Bonus Depreciation Phase-Out
May 24, 2022
Properly qualifying assets for bonus depreciation can have a significant impact on a business’s bottom line. If an asset qualifies as long-term business property under tax rules, bonus depreciation may allow a business owner to deduct the entire cost of that asset in the year of acquisition.
This will be the last year for 100% bonus depreciation as enacted by Tax Cuts and Jobs Act (TCJA). Starting in 2023, bonus depreciation is scheduled to drop to 80% and will continue to drop by 20% each year thereafter until finally there will be no bonus depreciation starting in 2027.
Prior to the enacting of bonus depreciation, the premier tool for businesses to expense asset purchases was Section 179. Section 179 is still scheduled to be fully available and the current amount of Section 179 deduction allowed is $1,080,000 and the phase-out of the deduction starts once you place eligible assets into service of $2,700,000 and no Section 179 deduction is allowed after $3,780,000 of assets placed in service for that year. Unlike bonus depreciation, Section 179 deductions are only allowed to the extent of taxable income.
Although tax incentives like Section 179 and bonus depreciation can be beneficial, these provisions should only be used in situations that make long-term financial sense for your operation. It is important to always consider your tax circumstances and cash-flow requirements when using these tools. Connect with your William Vaughan Company advisor with additional questions.
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Categories: Tax Compliance, Tax Planning
Strategic Financial Moves to Consider During A Market Downturn
May 19, 2022
The natural ebbs and flows of market volatility can make even the best investors a bit nervous at times. However, smart investors also recognize the opportunities presented by a downturn. These include specific financial strategies to be leveraged for a long-term benefit. Here are several financial moves one should consider during a market lull:
Roth IRA Conversions
During normal market conditions, Roth IRA conversions typically initiate a sizable tax event. However, during a market dip, Roth IRA conversions are a prime opportunity to move funds from a traditional taxable IRA to a tax-free Roth IRA all while saving money.
To achieve the benefits of a Roth IRA conversion, investors convert funds from their traditional IRA to a Roth IRA. While the conversion will trigger a taxable event, it’s based on the contributions and earnings. The larger your pre-tax balance, the more you will owe. During market volatility, financial experts recommend making this move as “it is like getting the Roth IRA on sale” and when the market ultimately recovers, that growth is captured, tax-free, inside of the Roth IRA.
If you don’t have a traditional IRA, this can also be achieved through what some call a “backdoor Roth IRA,” an unofficial means for high-income individuals to create a tax-free Roth IRA.
Remember, the earnings limits for Roth individual retirement account contributions are capped at $144,000 modified adjusted gross income for single investors and $214,000 for married couples filing together in 2022.
To achieve the benefits of a “backdoor” Roth IRA conversion, investors make what’s known as non-deductible contribution to a pre-tax IRA before converting the funds to a Roth IRA, kickstarting tax-free growth.
Gift & Estate Planning
A market downturn is also a great opportunity for individuals seeking to minimize estate taxes and gift assets to others. This is because the value of the securities will be lower, resulting in a lower gift tax amount and all subsequent appreciation will be excluded from your estate – a win-win!
Tax-Loss Harvesting
Tax-loss harvesting is another key strategy to consider during a down market. It involves selling investments that have lost value and replace them with similar investments to ultimately offset your capital gains with capital losses. In doing so, investors reduce their tax liability while better positioning their portfolio. This can be done up to $3,000 a year. The average investor can leverage this strategy and it doesn’t involve much but an assessment of your investments and their performance. A couple of items to note when considering this option is:
- It applies only to investments held in taxable accounts – so it does not include 401(k)s, 403(b), IRAs or 529s because the growth in these tax-sheltered accounts in not taxed by the IRS
- This is not a beneficial strategy for those in lower tax brackets – the idea is to reduce your tax liability and traditionally, those individuals in the higher tax bracket have a greater liability and therefore, a greater savings.
- The deadline for taking advantage of this approach is the end of the calendar year – December 31.
Finally, the information provided above is for general information only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. We recommend connecting with your financial and tax advisors to discuss the best plan of action for your personal situation.
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Categories: Estate Planning, Tax Planning
The Importance of Endpoint Detection & Response (EDR)
Mar 29, 2022
As cybercriminals continue to evolve, their attacks have become more sophisticated. Now more than ever endpoint targeting has become more prevalent. Endpoints include not only desktops and servers, but laptops, tablets, smartphones and even smartwatches. For some IT departments, endpoint management can be in the thousands which makes this a prime target for infiltration. Even more critical is the fact that traditional antivirus software is no longer enough to mitigate your cyber risk – enter Endpoint Detection & Response (EDR) solutions.
What is EDR?
Endpoint Detection & Response (EDR) is a security solution leveraging real-time continuous monitoring and collection of an organization’s endpoint data to detect suspicious system behavior.
What are the benefits of EDR?
Research suggests the average time between a breach and actual detection is over 200 days! EDR solutions help eliminate human response delays through its continuous monitoring which allows for remediation through predictive analysis and advanced threat protection. Once it detects an issue, it automatically takes action to quarantine and remove the threat all while alerting appropriate human administrators to prevent a potentially devastating and costly cyber incident.
