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11 Jan 2024

Be Aware When Hiring For A Tax Organization: A.I. Versus Human Recruiters

As a thirty-year veteran in executive search for tax professionals, I have a special set of skills. Remember the Liam Neeson movie quote in Ransom: “What I do have are a very particular set of skills, skills I have acquired over a very long time. Skills that make me a nightmare for people like you.” However, in the case of a career in executive tax search, highly trained tax recruiters like me have skills that prevent nightmares for companies. What concerns me now are companies who are leaning on A.I. software to solve their recruiting challenges. Human recruiters will far surpass any A.I. software in identifying the very best candidates.

There is not a day that goes by without a message about A.I. in my inbox. In executive search, I do not fear A.I. but I fear the false sense of superiority in results using A.I software over human intelligence. It is known that one of A.I.s biggest flaws has less to do with technology and more about A.I. systems to making false assumptions about certain groups of people or to misidentifying people of color in facial recognition that reflects the biases in multicultural societies. Additionally, as people age, their voices often change, and I imagine this will impact A.I. results as well. Imagine being locked out of your job or bank account because A.I. does not recognize your voice. An A.I. nightmare that is bound to happen to many folks(sheeple) running into the arms of A.I. which appears to be a solution for everything these days.

Increased reliance on A.I.-driven solutions leads to less face-to-face interactions, eroding social bonds established between a recruiter and the candidates, and their impact on the search process. The art of highly successful executive search has a lot to do with evaluating candidate soft skills: interpersonal skills, problem solving, communication, adaptability, critical thinking, creativity, empathy, leadership capacity, and their ability to work successfully on teams.

Allow me to demonstrate what I am talking about with real world experience:

Tax Executive Search Case One: A company has a particular tax problem that was created by a previous employee that has put the company at great financial risk. The company and executives are under the biggest audit of their company history which could cost them 500K to 1M in tax, penalties, and interest. The company has an option of using an AI software Recruiter to find a candidate or they have the option to utilize a real human Tax Recruiter who knows the market and speaks privately with tax executives who have solved similar problems. These are private company matters that should never be input into an AI software to search for the very best executives to handle a highly confidential search for a tax executive with these skills.

( Note: Confidentiality and privacy is so important in a tax executive search because of the sensitivity involved in these searches. Communicating these sensitive matters to A.I. is not likely to happen.

Written by Kat Jennings

11 Jan 2024

Offsetting Section 174 R&E Software Development Tax Liability With R&D Tax Credits

The new changes to Section 174 have a significant impact on software development costs. For tax year 2022, any cost that has been paid or incurred related to software development is now considered a Section 174 R&E expenditure. This means it must be capitalized and amortized over 5 years (15 years for foreign software development).

Many favorable provisions are made temporary due to the budgeting constraints of Congress, making yearly extensions normal and expected. It is important to note that the research expenses being addressed by this provision in the TCJA are not just the same as those provided for in the R&D tax credit rules. These general research costs are much broader.

If the current unfavorable tax treatment of research expenses does not get fixed, companies could see larger tax bills and therefore need the benefits of R&D tax credits even more.

Which Software Development Costs fall under the new Section 174 R&E Amortization rules?

While guidance related to what costs constitute Section 174 Expenditures is still vague, potential expenditures can include:

Written by Deborah Roth

11 Jan 2024

National Taxpayer Advocate Delivers Annual Report To Congress; Focuses On Taxpayer Impact Of Paper Processing Delays

WASHINGTON — National Taxpayer Advocate Erin M. Collins released her 2023 Annual Report to Congress, describing 2023 as a year of “extraordinary transition for the IRS and therefore for taxpayers.”

The report credits the Internal Revenue Service with substantially improving taxpayer services and developing plans to transform the taxpayer experience in the coming years, but it identifies paper processing as an area of continuing weakness.

By law, the Advocate’s report is required to identify the 10 most serious problems taxpayers are experiencing in their dealings with the IRS and to make administrative and legislative recommendations to address those problems. Before cataloging taxpayer challenges, however, Collins praised the IRS for taking notable strides forward.

