Business Strategies

Build Back Better Legislation Could Present Complications for QSBS

Tax advisors are seeing more clients looking to claim an exclusion for Qualified Small Business Stock and expecting the gain to be 100 percent tax free. Can this be? Believe it or not, it very well could be, but nuanced criteria, not to mention the recently proposed amendment to IRC Section 1202 through the Build Back Better Act, make it a complex incentive to evaluate and monitor over time.

In fact, QSBS gains haven’t always been 100 percent tax free. When introduced in 1993, QSBS started out as a 50 percent capital gain exclusion. The exclusion was increased to 75 percent in 2009, and increased to 100 percent in September 2010. Currently, the exclusion percentage is solely based on the date the owners acquired QSBS stock, but the proposed BBB amendment would additionally subject the exclusion percentage to the taxpayer’s Adjusted Gross Income (AGI), depending on a $400,000 threshold.

The proposed language has accountants scratching their heads over the seemingly circular reference in determining what level of exclusion their clients would receive. As written, you need to know the QSBS exclusion percentage to calculate AGI, and you need AGI to know the exclusion percentage! Keep reading to learn how.

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Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

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CURRENT EDITION

How to Deal with Huge Tax Debt

Jeff Stimpson

The only thing scarier than owing Uncle Sam a lot in taxes is being unable to pay the bill. Luckily, the Internal Revenue Service has ways for you to whittle what you owe. Just make sure which method works for you, depending on such factors as the size of your tax debt and what you can afford to pay and when. Don’t panic. Here’s how individual taxpayers can proceed – and what to watch out for.

Client Retention Strategies for Accountants: Building Long-Term Relationships

Marie Torossian, CPA

Client acquisition is crucial for business growth in the fast-paced accounting world. However, retaining existing clients is equally important, if not more so. Servicing long-term client relationships is a testament to your firm’s reliability and is critical to sustained success. My first client is still with me, now more than seven years. Our relationship has grown and changed over time but has also strengthened.

Loyalty and commitment are two of my core values. I’m always looking to provide value to my prospects and clients to attract and retain them long-term. However, some clients do not fit those values, and I have decided to forgo working with them.

I believe that attracting and retaining the right clients starts with your mission, vision, and core values. However, it is also essential to have effective client retention strategies to ensure clients remain loyal and satisfied for the long haul.

Health Savings Accounts vs Flexible Spending Accounts

Timalyn Bowens, EA

With the rising cost of healthcare, our clients are looking to save money where they can, especially if they can save money on their healthcare costs and taxes at the same time. As their trusted advisor, you can offer them a basic understanding of what savings tools are available to your clients. Some of the tools available will come in handy if there is a minor unexpected tax bill this spring.

That is why today we’re going to look at the triple tax advantaged health savings account (HSA) and the health flexible spending account (FSA). We’ll look at what they are, who is eligible to open one, and how they can save your clients money each year.