Don’t Forget to Consider the Ohio Business Income Deduction

Cathy Robinson, CPA

Principal

robinson@hwco.com

 

Beginning in 2015, Ohio has increased the benefit to taxpayers for the Ohio Business Deduction.  A business will receive up to 75% deduction on their first $250,000 of business income. This means up to $187,500 of business income will go untaxed by the state of Ohio no matter where it was earned.  The calculation removes the apportionment calculation that was part of the original deduction.  The remainder of the business greater than $250,000 will be taxed at the graduated rate of up to 3%.  The new deduction applies to both pass - through entities and proprietors alike.  The taxpayer should be careful though and take a closer look at what exactly constitutes business income.  Business income includes monies received in the ordinary course of a trade or business operation.

 

The deduction gets even better in 2016 when individuals can deduct 100% of their business income from their personal Ohio income tax.

 

Please remember to consider this tax deduction when preparing your return, and as always when in doubt, consult your advisor.

 

Lease Accounting Standard and Private Companies

Anthony LaNasa, CPA, CFE

Managing Principal - Columbus

lanasa@hwco.com

 

The U.S. Chamber of Commerce and other trade groups are trying to get the new lease standard expected to be published this month exempted from Private Companies.  In a January 29, 2016 letter to the Financial Accounting Standards Board (FASB), the trade groups state they do not feel the FASB adequately considered the differences between private and public companies.  This new standard will require all leases (those more than 12 months in duration) to be recorded as assets (right to use asset) and debt on all company’s balance sheets.  This is a significant change from prior guidance related to operating leases that were expensed as paid by companies.

 

The letter states:   “We are concerned that the decision to apply the soon-to-be finalized lease accounting standard to private businesses will exacerbate complexity, not meet the needs of private company investors and harm capital formation for those businesses. Such a decision would presume that users of private company financial statements would prefer capitalizing leases on balance sheets. However, since users of private companies are different than public company financial statement users in both composition and motivation this may not be the case”.  The link to the letter is http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175832675827&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=534659&blobheadervalue1=filename%3DLEASES-16.UNS.0021.U.S._CHAMBER_OF_COMMERCE_SEE_LISTED.pdf&blobcol=urldata&blobtable=MungoBlobs

 

The new standard will apply to all companies (private, public, and nonprofit) and is expected to be released this month.  However, stay tuned to potential last minute changes based on negative reaction such as this.

 

Check your Mailbox - Another IRS Data Breach

 

 

 

Cathy Robinson, CPA

Principal

robinson@hwco.com

 

Last month, the IRS stopped identity thieves from attempting to generate E-file PINS for stolen Social Security Numbers.  The PINS are used to efile a tax return.  There were 101,000 Social Security Numbers affected.  The IRS will be contacting the taxpayers to tell them of the breach, and tax return identity theft markers will be placed on their accounts.  There was no personal taxpayer data compromised or disclosed.  The breach was not related to the shutdown of efiling last week. 

 

Remember, the IRS will only contact you by mail.  They will not contact you by telephone or email.  If you need clarification of the correspondence, do not hesitate to consult your CPA.