“Overall, the magnitude of successes exceeded the areas of weakness in 2023, and most metrics showed significant improvement from the depths of the [COVID-19] pandemic,” Collins wrote in the report’s preface. The report says the IRS virtually eliminated its backlog of unprocessed original individual income tax returns (Forms 1040) and substantially improved telephone service.

Taxpayer service challenges

“When I released the National Taxpayer Advocate’s 2020 report, I wrote that the IRS in most cases ‘can effectively handle whatever it can automate,’ and when I released our 2021 report, I wrote that ‘paper is the IRS’s kryptonite,'” Collins said in releasing the new report. “Those observations continued to hold true in 2023. The areas in which taxpayers continued to experience delays were primarily those that required employees to process tax returns and taxpayer correspondence.”

Extraordinary delays in assisting victims of identity theft. At the end of fiscal year (FY) 2023, nearly half a million taxpayers with cases pending in the IRS’s Identity Theft Victims Assistance (IDTVA) unit were waiting an average of almost 19 months for the agency to resolve their identity theft problems. “If it weren’t for the significant number of challenges affecting larger groups of taxpayers, this would be headline news, and it should be,” Collins wrote. “Many taxpayers depend on their tax refunds to meet their living expenses, particularly low-income taxpayers who receive Earned Income Tax Credit (EITC) benefits that [approached] $7,000 for tax year 2022.” Noting that 69% of taxpayers whose identity theft cases the IDTVA unit resolved had adjusted gross incomes at or below 250% of the federal poverty level, Collins called the delays “unconscionable” and urged the IRS to place a higher priority on resolving cases quickly.

Written by National Taxpayer Advocate

10 Jan 2024

A Guide To Recovery Rebate Credit For U.S. Expats: You May Still Be Able To Claim This Credit

If you’re one of the many U.S. expats who are owed stimulus money, you can still claim it through Recovery Rebate Credit. As the matter of fact, 2024 is the last year to get all the stimulus checks you might have missed! It will either boost the amount of your tax refund or reduce the taxes you owe to the IRS. Either way – you win! Don’t miss out on the opportunity to get the money you’re entitled to. Keep reading to find out how the credit works and what makes you eligible to qualify.

WHAT IS RECOVERY REBATE CREDIT?Recovery Rebate Credit is part of the Covid-19 Economic Relief program. The credit makes it possible for those who didn’t receive Economic Impact Payments (also known as stimulus payments) to claim their missing money. So if you were eligible for stimulus payments but did not receive them (or you received a partial payment), you can claim them through Recovery Rebate Credit on your tax return.

HOW TO CLAIM RECOVERY REBATE CREDIT

Getting your Recovery Rebate Credit is not too complicated. You just need to file the right tax return and you’re good to go. For stimulus payments made in 2020 that you haven’t already received, you can claim the Recovery Rebate Credit on your 2020 tax return. And for payments made in 2021, you will need to file a 2021 tax return.

Even If you don’t usually file taxes but are otherwise eligible for stimulus checks, you will still need to file in order to get your money. And keep in mind – 2024 is the last year to do it! If you need any help along the way, don’t hesitate to reach out to us.

RECOVERY REBATE CREDIT VS STIMULUS CHECKS

To put it simply – stimulus payments were actually just advanced payments of the tax credit. The U.S. government provided them in response to COVID-19, aiming to get money into the hands of taxpayers as fast as possible, without having to wait for them to file their tax returns.

In total, three rounds of stimulus checks have been paid out. The amounts you were eligible to receive varied depending on your filing status and other factors.

RECOVERY REBATE CREDIT 2020

The first and the second stimulus checks were advance payments of the 2020 Recovery Rebate Credit claimed on a 2020 federal tax return. They were sent out in 2020 and early 2021. Here’s how much the first 2 rounds of Stimulus Checks are worth:

The first stimulus payment provided up to $1,200 per eligible individual, while a married couple filing a joint return received up to $2,400. An additional $500 was provided per dependent child.
The second stimulus payment provided up to $600 for eligible single individuals, and up to $1,200 for married taxpayers filing a joint tax return. An additional $600 was provided per each dependent child.

