Gould Killian CPA Group, P.A.

Gould Killian CPA Group, P.A. Gould Killian CPA Group, P.A. is a full service tax, accounting and business consulting firm located in Asheville, NC. traces its beginnings to 1966.

Firm History

Gould Killian CPA Group, P.A. While the name of the firm has changed over the years, there has been an underlying consistency in quality accounting services. The firm has had steady growth and stable, long-term relationships with its clients. Our total staff of about 40 individuals includes CPAs, accountants, and administrative personnel. Gould Killian is located in the Sawyer Motor

Company Building on Coxe Avenue in downtown Asheville. The building, completed in 1926 is one of the most intact surviving automobile dealership buildings in downtown Asheville from the early twentieth century. Our Philosophy

Our approach to the practice of accounting is one of team work. Within the firm, we put the resources of a diverse professional staff to work for our clients by operating as a team. We also work as a member of a professional team that includes the client’s attorney, banker, insurance agent, stockbroker, and other professionals. We believe that to provide our clients with quality accounting and tax services we must know the client and the client’s business. With us, a client isn’t simply a set of faceless numbers. We strive to learn the needs and goals of the individuals and the businesses behind the numbers.

07/14/2023

Security Summit Issues Alert Regarding New Scam Targeting Taxpayers
The Security Summit—a coalition between the IRS, state tax administrators and the tax industry—on July 3 issued a warning to taxpayers about a burgeoning scam. (IR 2023-123)
Taxpayers should be on the lookout for a new scam mailing that tries to mislead people into believing they are owed a refund, the IRS said.
As described by the agency, the new scheme involves a mailing coming in a cardboard envelope from a delivery service. "The enclosed letter includes the IRS masthead and wording that the notice is 'in relation to your unclaimed refund.'"
The letter includes contact information and a phone number that does not belong to the IRS. "It also seeks a variety of sensitive personal information from taxpayers, including detailed pictures of driver's licenses," the agency noted.
In this new scam, there are many warning signs that are typically seen in similar scams involving email or text messages. However, "an unusual feature of this scam is that it tries tricking people to email or phone very detailed personal information in hopes of stealing valuable information," the IRS said.
The letter states that the recipients need to provide "Filing Information" for their refund. It then seeks to obtain more sensitive information, including cellphone number, bank routing information, Social Security number and bank account type.
"This is just the latest in the long string of attempts by identity thieves posing as the IRS in hopes of tricking people into providing valuable personal information to steal identities and money, including tax refunds," said IRS Commissioner Danny Werfel. He advised people to exercise caution when receiving emails, texts or special mailings which contain "red flags that clearly mark these as IRS scams."

© 2023 Thomson Reuters/Tax & Accounting. All Rights Reserved.

04/01/2023

Important Tax Season 2023 Updates

As we hit the homestretch of the 2023 tax season, we have a couple important updates to share.

The Due Date of Individual Income Tax Returns is Tuesday, April 18, 2023

It sounds wrong, doesn’t it? It requires some complicated calculations, but the due date this year is Tuesday April 18th. Here is what happened. April 15th falls on Saturday this year. A due date on a weekend moves the required filing date to the next business day that is not a holiday. This year, Emancipation Day, which is a federal holiday observed in the District of Columbia, falls on Sunday, April 16th, meaning that the observed date is the next day, which is Monday the 17th. So, all of that pushes out the due date for tax return filing to Tuesday, April 18th. We will be open every day leading up to the due date, including the weekend and the holiday to allow a comfortable timetable for signing, paying, and filing.

Our Extension Procedures

As we reach this point in tax season, we begin filing automatic electronic extensions for all tax returns that have not yet been electronically filed. This is only a precaution to protect our clients from penalties for late filing. You may receive an e-mail confirmation of the extension filing from the North Carolina Department of Revenue. The notification does not mean that we’ve filed your return, which we cannot do without your authorization, nor does it mean that your return will not be completed in time for filing. It is simply a precautionary measure.

North Carolina Pass-through Entity Tax (PTET) Issues

Business clients who file partnership and S corporation returns for businesses with North Carolina source income may now elect to pay the state income tax on North Carolina taxable income at the business entity level, allowing a federal tax deduction that will bypass the state and local tax (SALT) limits on the itemized deduction for these taxes on individual income tax returns. This new provision in the North Carolina law will provide a tax benefit to many taxpayers. Unfortunately, the North Carolina Department of Revenue has struggled a bit with implementation, and the North Carolina General Assembly discovered some drafting issues in the law passed late in 2022 that it is correcting, retroactively, in the current session, for 2022 pass-through entity income tax return filings. As a result, many of these returns cannot be filed at present, and the mechanism for tax payments is not fully resolved. We expect to provide updates and guidance soon.

