Martin Leon is a Cal Poly graduate, class of 2010. Martin was born in Mexico City and moved to the Central Coast when he was 8 years old. He enjoys playing soccer in the Santa Maria Men’s Soccer league, restoring his 1968 Ford Mustang and spending time with his family (wife Mayra and children Gerry, Darianna, and Santiago).

Macey Geis grew up in Orange County and moved to San Luis Obispo to attend Cal Poly, where she recently graduated in June 2012. She enjoys doing floral design for weddings and hiking the many beautiful trails in the area. Macey is very excited to stay on the Central Coast and looks forward to serving her community in the accounting profession.

This means certain vineyards that meet the criteria can immediately deduct up to $139,000 of fixed asset (including vineyard development) costs that occurred in 2012 with a maximum fixed asset purchase amount of $560,000. Unless the laws are changed, those amounts would revert back to pre-2010 levels and be a maximum of $25,000 in Section 179 deduction for 2013 and beyond with a maximum fixed asset purchase amount of $200,000. Fruit bearing trees and vines aren’t considered placed in service until they have reached an income-producing stage (commonly referred to as a commercially viable crop).

The deduction under IRC Section 179 is also further limited to the amount of taxable income from any of the taxpayer’s active trades or businesses. Section 179 cannot be used to reduce taxable income below zero, so if the vineyard already has a taxable loss then Section 179 cannot be used.

This recent ruling could provide a large benefit for many small to medium size vineyards by allowing them to quickly recover the costs paid for vineyard development.

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

In the case of D’Errico v. Commissioner, the court held for the IRS when the owner of a C-Corporation deducted meal, entertainment, and automobile expenses for its sole shareholder, who was also an employee.  The IRS denied all of the deductions, and the court agreed, since the taxpayer excluded these very important details.

There are very strict rules that apply to meals, entertainment and business auto use.  Receipts alone are not always enough.  Be sure to keep a record of as many details as possible to be on the safe side.

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

An S corporation is not subject to tax at the corporate level. Instead, the corporation’s items of income, gain, loss, and deduction are passed through to the shareholders. However, the income passed through to the shareholder is not treated as self-employment income. Thus, by using an S corporation, you can avoid self-employment income tax.

There is a catch however, in that IRS requires that the S corporation pay you reasonable compensation for your services. The compensation is treated as wages – subject to employment tax (split evenly between the corporation and the employee), which is equivalent to the self-employment tax. If the S corporation does not pay you reasonable compensation for your services, IRS may treat a portion of the S corporation’s distributions to you as wages and will impose social security taxes. There is no simple formula regarding what is reasonable compensation. Presumably, reasonable compensation would be the amount that unrelated employers would pay for comparable services under similar circumstances. There are many factors that would be taken into account in making this determination, but often the effect of changing to a S Corporation is to reduce the cost of social security and self-employment tax.

Please feel free to call us at (805) 541-2500 if you would like to discuss the practical aspects of conducting your business through an S corporation.

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

Things to consider regarding business trip deductible expenses:

• The expenses have to be ordinary and necessary in order to be fully deducible.  An ordinary expense is one that is customary or frequent to your field of business. A necessary expense is one that is needed to acquire the necessary skills towards the development of the business.
• Professional Development – Convention and Seminar costs are deductible as long as they relate to your job or profession. 
• Travel and lodging expenses – The primary purpose of the trip must be business oriented.  If the majority of time during your trip is spent doing business related activities, such as conventions, seminars or meetings with clients no allocation is necessary.  You can deduct 100% of your travel expenses even if you have some personal leisure time during the trip.
• Meals and entertainment – Costs incurred for meals and entertainment while conducting business are limited to a 50% deduction. If meal and entertainment costs are personal they are fully excluded.

You can find additional information for travel, meal and entertainment costs on the IRS Publication 463 here http://www.irs.gov/pub/irs-pdf/p463.pdf

 Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.

Longcrier & Associates have also signed on for another year to support the 2012 SLO Heart Walk and will be led by team captains Kathy Longcrier and Corri O’Rourke. Kathy agreed to enter the Executive Leadership Challenge as one of 16 local executive leaders within the SLO community. This is an exciting new opportunity and Kathy has committed herself to raise $500.00 by June 30th. Our team goal is to raise $1,000 by the October 13, 2012 event at the Avila Beach Promenade. Visit SLOHeartWalk.com to make a secure, tax-deductible donation or to join our team and walk for this wonderful cause.

Heart disease is America’s number one killer, but with medical research, awareness, education, and community programs, we can all live longer and healthier lives.

• Rates of pay and whether paid by hour, shift, day, week, salary, piece, commission, or otherwise, including rates for overtime.
• Any allowances claimed as part of minimum wage, including meal or lodging allowances.
• Regular payday, as designated by the employer.
• Name of employer, including any “doing business as” name.
• The physical address of the employer’s main office and a mailing address if different.
• Employer’s telephone number.
• Name, address and telephone number of employer’s workers compensation insurance carrier.
• Any other information the Labor Commissioner deems necessary.

In addition, you are required to notify your employees in writing of any changes to the information set forth in the notice within 7 calendar days of making the changes, unless all the changes are reflected on timely wage statement.

The IRS requires employers to withhold income and FICA taxes from paid wages to employees. These funds are usually held in a special trust fund for the United States, and failure to pay subjects a responsible person to personal liability.

But who is the “responsible person” in a business relationship? According to the IRS, a responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be an officer or an employee of a corporation, a member or employee of a partnership, a corporate director or shareholder, a member of a board of trustees of a nonprofit organization, another person with authority and control over funds to direct their disbursement, or another corporation or third party payer.

In the case of Dintelman v. United States, a husband and wife started a small business, with each owning 50% and naming themselves as sole corporate officers. The wife completed and signed the articles of incorporation as President, and a checking account for the business was opened with both officers having signatory rights.

Later that same year, the couple separated, but continued to work together in the business. The wife had retained the titles of CEO and President, and continued to sign various contracts and checks, both individually and in her capacity as president.

The company then failed to file its employment tax return and deposit the taxes withheld as required by law. Both owners met with a small business consultant multiple times and expressed interest in keeping better track of accounting activities. The consultant inquired about the company’s payroll tax balance, and the husband admitted they were behind.

Because the wife was present at this meeting and had other signatory rights, she can be held as a “responsible person”. Since she had continued to sign checks to pay for other expenses, including payments to other creditors, knowing they were behind in their payroll taxes, this was considered “willful failure” to pay.  The wife then claimed she did not qualify as a “responsible person” because she was CEO in name only and had no control over any aspect of the company’s operation. The court held for the IRS, because the responsible person cannot escape personal liability by surrendering authority, failing to exercise it, or delegating it to others. If you have check-writing authority and were aware your company paid other expenses when payroll taxes were due, the IRS can come after you personally for the taxes, penalties and interest.

Pursuant to IRS Circular 230, the Internal Revenue Service requires us to inform you that any tax advice included herein is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by the IRS on the taxpayer. That said, please do not hesitate to contact us if you have any further questions regarding this matter.