RECOVERY REBATE CREDIT 2021

The third round of stimulus checks (including the plus-up payments) was an advance payment of the 2021 Recovery Rebate Credit claimed on a 2021 tax return. These checks were issued starting in March 2021 and continued through December 2021.

The third stimulus check of up to $1,400 was made available per eligible individual. A married couple filing a joint return could get up to $2,800. An additional $1,400 was provided for a dependent of any age.

ELIGIBILITY FOR THE RECOVERY REBATE CREDIT

The eligibility rules for the recovery rebate credit are basically the same as they were for the Economic Impact Payments (stimulus checks).

The only major difference is that eligibility for the stimulus check was typically based on the information that the government had at the time of distributing the payments. On the other hand, eligibility for the credit is based on the IRS’s most recent information for you on file.

You’re generally eligible to claim the Recovery Rebate Credit if you meet the following requirements:

You are a U.S. citizen, Green Card Holder, or qualifying resident alien.
You are not a dependent of another taxpayer
You have a valid Social Security number (SSN)
You did not receive the entire credit through previously issued stimulus payments (this means you received a partial payment or missed an entire check)

If you’re claiming additional stimulus money based on your dependent children, they also need to have a valid SSN or adoption taxpayer identification number (ATIN).

Nonresident alien individuals, estates, and trusts don’t qualify for the credit. On the other hand, eligible U.S. expats who are thinking about renouncing their U.S. citizenship will be able to claim the credit. If you’re one of them, don’t let the cost of renunciation discourage you. Your Rebate credit will more than likely cover any fees and expenses you might have.

After meeting the qualification requirements above, the individual’s adjusted gross income (AGI) must fall within certain income limits to receive the full credit. Find more information on income requirements in the section below.

HOW TO CALCULATE RECOVERY REBATE CREDIT

As with the stimulus checks, calculating the amount of your recovery rebate credit starts with a “base” amount. If you’re eligible for the full credit, the base amount you may receive is up to $3,200 for single filers or $6,200 for married couples filing a joint return. You can claim even more money in case you have children or adult dependents.

The actual amount of your Recovery Rebate Tax Credit is based on the following:

Filing status – as we already mentioned, the base amount you are eligible to receive differs depending on your filing status (Single Filer or Married Filing Jointly)
Number of qualifying children or adult dependents – you are eligible to receive a certain amount of money per each child (or an adult-dependent in case of a third stimulus check)
Adjusted gross income – After adding up the base amount and any additional amount for your dependents, you then need to determine if your recovery rebate credit is reduced because of your income. If your income is less than $75,000 (for Single Filers), $112,500 (for Head of Household filers), or $150,000 (for Married Couples Filing a Joint Return), you can get the full benefit. The credit starts to decrease for people with higher earnings that exceed these income thresholds.
Amounts of Stimulus Payments you previously received – Finally, you need to subtract the total amount of stimulus checks and “plus-up” payments you received in the past.

If you have already received the full amount of stimulus payments that you’re eligible for, you don’t qualify for any additional credit. However, if you ended up receiving more than you qualified for, you are not required to pay it back.

HOW TO TRACK YOUR STIMULUS CHECKS

What if you forgot the exact amount of money you received through stimulus checks? There are several ways to find out your payment status:

The amount received from the first stimulus check can be found on IRS Notice 1444, the second stimulus check on Notice 1444-B, and the third on Notice 1444-C, which were all sent out by the IRS. Through March 2022, they also sent out Letter 6475 which confirmed the total amount of the third stimulus check and any received “plus-up” payments.
To find the amount to subtract from the credit, you can also check your IRS online account (if you have one). The exact amount of stimulus payments you previously received is listed under the Tax Records tab – “Economic Impact Payment Information.”
You can also locate the amount of your first, second, and third stimulus payments by checking your bank statements, in case you had them direct deposited. These payments should be labeled “IRS TREAS 310” with codes “TAXEIP1” (1st payment), “TAXEIP2” (2nd stimulus payment), or “TAXEIP3” (3rd stimulus payment).
Finally, you can request a tax account transcript from the IRS. All transcript types are available online through the IRS’s Get Transcript service. To have your transcript mailed to you – submit a Form 4506-T or make a request using the IRS’ automated phone transcript service at 800-908-9946.