08/26/2022

INFLATION REDUCTION ACT OF 2022 – KEY PROVISIONS
The recently enacted Inflation Reduction Act of 2022 contains several new environment-related tax credits that are of interest to individuals and small businesses. The Act also extends and modifies some preexisting credits.
Feel free to contact us if you have questions about taking advantage of these new and modified tax credits.
Extension, Increase, and Modifications of Nonbusiness Energy Property Credit
Before the enactment of the Act, you were allowed a personal credit for specified nonbusiness energy property expenditures. The credit applied only to property placed in service before January 1, 2022. Now you may take the credit for energy-efficient property placed in service before January 1, 2033.
Increased credit. The Act increases the credit for a tax year to an amount equal to 30% of the sum of (a) the amount paid or incurred by you for qualified energy efficiency improvements installed during that year, and (b) the amount of the residential energy property expenditures paid or incurred by you during that year. The credit is further increased for amounts spent for a home energy audit. The amount of the increase due to a home energy audit can't exceed $150.
Annual limitation in lieu of lifetime limitation. The Act also repeals the lifetime credit limitation, and instead limits the allowable credit to $1,200 per taxpayer per year. In addition, there are annual limits of $600 for credits with respect to residential energy property expenditures, windows, and skylights, and $250 for any exterior door ($500 total for all exterior doors). Notwithstanding these limitations, a $2,000 annual limit applies with respect to amounts paid or incurred for specified heat pumps, heat pump water heaters, and biomass stoves and boilers.
Extension and Modification of Residential Clean-Energy Credit
Before the enactment of the Act, you were allowed a personal tax credit, known as the residential energy efficient property (REEP) credit, for solar electric, solar hot water, fuel cell, small wind energy, geothermal heat pump, and biomass fuel property installed in homes in years before 2024.
The Act makes the credit available for property installed in years before 2035. The Act also makes the credit available for qualified battery storage technology expenditures.
Extension, Increase, and Modifications of New Energy Efficient Home Credit
Before the enactment of the Act a New Energy Efficient Home Credit (NEEHC) was available to eligible contractors for qualified new energy efficient homes acquired by a homeowner before Jan. 1, 2022. A home had to satisfy specified energy saving requirements to qualify for the credit. The credit was either $1,000 or $2,000, depending on which energy efficiency requirements the home satisfied.
The Act makes the credit available for qualified new energy efficient homes acquired before January 1, 2033. The amount of the credit is increased, and can be $500, $1,000, $2,500, or $5,000, depending on which energy efficiency requirements the home satisfies and whether the construction of the home meets prevailing wage requirements.
New Clean-Vehicle Credit
Before the enactment of the Act, you could claim a credit for each new qualified plug-in electric drive motor vehicle (NQPEDMV) placed in service during the tax year.
The Act, among other things, retitles the NQPEDMV credit as the Clean Vehicle Credit and eliminates the limitation on the number of vehicles eligible for the credit. Also, final assembly of the vehicle must take place in North America.
No credit is allowed if the lesser of your modified adjusted gross income for the year of purchase or the preceding year exceeds $300,000 for a joint return or surviving spouse, $225,000 for a head of household, or $150,000 for others. In addition, no credit is allowed if the manufacturer's suggested retail price for the vehicle is more than $55,000 ($80,000 for pickups, vans, or SUVs).
Finally, the way the credit is calculated is changing. The rules are complicated, but they place more emphasis on where the battery components (and critical minerals used in the battery) are sourced.
Credit for Previously Owned Clean Vehicles
A qualified buyer who acquires and places in service a previously owned clean vehicle after 2022 is allowed an income tax credit equal to the lesser of $4,000 or 30% of the vehicle's sale price. No credit is allowed if the lesser of your modified adjusted gross income for the year of purchase or the preceding year exceeds $150,000 for a joint return or surviving spouse, $112,500 for a head of household, or $75,000 for others. In addition, the maximum price per vehicle is $25,000.
New Credit for Qualified Commercial Clean Vehicles
There is a new qualified commercial clean-vehicle credit for qualified vehicles acquired and placed in service after December 31, 2022.
The credit per vehicle is the lesser of: 1) 15% of the vehicle's basis (30% for vehicles not powered by a gasoline or diesel engine) or 2) the "incremental cost" of the vehicle over the cost of a comparable vehicle powered solely by a gasoline or diesel engine. The maximum credit per vehicle is $7,500 for vehicles with gross vehicle weight ratings of less than 14,000 pounds, or $40,000 for heavier vehicles.
Increase in Qualified Small Business Payroll Tax Credit for Increasing Research Activities
Under pre-Inflation Reduction Act law, a "qualified small business" (QSB) with qualifying research expenses could elect to claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the employer's share of Social Security tax.
Due to concerns that some small businesses may not have a large enough income tax liability to take advantage of the research credit, for tax years beginning after December 31, 2022, QSBs may apply an additional $250,000 in qualifying research expenses as a payroll tax credit against the employer share of Medicare. The credit can't exceed the tax imposed for any calendar quarter, with unused amounts of the credit carried forward.
Extension of Incentives for Biodiesel, Renewable Diesel and Alternative Fuels
Under pre-Act law, you could claim a credit for sales and use of biodiesel and renewable diesel that you use in your trade or business or sold at retail and placed in the fuel tank of the buyer for such use and sales on or before December 31, 2022. Now you are permitted to claim a credit for sales and use of biodiesel and renewable diesel fuel, biodiesel fuel mixtures, alternative fuel, and alternative fuel mixtures on or before December 31, 2024.
You're also now allowed to claim a refund of excise tax for use of 1) biodiesel fuel mixtures for a purpose other than for which they were sold or for resale of such mixtures on or before December 31, 2024, and 2) alternative fuel as that used in a motor vehicle or motorboat or as aviation fuel, for a purpose other than for which they were sold or for resale of such alternative fuel mixtures on or before December 31, 2024

