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Celebrating
our 25th Anniversary
Ensure your construction activities
are in line
For construction activities to qualify for the deduction, you must
actually perform the activities. In other words, you can’t just hire
someone else to do them and claim the deduction. But you don’t have to
be a general contractor, either. The final regulations clarify that
construction activities are those typically performed by a general
contractor, including management and oversight of the construction
process.
The final regulations also make clear that materials and supplies
consumed in the construction process are included in domestic production
gross receipts. Receipts attributable to land sales are not included,
however, and the regulations provide guidance on allocating receipts
between land and construction activities.
Alert: E-mail tax scam
The IRS is warning taxpayers about the latest in a series of e-mail
“phishing” scams designed to look like a page from the IRS Web site. In
this scheme, the “IRS Antifraud Comission” (sic) claims that someone has
enrolled your credit card in the Electronic Federal Tax Payment System
and attempted to pay taxes with it. You’re asked to click on a link that
will help you recover your funds and personal information is requested
that can be used to steal your identity.
IRS officials stress that they never send unsolicited e-mails asking for
personal information, nor do they ask taxpayers for PIN numbers or
passwords that allow access to credit card and bank accounts.
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Mastering the art of strategic
planningAll too
often, a company goes through the process of developing a
well-articulated set of strategic directions, only to have
the plan collect dust on a shelf. This article presents some
ideas on how you can ensure your strategic plan grows with
your company. For example, instead of doing an annual update
on your plan, update it as needed, such as when an
opportunity to buy out a competitor arises or when you lose
key employees.
Read more
Gain a clearer picture of
your profitability with ABC
If questioned about
profitability, some business owners would answer based on
their gut feelings. But to more accurately assess a
business’s profitability, you must match costs with the
activity that drives them. Activity based costing (ABC) does
just that. This article explains some of the problems that
may be inherent with certain traditional approaches to cost
accounting, such as indirect costs that don’t correlate to
direct expenses, and how ABC reworks that process by
establishing a hierarchy of activities along with their cost
drivers. ABC challenges a business to make difficult
decisions regarding unprofitable products and customers.
Read more
Production numbers
Understanding the manufacturers’ deduction
In 2004, the American Jobs
Creation Act (AJCA) added the manufacturers’ deduction (also
known as the Section 199 deduction) to the tax code,
creating a new tax break for domestic production activities.
But this deduction isn’t just for manufacturers.
Construction firms, engineers, architects, software
developers, agricultural processors and other types of
businesses may also benefit. Computing this deduction is
complicated and, until recently, there were many questions
left unanswered. Fortunately, the IRS has provided interim
guidance on applying the deduction and issued final
regulations on the subject. This article looks at how the
deduction works.
Read more
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Tax Tips
This section presents brief
notes on IRA conversion, the generation-skipping
transfer tax, conservation easements and e-mail tax
scams.
Read more
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