If the above options don’t work for you, you can provide the amount of your stimulus checks based on your memory. If you misremember the exact amount and make a mistake, the IRS will correct the error for you. In case this happens, they will send you a notice of any changes made to your return.
But should you do it? Keep reading to find out.

WHEN WILL I GET MY RECOVERY REBATE CREDIT?

You will most likely get Recovery Rebate Credit as part of your tax refunds. But how long will it take to get your money? Depending on the filing options you chose and the accuracy of the information, it usually takes between 3 to 8 weeks to receive your refund.

Making a mistake will not result in financial loss, but might require extra time to fix. Any errors on your federal tax return, including those related to calculating the recovery rebate credit can cause delays and prolong the wait for your refund. So if all the information on your tax return is correct, it might take just a couple of weeks. But If there are errors or red flags, it can go on for months.

You can receive your payment faster through direct deposit rather than waiting for it to arrive in the mail. Depending on your preferences, your refund can be deposited into your bank account, prepaid debit card, or mobile app.

CAN I STILL CLAIM THE CREDIT IF I ALREADY FILED MY 2020 OR 2021 TAXES?

Since many individual taxpayer situations change from year to year, some people who were not eligible in the past may become eligible in 2023. Here are some situations when this might happen:

Some people may have received less than the full Stimulus Payment because their adjusted gross incomes were too high. A change in income could make a filer eligible for more credit.
Eligible taxpayers can get additional stimulus money if their family expanded in the meantime through the birth or adoption of a child.
Eligible people who did not have a valid Social Security Number but acquired Social Security Number in the meantime may now be able to qualify.
Individuals who were claimed as dependents in the past (and were, therefore, ineligible) may qualify for the credit if they are no longer dependents. This also includes some first-time filers, like college students for example. Many college students are first-time filers, as they are no longer claimed as their parents’ dependents. They can also claim the credit if they meet the eligibility requirements.

RECOVERY REBATE CREDIT FAQ

How do I claim Recovery Rebate Credit on my tax return? You need to file a tax return for the year in which the credit applies, and include information on the stimulus payments received. You can report the total amount of the Recovery Rebate Credit that you are claiming using Form 1040 or 1040-SR (enter the amount of your credit on line 30).
How to Claim the 2021 Recovery Rebate Credit? Following the instructions above, file a 2021 federal tax return and include the information on any stimulus payments you already received.
How to Claim the 2020 Recovery Rebate Credit? Simply file your 2020 federal tax return and include all the relevant information on the stimulus payments you received in the past.
What if my stimulus check was lost? If you suspect that your check was lost, stolen, or destroyed – don’t file for the Recovery Rebate Credit but instead ask the IRS to trace the payment. If the check was not cashed, the IRS will reverse your payment and notify you. On the other hand, if the check was cashed, the Treasury Department’s Bureau of the Fiscal Service will send you a claim package that includes a copy of the cashed check.

WRITTEN BY

Olivier Wagner

A tax preparer who is both an Enrolled Agent and a CPA (New Hampshire) very well aware of the tax situation of US citizens living abroad. He runs the tax practice 1040Abroad.

Written by Olivier Wagner

10 Jan 2024

Taxpayers Fighting Tax Hikes Through Reform California

There actually taxpayers fighting tax increases that are piling on in California. In 2019, Gov. Gavin Newsom signed into law an expansion of healthcare to all immigrants coming into the state. This sets up California to be an even bigger draw to illegal immigrants who will receive full healthcare benefits, regardless of immigration status.

California’s 68 BILLION DEFICIT stems largely from the number of companies and taxpayers leaving the state in droves. Here is how Reform California led by Carl DeMaio is educating taxpayers. Here is how the state of California wants to raise your taxes even higher.