04/26/2021

The IRS has just released information for employers about claiming credits for paid time off for employees to get vaccinated. The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021.

Here are some basic facts about the employers eligible for the tax credits and how these employers may claim the credit for leave paid to employees who take leave to receive or recover from COVID-19 vaccinations.

Eligible Employers

An eligible employer is any business, including a tax-exempt organization, with fewer than 500 employees. An eligible employer also includes a governmental employer, other than the federal government and any agency or instrumentality of the federal government that is not an organization described in section 501(c)(1) of the Internal Revenue Code. Self-employed individuals are eligible for similar tax credits.

Paid sick and family leave for which tax credits can be claimed

Eligible employers are entitled to tax credits for wages paid for leave taken by employees who are not able to work or telework due to reasons related to COVID-19, including leave taken to receive COVID–19 vaccinations or to recover from any injury, disability, illness or condition related to the vaccinations. These tax credits are available for wages paid for leave from April 1, 2021, through September 30, 2021.

The amount of the tax credits and how they are calculated

The paid leave credits under the ARP are tax credits against the employer's share of the Medicare tax. The tax credits are refundable, which means that the employer is entitled to payment of the full amount of the credits if it exceeds the employer's share of the Medicare tax.

The tax credit for paid sick leave wages is equal to the sick leave wages paid for COVID-19 related reasons for up to two weeks (80 hours), limited to $511 per day and $5,110 in the aggregate, at 100 percent of the employee's regular rate of pay. The tax credit for paid family leave wages is equal to the family leave wages paid for up to twelve weeks, limited to $200 per day and $12,000 in the aggregate, at 2/3rds of the employee's regular rate of pay. The amount of these tax credits is increased by allocable health plan expenses and contributions for certain collectively bargained benefits, as well as the employer's share of social security and Medicare taxes paid on the wages (up to the respective daily and total caps).

Claiming the credit

Eligible employers may claim tax credits for sick and family leave paid to employees, including leave taken to receive or recover from COVID-19 vaccinations, for leave from April 1, 2021, through September 30, 2021.

Eligible employers report their total paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer's share of social security and Medicare taxes on the paid leave wages) for each quarter on their federal employment tax return, usually Form 941, Employer's Quarterly Federal Tax Return. Form 941 is used by most employers to report income tax and social security and Medicare taxes withheld from employee wages, as well as the employer's own share of social security and Medicare taxes.

