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May 30, 2019

Dear Clients and Friends:

One of the pleasures of tax season is the opportunity it affords us to have personal contact with you.  We have enjoyed working with you this season and catching up on your activities.  Please note that our “post tax season” office hours are Monday through Thursday, 8:30 – 5, and Friday, 8:30 – 3.

This issue of CPA Client Tax Letter addresses an assortment of issues, from state sales taxes, to investing in stocks or bonds and choosing your company business entity. 

  • Making stock sales less taxing: In general, patient investors prosper over the long term; but there are many reasons for selling stocks.  For discussion on knowing the basics that may help improve tour tax position, see pages 1 and 2.
  • Bond ladders may hedge interest rate hikes: With high prices and rising interest rates, many currently hesitate to buy stocks.  The time-tested strategy of building a bond ladder might be a useful strategy to use as an alternative.  See pages 2 and 3 for a discussion and examples of bond options.
  • The SALT deduction limits will affect home sales:  With the enactment of The Tax Cuts and Jobs Act of 2017 (TCJA), state and local tax (SALT) deductions were limited to $10,000 per tax return, impacting home buying and selling.  Pages 3 and 4 discuss impacts for both sellers and buyers.
  • IRS says business meal deductions still apply:  Even though the TCJA disallowed deductions for business entertainment, amusement and recreation, the deductibility of business meal expenses is still allowed.  The five-point test to support this deduction is discussed on page 4 and 5.
  •  Supreme Court decision in Wayfair affects online sellers: Are you collecting state sales tax on purchases from your company by out-of-state buyers?  You may not be required to do so.  For discussion on whether it is required or not, see page 5.
  • Tax law enhances the appeal of C corporations:  The TCJA has made the pain of taxation as a C corporation a bit easier to bear, by reducing the personal income tax rates, and retaining the tax rates for qualified dividends received.  For discussion of pros and cons see page 6.

If you have any questions on the content of this newsletter, we encourage you to contact our office.  Situations vary as widely as individuals do, and we are available to discuss your particular situation with you and help you with your tax planning.

Very truly yours,

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American Institute of CPAs, Virginia Society of CPAs.