What California Politicians are Trying to Do:

California politicians are trying to confuse voters by placing two initiatives on the ballot that would both gut Prop 13 and make it easier to raise state and local taxes, as well as increase your utility rates;
ACA-1 would gut Prop 13’s 2/3 vote requirement for new taxes by lowering it to 55%;
ACA-13 would gut Prop 13 by blocking the California Taxpayer Protection Initiative and eliminating the requirement that voters be allowed to vote on tax increases with honest ballot titles;
We MUST defeat both of these initiatives to save Prop 13 in 2024!

What the California Taxpayer Protection Initiative Does:

Requires a public vote on ALL state tax hikes – no exceptions like what happened with the recent gas and car tax hikes.
Requires that tax hikes achieve a two-thirds voter approval to pass – not a simple majority.
Repeals dozens of costly tax hikes that were imposed any time after January 2022.
Ends the ability of politicians to put deceptive titles on the ballot that fail to disclose a measure contains a hidden tax hike.
Tightens the definition of a “tax” to eliminate the ability of politicians to call something a mere “fee” to avoid voter approval.
Prohibits state politicians from raising your electric and gas utility rates through illegal taxes and fees.

Tax Hikes We Are Fighting:

Written by TaxConnections Admin

10 Jan 2024

What Is The Federal Universal Service Fund Fee?

The Role of Telecommunications in the Federal Universal Service Fund

Telecommunications companies operating in the United States are subject to the Federal Universal Service Fund (USF), a program administered by the Federal Communications Commission (FCC). The USF aims to promote access to telecommunications services for all Americans, regardless of location or economic status. It is funded through contributions from telecommunications service providers—the USF funds four programs – High-Cost Program, Lifeline Program, Schools, and Libraries Program. Telecommunications companies may be subject to contributions to one or more of these programs based on the services they offer and the areas they operate in.

Telecommunications companies are required to contribute to the USF based on a percentage of their interstate and international revenues. This contribution is known as the Universal Service Fund Fee. It is calculated as a percentage of a company’s end-user telecommunications revenues. The rate varies but typically ranges from 15.5% to 33%. FUSF surcharges may be passed through to the final user of the telecommunications services.

Fee Collection and Reporting

All telecommunications companies are required to contribute to the USF fund. Companies providing telecommunications services to retail customers, either to other businesses or residential, must register with the FCC and file the necessary forms. Each quarter, the FCC sets a contribution factor, which is a percentage of interstate and international revenue, that each contributor is required to contribute. Telecommunications companies are responsible for quarterly collecting and submitting USF fees to the FCC.

Written by Chris Vignone

10 Jan 2024

IRS: Jan. 31 Filing Deadline For Employers To File Wage Statements, Independent Contractor Forms

WASHINGTON – With tax season rapidly approaching, the IRS reminds employers that Jan. 31 is the deadline for submitting wage statements and forms for independent contractors with the government.

Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by Jan. 31.

The Jan. 31 deadline also applies to Forms 1099-MISC, Miscellaneous Income, and Forms 1099-NEC, Nonemployee Compensation, that are filed with the IRS to report non-employee compensation to independent contractors. Various other due dates related to Form 1099-MISC, Form 1099-K and Form 1099-NEC, including dates due to the IRS, can be found on the forms’ instructions.

The IRS offers a free electronic filing service for the Form 1099 series using the Information Returns Intake System (IRIS). Filers can also use this online portal to prepare payee copies for distribution, file corrections and request automatic extensions.

New Filing Requirements

New electronic filing requirements affect Forms W-2 that are required to be filed in 2024. Businesses that file 10 forms or more must file W-2s and certain information returns electronically. See New electronic filing requirements for Forms W-2 for more information.

E-filing is the quickest, most accurate and convenient way to file forms. For more information on e-filing Forms W-2, employers can refer to Employer W-2 Filing Instructions & Information on the Social Security Administration’s website.

