Filing for 501c (3) Tax Exempt Status: Easing the Burden on Smaller Nonprofit Organizations

NonprofitMost organizations seeking 501c (3) tax exempt status must file an application with the IRS. Until 2014, the only means available to organizations was filing Form 1023: Application for Recognition of Exemption Under Section 501c (3) of the Internal Revenue Code. Preparing this 26 page application is a cumbersome and time consuming process as organizations are required to disclose information in regards to organizational structure, governance, charitable purpose and related activities, sources of funding, and current and prior financial statement data. In addition, organizations are also required to submit their articles of organization and bylaws with the application. The overall process of preparing the application as well as the related recordkeeping can take over 100 hours to complete, followed by an IRS approval process that can take over a year.
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Charitable Giving Strategies

Charitable GivingWhile there may be a lot of wisdom in the proverb “May your charity increase as much as your wealth,” there can also be wealth in properly planning your charitable giving. This wealth is derived from the economic benefit that can result from tax savings achieved by implementing certain charitable giving strategies.

Bunching of deductions is one such charitable contribution strategy. Because the Tax Cuts & Jobs Act limits many allowable itemized deductions beginning in 2018 and increases the standard deduction, many taxpayers will find that the standard deduction is more beneficial than itemizing, thus losing the tax benefit of making the gift.
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New Status for Therese Connell

Therese Connell

Therese Connell, one of the firm’s Partners and Director of its Estate and Trust department, marks 25 years with the firm this year. She has decided to move to part-time status at Capaldi Reynolds & Pelosi effective August 31, 2018.

Therese has served in her current role since 1999, where she has been integral in managing firm software and internal processes. She joined the Firm in 1993, after working in another local accounting firm. Therese graduated from Immaculata College with a degree in Home Economics.

During her tenure with the firm, she developed the estate and trust work of the Firm into one of its key divisions. Therese is a mentor to a number of the Firm’s professionals and a trusted advisor to many of the Firm’s clients and business partners. She also plays a critical role in helping the Firm develop and maintain its information technology systems as well as relationships with tax and information systems vendors.

“In the 25 years of her tenure with Capaldi Reynolds & Pelosi, Tese has attained the status as one of the area’s premier experts in her field. Her incredible knowledge base, dedication to excellence, and service philosophy have really made an impact,” said Donna Buzby, one of the Managing Partners of Capaldi Reynolds & Pelosi. “Tese is an inspiration to everyone here, and I hope she continues to work with us for many years.”

Quickbooks Quick Tip

Quickbooks TipsHave you ever posted to incorrect accounts or classes for a few months in Quickbooks?  One way to resolve the problem is to go back to each transaction and change it manually.  This is both tedious and time consuming. Fortunately, Quickbooks has an accountant’s tool called “Reclassify Transactions.” 
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Non-Grantor Trust: A Tool for Estate, Asset Protection and Income Tax Planning

estate asset protection

While there are many forms and types of trust, this article highlights some of the various beneficial structures that encompass the use of non-grantor trusts.  The use of non-grantor trusts to achieve estate, asset protection and income tax planning should be customized to address specific facts, assets and needs.

Trusts are a centuries old vehicle originating from England used to allow an individual to transfer assets for the benefit of one or more beneficiaries.  The settlor or grantor of the trust transfers the assets to a trustee to be held in trust.  The trustee is tasked with managing, preserving and growing the assets based on the intent and instructions of the grantor set out in the trust.
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Frank Pelosi To Retire From Capaldi Reynolds & Pelosi

Frank Pelosi

Capaldi Reynolds & Pelosi today announced that Frank Pelosi, one of the Firm’s Managing Partners and Director of Litigation Support, has decided to retire effective August 31, 2018.

Frank has served in his current role at the Firm since 2000, where he helped oversee its most critical operations and management processes.  He joined the Firm in 1971 after graduating from Mount Saint Mary’s College with a degree in Business Administration.  He received his MBA from Monmouth University in 1980.
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CRP TAX BULLETIN AND UPDATE: REDEFINING NEXUS FOR SALES AND USE TAX PURPOSES

Nexus for Sales and Use Tax

On June 21 of this year, the Supreme Court reached a decision in the South Dakota v. Wayfair case which could have a far-reaching impact on clients with sales and operations in multiple states. Prior to the ruling, case law dating back 26 years to the National Bellas Hess Inc. v. Department of Revenue of Illinois and Quill Corp. v. North Dakota, established the rules for “substantial nexus” used to determine whether or not a business had an obligation to collect and pay sales and use tax to a state taxing authority. The rule, as originally set forth and upheld, called for a seller to have a physical presence (meaning either a physical structure such as a building or warehouse, or a human presence like a sales representative) in order to establish nexus within that state. Under this guideline, a seller with substantial sales, yet no physical presence, in a given state was not required to remit sales tax on goods sold, creating a substantial missed revenue opportunity for state taxing authorities.
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HOW SOCIAL SECURITY BENEFITS ARE DETERMINED

Determining Social Security Benefits

Social Security is a valuable resource for older and disabled workers as well as the worker’s survivors and dependents. It provides 90% of the cash flow for one-third of retirees. It delivers 28% of the cash flow for high income retirees. A mistake in claiming these benefits can be permanent and costly to the worker and his/her family. This is the second in a series of articles on Social Security. The objective of the series is to help you make better decisions regarding claiming benefits. To make good decisions we need to identify, determine, and appreciate certain terms and concepts. The theme of this installment is the procedure used to calculate Social Security benefits and a brief discussion of average benefits. Estimating your benefits is the essential first step in the SS decision-making process.
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REPEAL OF ENTERTAINMENT DEDUCTIONS

Entertainment Tax Deduction

The Tax Cuts & Jobs Act (TJCA) repealed the deduction for business entertainment beginning in 2018.  This includes expenditures for taking clients to sporting events and shows, and paying for season tickets for various sporting events.   Generally, any dues for social clubs such as country clubs or athletic clubs will also be non-deductible.

Most business-related meals will be 50% deductible.  If no business is discussed, the meal is not deductible for tax purposes and should be classified as entertainment.

Deductions will be permissible for sponsorship payments, net of the fair market value of any meals and entertainment, as well as for payments for professional dues and meetings such as civic organizations, trade associations and professional organizations.

Proper classification of the above-cited expenditures will be important for proper tax reporting.  Accordingly, it is essential to have your company’s internal accounting set up appropriately.  Please contact us if you would like assistance in identifying and classifying these expenses to treat them correctly on your tax return.

By Terri L. Marakos, CPA

CRP Staff: Actively serving the community

Capaldi Reynolds & Pelosi staff actively serving the communityThe staff of Capaldi, Reynolds & Pelosi (CRP) is often found crunching numbers and burning the midnight oil, especially during the 1st quarter of the year. Sometimes, however, they do come up for air and when they do, they get involved in some very worthwhile ventures in the community. Several members serve on boards of civic organizations, participate in local events, and even offer presentations to various groups. Here are some of our activities outside the office.
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