Accounting & Tax News

The tax code classifies partnerships as “flow through entities”. This means that all income is taxable to the partners regardless of whether cash is distributed or not, who report the income on their individual returns The income is not taxed at the entity or partnership level. Each partner will receive a “Schedule K-1,” which details their proportional share of the entity’s income and deductions which they must report on their personal tax returns.

Qualified Opportunity Zone Funds (“QOF”s) were introduced in 2017 as part of the Tax Cuts and Jobs Act. Tax on capital gains may be deferred if the gains were invested in a QOF. The 2017 version had the following requirements and corresponding benefits:

The California Pass-Through Entity Tax (PTET) election has been a valuable planning tool in recent years, particularly as a workaround to the federal limitation on state and local tax (SALT) deductions. However, recent changes to both Federal and California tax law make the decision on whether to make this election more nuanced than in prior years.

CalSavers was implemented to ensure that each employee in the state has access to a workplace retirement savings account. California state law (Title 21 of the California Government Code) requires employers who do not offer a retirement plan to register with CalSavers. The registration deadline for employers with 1 to 4 employees is December 31, 2025.

Qualified Small Business Stock (QSBS) is one of the most powerful tax breaks for founders, early employees, and startup investors. Under federal law, the §1202 exclusion can eliminate federal capital gains tax on the greater of $10 million ($15 million under the new OBBBA) or 10× your original investment when you sell qualifying small-business stock.

On July 4th, President Trump signed the One Big Beautiful Bill Act into law, extending many provisions originally set to expire from the previous Tax Cuts and Jobs Act of 2017 (“TCJA”) and also creating new provisions. We have summarized some of the most important tax updates so that you may plan effectively for 2025 and beyond.

The IRC §199A Qualified Business Income Deduction, a significant component of the Tax Cuts and Jobs Act (TCJA), may grant substantial tax savings to those who qualify. We are encouraging all eligible clients to take advantage of this opportunity. These new rules stipulate that owners of sole proprietorships, S-Corporations, and Partnerships may be able to claim up to a 20% deduction against their Qualified Business Income.

With the 2017 tax reconciliation reform (Tax Cuts and Job Acts) comes a new tax incentive program aimed at promoting investments in certain economically distressed communities across the country.

QSBS is stock of a U.S. “C” corporation with gross assets less than $50M, both before and immediately after the issuance of the stock. The original issuance of the stock must have occurred after August 10, 1993. All corporations that are a part of the same parent corporation are treated as one corporation.