In anticipation of claiming the credits on the Form 941, eligible employers can keep the federal employment taxes that they otherwise would have deposited, including federal income tax withheld from employees, the employees' share of social security and Medicare taxes and the eligible employer's share of social security and Medicare taxes with respect to all employees up to the amount of credit for which they are eligible. The Form 941 instructions explain how to reflect the reduced liabilities for the quarter related to the deposit schedule.

If an eligible employer does not have enough federal employment taxes set aside for deposit to cover amounts provided as paid sick and family leave wages (plus the eligible health plan expenses and collectively bargained contributions and the eligible employer's share of social security and Medicare taxes on the paid leave wages), the eligible employer may request an advance of the credits by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. The eligible employer will account for the amounts received as an advance when it files its Form 941, Employer's Quarterly Federal Tax Return, for the relevant quarter.

Self-employed individuals may claim comparable tax credits on their individual Form 1040, U.S. Individual Income Tax Return.

03/22/2021

A BRIEF SUMMARY OF THE AMERICAN RESCUE PLAN
The American Rescue Plan, signed into law by President Biden on March 11, 2021, provides for numerous tax-related provisions for individuals and businesses. The most noteworthy provisions follow.
Provisions for Individuals
Additional “Stimulus” Payments
The Act provides for an additional economic impact payment (stimulus) in the amount of $1,400 per individual, to be paid in advance by the IRS. Payment eligibility is based upon 2019 adjusted gross income, unless a taxpayer has filed their 2020 income tax return. A phaseout begins for taxpayers with adjusted gross income (AGI) exceeding $75,000 (single), $150,000 (married filing jointly), or $112,500 (head of household). The stimulus payment is fully phased out at the following AGI levels: $80,000 (single filers), $160,000 (married filing joint), and $120,000 (head of household).
Unemployment Benefits Exclusion
For taxpayers whose AGI does not exceed $150,000 in 2020, the first $10,200 of unemployment benefits received is not subject to income tax. Please note: Many states, including NC, have not yet adopted this provision of the federal law.
Expansion to Child Tax Credit
The child tax credit has been expanded.
o 17 year old children are now eligible as qualifying children.
o The credit is fully refundable for 2021. Under previous law, up to $1,400 per child was refundable.
o The maximum credit amount is increased from $2,000 to $3,000 per child (and to $3,600 per child for children under age 6 as of the close of the calendar year).
o The IRS will estimate a taxpayer’s 2021 child tax credit and pay 50% of the credit in advance to taxpayers between July and December 2021.
o The phaseout of the increased credit begins at the same AGI levels at which the economic impact payment phaseout begins (above).
o The amount of advance credit will be reconciled to the actual credit amount as calculated on a taxpayer’s 2021 tax return, resulting in either additional credit or repayment of excess credit with the 2021 income tax return.
Expansion to Dependent Care Credit
The dependent care credit has been expanded.
o For 2021 only, the credit is refundable.
o The credit maximum is increased to 50% of the eligible costs of care up to $8,000 per individual. This change results in a maximum credit of $4,000 for one qualifying individual or $8,000 for two or more qualifying individuals, reflecting an increase in both the eligible care expense amounts and the percentage of care costs allowed as a credit. Credit reductions begin at AGI levels over $125,000. For households with AGI in excess of $440,000, no credit is allowed.