Key Points To Remember

Extensions to file are not automatically granted. Employers may request a 30-day extension to file Forms W-2 by submitting Form 8809, Application for Extension of Time to File Information Returns, by Jan. 31.
Filing Form 8809 does not extend the due date for furnishing wage statements to employees. A separate extension must be filed by Jan. 31. See Extension of time to furnish Forms W-2 to employees for more information.
Filing by the deadline helps the IRS to fight fraud by making it easier to verify income. Employers can help support that process and avoid penalties by filing the forms on time and without errors.
Penalties may be assessed for failure to file correctly and on time. For more information visit the IRS’ Information Return Penalties page.
Form 1099-K $600 reporting threshold delayed. This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions. For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.

The IRS encourages employers and taxpayers to visit About Form W-2, Wage and Tax Statement and Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2GPDF, for more information.

IR-2024-06

Written by TaxConnections Admin

09 Jan 2024

Grab Your Unclaimed Stimulus Checks: Last Chance For Late Tax Filers!

As a US expat, you’re accustomed to navigating the complexities of living abroad. But there’s one opportunity you don’t want to miss – claiming your federal stimulus checks, also known as Economic Impact Payments, which can amount to up to $3,200. The final deadline is looming: June 15th, 2024. This is not just another date on the calendar; it’s your last chance to access funds that could significantly support your life overseas. In this article, we’ll guide you through the essentials of becoming compliant and how to claim what’s rightfully yours. Remember, it’s now or never!

WHAT ARE STIMULUS CHECKS?

Understanding the Basics

The stimulus package, officially known as Economic Impact Payments, were introduced by the federal government as a response to the economic challenges posed by global events. These checks are designed to provide financial assistance to American citizens, including those living abroad.

Eligibility Criteria for US Expats

The eligibility criteria for U.S. expats to claim the government relief package issued by the IRS during the COVID-19 pandemic are as follows:

U.S. Citizenship or Residency: You must be a U.S. citizen or U.S. resident alien.
Dependent Status: You must not be claimed as a dependent on someone else’s tax return.
Social Security Number: You must have a valid Social Security Number (SSN). If you or your spouse is a member of the military, only one of you needs a valid SSN.
Income Limitations: For the third stimulus check, individuals earning up to $75,000 annually and married couples earning up to $150,000 annually were eligible for the full $1,400 stimulus payment. Payments phased out entirely at $80,000 for individuals and $160,000 for married couples filing joint return.
Tax Filing: Even if you live overseas, you qualify if you fall within the income threshold, have a social security number, and file taxes.

The IRS uses your tax return information to determine your qualification for the stimulus check. This means if you haven’t filed your taxes while living abroad, now is the time to do so.

Written by TaxConnections Admin

09 Jan 2024

A Cautionary Tale About Tax Court Filing Dates

In a prior NTA Blog: Have You Recently Filed a Petition With the U.S. Tax Court?, I discussed how delays in processing U.S. Tax Court petitions were negatively impacting taxpayers. Today, I want to remind taxpayers about the importance of filing electronic petitions by the applicable filing date using Eastern Time (ET).

What Taxpayers Should Know

A timely filed petition is what gives the Tax Court jurisdiction to hear a taxpayer’s case. Pursuant to Tax Court Rule 22, all Tax Court petitions, regardless of format, are considered filed when received by the Tax Court in Washington, D.C., which is in the ET zone. For petitions filed by U.S. mail or a designated delivery service, the timely mailed, timely filed rule of IRC § 7502 applies so petitions filed by the deadline are considered filed on time even if they arrive at the Tax Court in Washington, D.C., after the due date. However, according to the Tax Court, the IRC § 7502 timely mailed, timely filed rule does not apply to electronically filed petitions so an electronically filed petition is considered filed when the Tax Court receives it. In this regard, earlier this year the Tax Court dismissed a petition (for lack of jurisdiction) because the taxpayers did not timely file their electronic petition by 11:59 p.m. (ET). In Nutt v. Commissioner, 160 T.C. No. 10 (May 2, 2023), the taxpayers received a statutory notice of deficiency with a July 18, 2022, deadline to file a petition with the court. The taxpayers lived in Alabama and filed their petition electronically on July 18, 2022, at 11:05 p.m. in their time zone, Central Time (CT). It was not officially received until 12:05 a.m. ET on July 19, 2022, in Washington, D.C., meaning the petition was not timely filed. Thus, the Tax Court did not have jurisdiction to hear the case. Consequently, the taxpayers lost their right to a prepayment review of their tax liability.

