CPA-HQ: September Edition

Making Will Revisions by Hand is Rarely a Good Idea

The laws regarding the execution of a valid will vary from state to state, but typically they require certain formalities. These may include signing the will in the presence of witnesses and a notary public.

But what happens if, after your will and other estate planning documents are completed, you need to make a change? Perhaps you’ve welcomed a new grandchild to the family or need to change the way your assets are distributed.

To avoid the time and expense associated with formally updating your will, it may be tempting to simply make the change by hand and initial it. But this is almost always a bad idea. For one thing, handwritten changes are highly susceptible to a challenge, which may result in a protracted probate court battle. So much for saving time and money. Even worse, depending on the law in your state, handwritten changes may not be binding.

Many states permit so-called “holographic wills.” These handwritten wills are valid if they meet certain requirements. Typically, the maker of the will must write the will by hand and sign and date it. Some states permit handwritten changes to a typewritten will if the changes meet all the requirements of a holographic will. That means each change must be handwritten, signed and dated. In other states, handwritten changes must satisfy the same formalities (such as witnesses and notarization) as for typewritten wills.

To ensure that your estate planning goals are carried out, discuss your needs with your attorney and avoid the temptation to make handwritten changes.

Hawkins Ash CPAs Relocates Neenah Office in Growth Trajectory

Neenah, WI – Hawkins Ash CPAs, ranked one of the Top 200 public accounting firms in the nation, recently relocated from downtown Neenah to 55 Jewelers Park Drive, along Highway 41 in Neenah. Occupying the majority of the second floor of the multi-tenant building, Hawkins Ash CPAs is geared to grow in the Fox Valley region.

“Our new space will allow us to double the size of our team in the coming years,” states Keith Depies, CPA, Parter-in-Charge of the Neenah office. “With the capacity to add professionals to our Neenah office we recently added an audit manager and tax manager to our team. We will be expanding tax, audit and our other service offerings here, working together with our closest regional offices in Green Bay and Manitowoc.”

Nicholas Speel, CPA, and Dan Fochs, CPA, recently joined Hawkins Ash CPAs in Neenah. Speel, a Tax manager, joins Hawkins Ash CPAs with 15 years of experience specializing in tax planning and preparation for businesses, individuals, trusts, and estates. Fochs, an Audit Manager, performs audits, reviews and compilations for nonprofit and government entities.

Visible from Highway 41, the office space offers an improved workspace with abundant natural light for a comfortable environment for employees. For clients and the public, access to the suite is convenient by way of a glass elevator and accessible staircase. Ample visitor parking is reserved in the main parking lot.

“We are excited about our new location,” remarked Depies. “There were two primary goals when we started the process. The first was to provide our clients better access to and in our facility. The second was to provide the Hawkins Ash team a more efficient workspace to collaborate so we can better serve our clients. We accomplished both at 55 Jewelers and set ourselves up to do that for a long time here.”

The Neenah office of Hawkins Ash CPAs was added to the Firm upon the 2021 merger with Roberts, Ritschke & Tyczkowski, Ltd. (RR&T) which served clients in the Fox Valley for 44 years.

“As the relocation of our Neenah office provides us the space to grow in the Fox Valley, the tradition of providing local, personalized service will remain constant,” said Abe Leis, CPA, Hawkins Ash CPAs Managing Partner. “Existing and new clients will benefit from expanded, expert services a Firm of our size can offer.

Additionally, current and future employees of our Firm will benefit from our growth. Our Firm offers many opportunities for advancement and support our team members in becoming well respected public accounting professionals.”

Since 1956, Hawkins Ash CPAs has been providing expertise in audit, accounting, tax, and business consulting services to a wide variety of sectors, including individuals, privately held businesses, nonprofit organizations, governmental entities, credit unions and housing authorities. In recent years, the Firm has developed expertise in valuations, business transaction advisory, and trust and estate tax planning. Hawkins Ash is now a $36 million Firm that ranks in the top 200 in a field of over 44,000 accounting firms in the nation. Its 24 partners and over 180 professionals, provide services to clients from seven offices in Wisconsin, three offices in Minnesota.

Open House and Ribbon Cutting

As a celebration of the expansion and relocation, Hawkins Ash CPAs will host a ribbon cutting and open house on Thursday, November 21, 2024 at 55 Jewelers Park Drive, Suite 200. Clients and the public are welcome to visit the office and network with area professionals from 4 p.m. – 6 p.m. Beverages and light refreshments will be served.

About Hawkins Ash CPAs

Hawkins Ash CPAs, an Inside Public Accounting Top 200 Firm, provides certified public accounting services to privately held businesses, governmental organizations, nonprofit entities, housing authorities, and credit unions and expert tax and financial services to high net worth individuals, estates and trusts. The Firm currently has Wisconsin offices in Green Bay, La Crosse, Manitowoc, Marshfield, Medford, Mequon, and Neenah, and Minnesota offices in Rochester, St. Charles and Winona. The Firm was founded in 1956. To learn more about Hawkins Ash CPAs, visit www.hawkinsash.cpa.

Business Website Expenses: How They’re Handled for Tax Purposes

Most businesses have websites today. Despite their widespread use, the IRS hasn’t issued formal guidance on when website costs can be deducted.

But there are established rules that generally apply to the deductibility of business expenses and provide business taxpayers launching a website with some guidance about proper treatment. In addition, businesses can turn to IRS guidance on software costs. Here are some answers to questions you may have.

What Are the Tax Differences Between Hardware and Software?

Let’s start with the hardware you may need to operate a website. The costs fall under the standard rules for depreciable equipment. Specifically, for 2024, once these assets are operating, you can deduct 60% of the cost in the first year they’re placed in service. This favorable treatment is allowed under the first-year bonus depreciation break.