Increase to Exclusion for Dependent Care Benefits
The maximum amount of dependent care benefits excludable from a taxpayer’s gross income is increased to $10,500 for 2021.
Changes to Earned Income Credit
The Earned Income Credit underwent the following changes:
o The applicable minimum age for individuals with no children decreased from 25 to 19, except for students (age 24) and qualified former foster youth or homeless youth (age 18). The maximum age, which had been 65 years old, is eliminated.
o The maximum credit for taxpayers with no qualifying children is increased from $543 to $1,502 per year.
o The credit phaseout percentages for childless workers increased to 15.3%, which increased the phaseout dollar amounts from $9,820 to $11,610.
o The credit is allowed for certain separated spouses.
o The disallowed investment income threshold increased from $2,200 to $10,000.
o Taxpayers can temporarily use their 2019 earned income instead of their 2021 earned income in computing the credit.
COBRA Credit
The Act provides for premium assistance for COBRA-eligible individuals between 4/1/21 and 9/30/21. This premium assistance is provided via a refundable credit, which is allowed against Medicare tax and is eligible to be advanced by the IRS.
Marketplace Health Insurance Excess Advance Premium Change
Taxpayers who received an excess advance premium tax credit in 2020 for their Marketplace coverage are not required to repay the excess.
Temporary Exclusion for Forgiven Student Loan Indebtedness
Discharged student loan indebtedness which occurs between 12/31/20 and 1/1/26 is not includible in gross income.
Business Provisions
Employee Retention Credit
The Employee Retention Credit is extended through the end of 2021.
Changes to Sick and Family Leave Credits
The following changes were made to the Sick Leave and Family Leave credits:
o The credits are extended through third quarter 2021.
o The credits are allowed for leave that is due to a COVID-19 vaccination or to recover from a vaccine-related illness.
o The maximum amount of qualifying wages from the credit has been increased from $200 per day to a maximum of $12,000 in the aggregate for each individual.
Miscellaneous Provisions
- The Act clarified that EIDL grants are not includible in gross income, and this exclusion does not result in a denial of a deduction, reduction in tax attributes, or denial of a basis increase.
- The Paycheck Protection Program received an additional $7.25 billion in funding.
- The Restaurant Revitalization Fund is established, receiving $28.6 billion in funding. This grant program is administered by the SBA for the benefit of restaurants which suffered pandemic-related losses.
- Businesses eligible for a Shuttered Venue Operators grant may apply for a PPP loan prior to applying for an SVOG. If the business receives a PPP loan, the amount of the PPP loan will be deducted from the SVOG. If a PPP loan was received in 2020, the SVOG is not reduced by the amount of the PPP loan.
Should you have questions about how any of these provisions may affect you, please contact our office at (828) 258-0363. We appreciate the opportunity to serve you.

03/18/2021

INDIVIDUAL INCOME TAX RETURN DUE DATE EXTENDED TO MAY 17TH

"It's like déjà vu all over again." – Yogi Berra

The IRS announced yesterday that individual income tax returns, and payments due with 2020 income tax returns will be due on Monday, May 17, 2021. Many of the same rules will apply as with the due date change to July 15th last year. However, there are some key differences:

• This announcement covers only individual income tax returns, not other tax returns due on April 15th, including returns for trusts, calendar year C corporations, and other returns normally due April 15th.
• The due date for the first quarter estimated tax payments was not moved forward. This means that the first quarter estimated tax payments due will be due on April 15th.

This is a particularly difficult time to comply with filing due dates. Below is list of the tax-related legislation that affects current tax filings. All of these Acts have provisions and rules that are not fully clarified for this filing season.

• TCJA, enacted December 2017, ongoing issues related to key provisions
• SECURE Act, enacted December 2019
• CARES Act, enacted March 2020
• CAA, enacted December 2020
• American Rescue Plan, signed by President Biden on March 11, 2021, with provisions that are retroactive to 2020.

State legislatures have created a patchwork of rules, ranging from full compliance to partial compliance, to no conformity with the rules adopted by federal legislation in the laws detailed above. In addition, tax software hasn’t been changed yet to accommodate some of the most recent changes, and the IRS isn’t able to administer them.

We know that many of our clients need income tax returns for a variety of purposes, and also like the peace of mind knowing that they are filed and finished for another year. However, this year, we are likely to advise many clients to wait, and possibly beyond the May 17th date, so that their returns will comply with new provisions, and also to apply those provisions in the way that provides the best outcome. Please call us to discuss any special needs or concerns as we navigate these issues on your behalf.

01/19/2021

Gould Killian is currently hiring for a great position with our sister in-house advisory firm, Altamont Capital Management. We are for a full time Client Services Manager, who will handle onboarding new clients, general operations and some marketing duties. For the full job description and application, click here:
https://careers.hireology.com/gouldkilliancpagrouppa/461328/description

