Hood & Strong LLP

A warm welcome to the newest members of the H&S team: Kris Jackson , Senior Director in our Not-for-Profit Client Accounting Services Group, and Michael Prothero, CPA, a new Manager in our Tax Services Group. And congratulations to Audit professionals Emily D. Murphy, CPA, Matthew Corder and Nicholas Schroyer, CPA on their recent promotions.    “Hood & Strong continues to add to our amazing bench of talented and committed team members,” said Managing Partner Susan Malone. “These individuals reflect the professional excellence that continues to define our success as a trusted partner to our clients with a culture that honors work-life balance and career advancement.” Read our press release.  https://lnkd.in/gG8JhTkF

As year end approaches, you may be thinking about tax strategies. One way to reduce potential estate taxes and show generosity to loved ones is to give cash gifts before Dec. 31. Taxpayers can transfer large amounts using the annual exclusion. In 2024, the exclusion amount is $18,000. It covers gifts you make to each recipient. That means if you have three children, you can transfer $54,000 to them in 2024, free of federal gift taxes. Married couples can consent to give each recipient up to $36,000 a year. Other rules may apply, and you need to file a gift tax return if you give more than $18,000 or consent to give gifts with your spouse. We can prepare a gift tax return for you.https://bit.ly/4asrXZh

Growing businesses often need help learning how to manage cash flow more effectively. That starts by understanding how profits (or taxable income) differ from cash flow. Your company’s income statement reports profits (revenue minus expenses), but it excludes other items that may affect cash on hand. Examples include investments in working capital (such as inventory stockpiles, outstanding receivables and payables, and accrued expenses), as well as changes in fixed assets, bank financing and owners’ capital accounts. If you regularly struggle to avert cash shortfalls, we can help. Contact us to discuss ways to get a better handle on company finances.https://bit.ly/4asrXZh

The recent drop in interest rates created a buzz in the real estate market. Potential homebuyers may now have an opportunity to attain their dreams of purchasing property. If you’re a homebuyer, you may wonder if you can deduct mortgage points paid on your behalf by the seller. The answer is “yes,” subject to some limits. For example, the rule allowing a deduction for seller-paid points doesn’t apply to points allocated to the part of a mortgage above $750,000 ($375,000 for marrieds filing separately) for tax years 2018 through 2025 (above $1 million for tax years before 2018 and after 2025). It also doesn’t apply to points on a loan used to improve a home or in certain other situations.https://bit.ly/4asrXZh

For businesses to stay operational and attain profitability, liquidity is key. The good news is that working capital management is a tried-and-true way to tackle this challenge. Working capital is a metric (current assets minus current liabilities) that measures liquidity. Regularly calculating it can help you and your leadership team determine, among other things, whether you have enough current assets to cover current obligations. The amount of working capital your company needs is known as its working capital requirement. To optimize your working capital requirement, focus primarily on three key areas: 1) accounts receivable, 2) accounts payable and 3) inventory. Contact us for help.https://bit.ly/4asrXZh

If you have a child or grandchild planning to attend college, you may wonder about investing in a qualified tuition program or 529 plan. You don’t get a federal tax deduction for contributions, but the earnings aren’t taxed while the funds are in the program. (There may be a state deduction in your state.) You can change the beneficiary without income tax consequences. Distributions are tax-free up to the amount of the qualified higher education expenses. These include tuition (up to $10,000 for an elementary or secondary public school), fees, books, supplies and required equipment. Room and board are also qualified expenses if enrolled at least half time. Contact us to learn more.https://bit.ly/4asrXZh

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Does your business own real estate titled under the business’s name? With long-term tax, liability and estate planning advantages, separating real estate ownership from the business may be a better choice. For example, C corporations treat real estate like other business assets. Expenses related to owning the assets are generally tax deductible in the year incurred. However, when the business sells real estate, the profits are taxed twice, at the corporate level and at the owner’s individual level when a distribution is made. But if the real estate ownership is transferred to a pass-through entity instead, the sale profit will be taxed only at the individual level. Contact us to learn more.https://bit.ly/4asrXZh

Under accrual-basis accounting, the end of the accounting period serves as a “cutoff” for when to recognize revenue and expenses. Revenue should be recognized in the period it’s earned, even if the cash is received in a subsequent period. Likewise, expenses should be recognized in the period they’re incurred, not necessarily when they’re paid. And expenses should be matched with the revenue they generate. But some companies may interpret these rules loosely to present their financial results more favorably. Our auditors use various procedures to ensure compliance with the rules, including updated guidance for recognizing revenue from long-term contracts. Contact us to help get it right.https://bit.ly/4asrXZh

It’s an ideal time to begin making moves that could reduce your tax bills for 2024 and 2025. If you itemize deductions, you may be able to deduct medical expenses, state and local taxes up to $10,000, charitable donations, and eligible mortgage interest. But these deductions won’t save taxes unless they’re more than your standard deduction ($29,200 for joint filers, $14,600 for singles and $21,900 for heads of household). You may be able to work around deduction limits by bunching discretionary medical expenses and charitable gifts into the year they’ll do some tax good. For example, if you itemize for 2024 but not 2025, you may want to make two years of charitable contributions this year.https://bit.ly/4asrXZh