Note: The bonus depreciation rate was 100% for property placed in service in 2022 and was reduced to 80% in 2023, 60% in 2024 and it will continue to decrease until it’s fully phased out in 2027 (unless Congress acts to extend or increase it).

Alternatively, you may be able to deduct all or most of these costs in the year the assets are placed in service under the Section?179 first-year depreciation deduction privilege. However, Sec.?179 deductions are subject to several limitations.

For tax years beginning in 2024, the maximum Sec.?179 deduction is $1.22?million, subject to a phaseout rule. Under the rule, the deduction is phased out if more than a specified amount ($3.05?million in 2024) of qualified property is placed in service during the year.

There’s also a taxable income limit. Under it, your Sec.?179 deduction can’t exceed your business taxable income. In other words, Sec.?179 deductions can’t create or increase an overall tax loss. However, any Sec.?179 deduction amount that you can’t immediately deduct is carried forward and can be deducted in later years (to the extent permitted by the applicable limits).

Similar rules apply to purchased off-the-shelf software. However, software license fees are treated differently from purchased software costs for tax purposes. Payments for leased or licensed software used for your website are currently deductible as ordinary and necessary business expenses.

Was the Software Developed Internally?

If, instead of being purchased, the website is designed in-house by the taxpayer launching it (or designed by a contractor who isn’t at risk if the software doesn’t perform), bonus depreciation applies to the extent described above. If bonus depreciation doesn’t apply, the taxpayer can either:

1. Deduct the development costs in the year paid or incurred, or
2. Choose one of several alternative amortization periods over which to deduct the costs.

Generally,?the only allowable treatment?will be to amortize the costs over the five-year period beginning with the midpoint of the tax year in which the expenditures are paid or incurred.

If your website is primarily for advertising, you can currently deduct internal website software development costs as ordinary and necessary business expenses.

What if You Pay a Third Party?

Some companies hire third parties to set up and run their websites. In general, payments to third parties are currently deductible as ordinary and necessary business expenses.

What About Expenses Before Business Begins?

Start-up expenses can include website development costs. Up to $5,000 of otherwise deductible expenses that are incurred before your business commences can generally be deducted in the year business commences. However, if your start-up expenses exceed $50,000, the $5,000 current deduction limit starts to be chipped away. Above this amount, you must capitalize some, or all, of your start-up expenses and amortize them over 60 months, starting with the month that business commences.

We Can Help

We can determine the appropriate tax treatment of website costs. Contact us if you want more information.

Are GoFundMe Gifts Taxable? A Guide for Givers and Recipients

On today’s episode of Tax Insights, Jeff explores the tax implications of GoFundMe gifts. He explains that these are considered individual-to-individual gifts without tax benefits. Jeff covers key points like the annual gift limit, which can impact your lifetime exemption if exceeded, and clarifies that recipients do not need to report these funds as income. Tune in for a clear overview of how GoFundMe gifts may affect your taxes.

Closing a Business Involves a Number of Tax Responsibilities

While many facets of the economy have improved this year, the rising cost of living and other economic factors have caused many businesses to close their doors. If this is your situation, we can help you, including taking care of various tax responsibilities.

To start with, a business must file a final federal income tax return and some other related forms for the year it closes its doors. The type of return that must be filed depends on the type of business you have. For example:

• Sole Proprietors?will need to file the usual Schedule C, “Profit or Loss from Business,” with their individual returns for the year they close their businesses. They may also need to report self-employment tax.
• Partnerships?must file Form 1065, “U.S. Return of Partnership Income,” for the year they close. They also must report capital gains and losses on Schedule D. They indicate that this is the final return and do the same on Schedule K-1, “Partner’s Share of Income, Deductions, Credits, etc.”
• All Corporations?need to file Form 966, “Corporate Dissolution or Liquidation,” if they adopt a resolution or plan to dissolve an entity or liquidate any of its stock.
• C Corporations?must file Form 1120, “U.S. Corporate Income Tax Return,” for the year they close. They report capital gains and losses on Schedule D and indicate this is the final return.
• S Corporations?need to file Form 1120-S, “U.S. Income Tax Return for an S Corporation,” for the year of closing. They report capital gains and losses on Schedule D. The “final return” box must be checked on Schedule K-1.
• All Businesses?may need to be filed other tax forms to report sales of business property and asset acquisitions if they sell the business.

Tying up Loose Ends with Workers

If you have employees, you must pay them final wages and compensation owed, make final federal tax deposits and report employment taxes. Failure to withhold or deposit employee income, Social Security and Medicare taxes can result in full personal liability for what’s known as the Trust Fund Recovery Penalty.

If you’ve paid any contractors at least $600 during the calendar year in which you close your business, you must report those payments on Form 1099-NEC, “Nonemployee Compensation.”

You May Face More Obligations

If your business has a retirement plan for employees, you’ll generally need to terminate the plan and distribute benefits to participants. There are detailed notice, funding, timing and filing requirements that must be met when terminating a plan. There are also complex requirements related to flexible spending accounts, Health Savings Accounts, and other programs for employees.

We can assist you with many other complicated tax issues related to closing your business, including debt cancellation, use of net operating losses, freeing up any remaining passive activity losses, depreciation recapture, and possible bankruptcy issues.

You also must cancel your Employer Identification Number (EIN) and close your IRS business account. In addition, you need to keep business records for a certain amount of time.

If your business is unable to pay all the taxes it owes, we can explain the available payment options to you. Contact us to discuss these responsibilities and get answers to any questions.

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