- Enhanced visibility into your endpoints and allows for faster response time
- Post-breach detection, remediation, and response
- Machine learning and built-in analytics tools used to identify new and emerging threats
- Prevention of costly intrusion – an IBM study found those organizations that contain a breach in under 30 days save more the $1million.
How can WVCT Help?
WVCT’s Managed Services through DMC Technology Group includes advanced Endpoint Detection & Response (EDR) software that provides you the peace of mind in knowing your greatest assets are being monitored 24×7 against the latest cyber threat. Proactively allowing you to minimize lost data and valuable production time.
For more information, check out our managed services solutions here.
Categories: Risk Services
Michigan Grant Money Now Available Through Grow MI Business Funds
Mar 15, 2022
What is Grow MI Business?
Grow MI Business is a grant program launched by the state of Michigan to deliver roughly $409 million of support to eligible businesses across the state impacted by COVID. The program, signed into law at the end of last year, allows companies who were open for business before October 1, 2019, to get back a percentage of their loss in total state sales through a grant of up to $5 million.
Who qualifies?
Qualifying businesses must meet the following criteria, as noted on the program website:
- Businesses with a decline in total Michigan sales between the calendar year 2019 and 2020 equal to or greater than 5 percent.
- Businesses that are not tax-exempt
- Businesses not classified as a government entity
- Must fall under one of the following qualifying business type categories:
- Entertainment Venue, including auditoriums, arenas, banquet halls, cinemas, concert halls, conference centers, performance venues, sporting venues, stadiums, and theaters;
- Recreational Facility or Place of Amusement, including amusement parks, arcades, bingo halls, bowling alleys, casinos, nightclubs, skating rinks, water parks, and trampoline parks;
- Cosmetology or Barber Services;
- Exercise Facility or Gym;
- Food Service Establishment;
- Nursery Dealer or Grower;
- Athletic Trainer;
- Body Art Facility; or
- Hotel or Bed & Breakfast
How do I apply?
Online applications are available now through March 31, 2022 (11:59 p.m. EST). You can find additional information along with the application on the Apply for Business Resources (ABR) website, here.
Applicants will be required to submit documentation to verify financial hardship including:
- Financial Documentation and Information to verify their decline in Michigan total sales from the calendar year 2019 to the calendar year 2020 for businesses in operation on October 1, 2019.
- Financial Documentation and Information to verify their fixed costs for the calendar year 2020 for businesses that were not in operation on October 1, 2019, but started before June 1, 2020.
- Beneficiary Agreement with terms and conditions that have been electronically signed.
Please note, unlike other COVID-based funding programs, Grow MI Business is NOT a first-come, first-serve program. Instead, it may be prorated depending on the number of eligible businesses that apply.
Next steps.
For more information on eligibility, requirements, and award methodology, please visit Michigan.gov/abr.
Your William Vaughan Company advisor can guide you through the process and help you provide the necessary information to qualify.
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Categories: COVID-19
New USDA Loan Program Focused on Food Supply Chain Revitalization
Feb 08, 2022
The U.S. Department of Agriculture (USDA) Secretary, Tom Vilsack recently announced that the USDA is deploying $100 million under the new Food Supply Chain Guaranteed Loan Program to make nearly $1 billion available in loan guarantees. The objectives are to support new investments in infrastructure for food aggregation, processing, manufacturing, storage, transportation, wholesaling, and distribution, and to also increase capacity and create a more resilient, diverse, and secure U.S. food supply chain.
What is the Food Supply Chain Guaranteed Loan Program?
The Food Supply Chain Guaranteed Loan Program is a part of the USDA’s Build Back Better initiative to strengthen critical supply chains and our food system. This program guarantees loans of up to $40 million for qualified lenders to finance food system projects, specifically for the start-up or expansion of activities in the middle of the food supply chain.
Who qualifies?
Eligible borrowers must be directly engaged in the middle of the food supply chain, specifically the aggregation, processing, manufacturing, storing, transporting, wholesaling, or distribution of food. Examples of the types of entities that may qualify for the program include meat processors and food hubs. Lenders may provide the loans to eligible cooperatives, corporations, for-profits, nonprofits, Tribal communities, public bodies, and people in rural and urban areas.
How can funds be used?
Funds are available on a first-come, first-serve basis and may be used to:
- start-up or expand food supply chain activities such as aggregating, processing, manufacturing, storing, transporting, wholesaling, or distributing food.
- address supply chain bottlenecks.
- increase capacity and help create a more resilient, diverse, and secure U.S. food supply chain.
How do I apply?
The USDA is accepting electronic applications from lenders through the Food Supply Chain Online Application System until funds are expended. Paper applications will not be accepted.
To access the online application system, lenders must submit a request to rdfoodsupplychainloans@usda.gov.
USDA Rural Development encourages applications for projects that advance the recovery from the COVID-19 pandemic, promote equitable access to USDA programs and services, and reduce the impacts of climate change on rural communities. For more information, visit www.rd.usda.gov/priority-points.
Categories: Agribusiness