01/14/2021

Paycheck Protection Program Second Draw Loans

Under the Economic Aid Act signed by President Trump on December 27, 2020, the SBA has been authorized to guarantee Paycheck Protection Program Second Draw Loans under generally the same terms and conditions available under the original Paycheck Protection Program. In order to qualify for a Second Draw loan, borrowers must apply by March 31, 2021, and must have used or will use the full amount of the initial (“First Draw”) PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw loan.
There are some key differences between First Draw PPP loans and Second Draw PPP loans, which are detailed below.
- A borrower is eligible for a Second Draw PPP loan only if it has 300 or fewer employees and experienced a revenue reduction in 2020 relative to 2019.
- As mentioned above, a borrower must have received a First Draw PPP loan, and must have used (or will use) the full amount of the First Draw PPP loan (including any increases made on such First Draw PPP loan) on eligible expenses, on or before the expected date on which the Second Draw PPP loan is disbursed to the borrower.
- A borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019, which is calculated by comparing quarterly gross receipts for one quarter in 2020 with quarterly gross receipts for the corresponding quarter in 2019.
o A borrower that was in operation in all four quarters of 2019 is deemed to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.
o Any forgiveness amount of a First Draw PPP loan that a borrower received in 2020 is excluded from a borrower’s gross receipts.
o Borrowers who apply for loans with a principal amount greater than $150,000 must submit documentation adequate to establish that the borrower experienced the revenue reduction. For loans of $150,000 or less, the documentation is not required at the time of application, but must be submitted on or before the date the borrower applies for loan forgiveness.
- The borrower may choose the relevant time period for calculating payroll costs to determine the maximum loan amount:
o The 12 month period prior to when the loan is made.
o Calendar year 2019, or
o Calendar year 2020.
- For entities with a NAICS code beginning with 72 (such as accommodation and food service), the maximum loan amount is equal to 3.5 months of payroll costs instead of 2.5 months of payroll costs.
The documentation requirements for Second Draw PPP loans are generally the same as the documentation requirements for First Draw loans. However, no additional documentation to substantiate payroll costs will be required if the applicant:
- Used calendar year 2019 figures to determine its First Draw PPP loan amount,
- Used calendar year 2019 figures to determine its Second Draw PPP loan amount, and
- Used the same lender for the applicant’s Second Draw PPP loan as for the First Draw PPP loan.
The applicant must submit to the lender SBA Form 2483-SD (Paycheck Protection Program Second Draw Borrower Application Form) or the lender’s equivalent form including the required certifications and documentation.
Should you have any questions or need assistance regarding Paycheck Protection Program Second Draw loans, please contact our office. We appreciate the opportunity to serve you.

The following terms which applied to First Draw Paycheck Protection Program loans also apply to Second Draw loans.
- The SBA guarantee percentage is 100 percent.
- No collateral will be required.
- No personal guarantees will be required.
- The interest rate will be one percent, calculated on a non-compounding, non-adjustable basis.
- The maturity is five years.
- All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower to determine the borrower’s eligibility and use of loan proceeds.
- The maximum loan amount is equal to the lesser of 2.5 months of the borrower’s average monthly payroll costs or $2 million.

Paycheck Protection Program First Draw Loans – Reopening

The SBA is reopening the first draw PPP loan program fully on Tuesday, January 19, 2021. This will allow borrowers to take advantage of the first draw loans if they did not participate previously. Depending on the timing of the use of the funds in a first draw, it may be possible for borrowers who obtain a first draw loan during this period to also qualify for a second draw loan.

12/30/2020

Temporary Change to Business Meals Deduction
You've probably heard that the recent stimulus legislation included a provision that removes the 50% limit on deducting business meals provided by restaurants in 2021 and 2022 and makes those meals fully deductible. Here are the details.
In general, the ordinary and necessary food and beverage expenses of operating your business are deductible. However, the deduction is limited to 50% of the otherwise allowable expense.
The new legislation adds an exception to the 50% limit for expenses for food or beverages provided by a restaurant. This rule applies to expenses paid or incurred in calendar years 2021 and 2022.
The use of the word "by" (rather than "in") a restaurant makes it clear that the new rule isn't limited to meals eaten on the restaurant's premises. Takeout and delivery meals provided by a restaurant are also fully deductible.
It's important to note that, other than lifting the 50% limit for restaurant meals, the legislation doesn't change the rules for deducting business meals. All the other existing requirements continue to apply. Thus, to be deductible:
• The food and beverages can't be lavish or extravagant under the circumstances.
• You or one of your employees must be present when the food or beverages are served.
• The food or beverages must be provided to you or to a "business associate." This is defined as a current or prospective customer, client, supplier, employee, agent, partner, or professional adviser with whom you could reasonably expect to engage or deal in your business.
If food or beverages are provided at an entertainment activity, either they must be purchased separately from the entertainment or their cost must be stated on a separate bill, invoice, or receipt. This is required because the entertainment, unlike the food and beverages, is nondeductible.

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100 Coxe Avenue Ste 100
Asheville, NC
28801

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