality industry more than others. To help our hospitality clients, prospects and others understand these provisions, Smith Schafer has provided a summary of the applicable changes below.
 

Sales Tax Implications for the Transportation Industry

The transport of people and products often have varying considerations when it comes to state sales tax implications. Sales tax is assessed on some items, but not others. The summary outlined below covers some of the more typical items in general commerce involving the transportation industry.

Passenger Transportation Services

Companies performing services within the transportation industry are afforded a number of tax-favorable benefits. One of which is a specific exemption related to passenger transportation. Passenger transportation services transport people to places. Under Minnesota Statutes 297B.03 and 297A.90, fees charged to transport passengers are not taxable for Minnesota sales tax purposes.

The Market Approach to Valuations

The words “Business Value” or “Business Valuation” by themselves hold more than a singular definition. The complexity of business valuations, make it challenging to fully grasp what is involved in the process of valuing a company. There are three main approaches when establishing a value for a company:

  1. Asset
  2. Income
  3. Market

 

Key Factors to Using the Market Approach

The market approach involves finding comparable sale transactions for other businesses in the same industry or finding comparable publicly traded companies to compare to the subject company. Below are important components to be included when using this business valuation approach.

 

Transportation Industry: Navigating Nexus

Transportation companies should carefully consider sales and use tax nexus issues. Crossing state lines for a job may be a way to boost the bottom line, but doing so may also mean dealing with complex tax laws. States are adopting far-reaching rules and interpretations on the issue of nexus and it is important to understand your responsibilities.

Businesses Will Celebrate Tax Cuts in the New Tax Year

Most businesses will receive a big tax cut starting with their 2018 tax years, thanks to the new law enacted on December 22, 2017. But some industries (such as retail, hospitality and banking) generally expect to reap more benefits than others (such as certain professional practices). The provisions in the law — known as the Tax Cuts and Jobs Act (TCJA) — are generally effective for tax years beginning after December 31, 2017 (except where noted otherwise). And, unlike the provisions for individual taxpayers, many of these provisions are permanent.

 

Here's an overview of some of the changes that affect businesses:

 

Business Valuation & Succession Planning

How much is your business worth and what are your plans for the long run? These are questions every business owner will face at some point. Business owners invest many years of time, energy, and personal funds to build a business. Planning for your exit is often one of the hardest things a business owner must do. Contemplating the business you built or help to develop without you is complex, difficult and emotionally challenging. When succession planning is executed properly, it allows for the orderly transition of management while protecting the exiting owner professionally, emotionally and financially.

Employer New Year Highlights

 

Minnesota Minimum Wage Rate Adjusted for Inflation as of January 1, 2018

 

PROVISION

RATE UNTIL
DEC. 31, 2017

RATE AS OF
JAN.1, 2018

Large employer wage

$9.50/hour

$9.65/hour

Small employer wage

Year-End Strategies & Tax Bill Highlights

Major tax changes are on the way for both individual and business taxpayers. To help clients, prospects, and others understand the changes and how it will impact them, Smith Schafer has provided year-end strategies responding to the tax bill and a summary of the key changes.

 

Year-End Strategies

 

Pay 2017 State Income Taxes 

The Tax Cuts and Jobs Act limits the deduction for state and local income and real estate tax deductions to a total of $10,000 per year beginning with the 2018 tax year. If the taxpayer is not subject to the alternative minimum tax (AMT) in 2017, paying state income taxes by December 31, 2017 would be beneficial.

 

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