What Accountants Do for Your Business?
Whatever kind of company you’ve, you are going to always require aid of a cpa. There are a lot of things in regards to what accountants do in a business. It is common for businesses to own ledgers and records of taxes along with past expenses. Sometimes such companies require bookkeeping and recording of earnings in addition to expenditures. This is actually when a cpa should be used.
In 2002, Dr. Howard sold his practice to Dr. Brian Finn via an Asset Purchase Agreement. In that agreement, Dr. Howard was allocated approximately $549K for his personal goodwill and $16K for retirement (www.yext.com) a covenant never to take on Finn. Howard Corporation received just over $47K for the assets. Dr. Howard reported a $320,358 long-term capital gain on his 2002 personal tax return from the sale of the personal goodwill. On audit, the IRS re characterized the sale of personal goodwill as being a corporate asset and treated the amount received with the Howard’s as a corporate dividend. As a result of this ruling, Dr. Howard’s corporation had to recognize extra revenue of $549K, resulting in added corporate taxes of nearly $200K.
The process is straightforward and safe. Sometimes insurance coverage is contained in the deal. At other times, they come insurance options with low premiums. This insurance coverage is used to pay off legal fees in the case of a prosperous challenge from your tax office. The SDLT planning could be implemented after exchange of contracts to start with the conclusion with the transaction.
Why, just last summer, I worked up a Cost Segregation Study for a friend of mine in Yolo County who had bought a little beach rental in 1997. We uncovered about $30,000 in unused depreciation. He said later that his CPA / Tax Preparer converted the data into about $7,000 in tax savings-for the present year! And his condo would not cost him nearly $750,000.