The taxpayers appealed the Tax Court decision to the U.S. Court of Appeals for the Eleventh Circuit. The Eleventh Circuit has not decided the case, but in the event it reverses the Tax Court, I will post another blog.

What Can Taxpayers Do?

Written by TaxConnections Admin

09 Jan 2024

The Life Cycle Of Real Estate

It’s not a “one size fits all” approach. We make it a point of understanding our clients’ needs – not just in the current year but throughout the ownership period.

Properties go through life cycles – whether it’s based on use, age or market conditions. Also, different groups within a client organization play distinct roles within the various phases of the life cycle. It is not uncommon for these groups to be unaware of the value of tax-centric information.

Here are just a few examples of how the information from our reports can be utilized.

Concept / Feasibility

Many sophisticated investors will want to gain a better understanding of how the depreciation deductions will impact cash flow. Source Advisors is routinely engaged by clients who wish to include our projections in the pro-forma packages.

Acquisition

It is usually best to have Cost Segregation Study completed following acquisition in order to maximize depreciation deductions from day one, benchmark property for asset management purposes and for a better understanding of what was specifically included or excluded as part of the acquisition. Also, in light of the Tangible Property Regulations, a comprehensive study will also properly document all assets that might be subject to disposition in the future.

Written by Greg Bryant

09 Jan 2024

Where To Start With Process Automation

Because a tax department’s processes are interconnected, it is often overwhelming to think about process automation. Those who have succeeded in this endeavor have managed to do so by breaking down the bigger picture into smaller sub-functions and treating each sub-function as a separate manageable project.

It is critical to choose the right projects for automation. As a rule of thumb, you should always start with a sub-function that has high volume with high ROI. These sub-functions normally center around data transformation tasks such as data validation, data reconciliation, report creation, tax adjustment calculations etc… Based on our experience, tasks that meet the below criteria are normally the best candidates for process automation:

Is the task performed routinely (weekly, monthly, quarterly…)?
Does the current manual process take more than “X” hours or days? You decide what value to assign to “X”. We suggest starting with those tasks with the highest “X” value that take the longest to complete.

As you may have noticed, in order to answer the 2^nd question above, you will need to quantify and time the steps that are involved in your routine tasks. Do not be surprised to find out a manual process that you thought takes 10 minutes to complete actually takes 30 or 50 minutes or even longer. The information that you collect in this discovery phase can also be used to determine the ROI of the project.

Written by Alex Fazelat

05 Jan 2024

Navigating The Energy Star Certification Process For Homes

ENERGY STAR certified homes are not only energy efficient, but they also offer better comfort and play a crucial role in reducing carbon emissions. Achieving this certification can unlock various financing options, like the 45L Tax Deduction, making Tax Credit a highly beneficial pursuit for homeowners.

However, understanding and successfully navigating the Energy Star Certification process is pivotal. Here, we illuminate the steps involved in achieving the Energy Star certification, emphasizing the flexibility it offers in adopting a custom combination of measures tailored to each home.

Step 1: Determining the ENERGY STAR ERI Target

The journey begins with the determination of the ENERGY STAR ERI (Energy Rating Index) Target for your home. This is achieved by collaborating with an EPA-recognized Home Certification Organization (HCO) and utilizing their Approved Software Rating Tool.

The ERI Target is the benchmark that your home needs to meet or exceed to earn the coveted Energy Star Certification. It’s a numerical representation of energy efficiency, where a lower score signifies superior efficiency.

Step 2: Modeling Efficiency Measures

Upon establishing the ERI Target, the next phase involves modeling the preferred set of efficiency measures for your home. These can encompass a variety of elements, ranging from insulation and HVAC systems to energy-efficient windows and appliances.

The objective here is to confirm, through meticulous energy modeling, that the chosen efficiency measures enable your home to meet or surpass the ENERGY STAR ERI Target.

Written by Imran Syed