Category Archives: sccm

Are you a Business Owner?

Category : Blog , sccm

Business owners can generally deduct losses on their tax returns. But the activity must show a profit motive by operating in a businesslike manner. The U.S. Tax Court denied loss deductions to one beauty consultant due to a lack of a profit motive. She had no financial statements or records of time spent on the activity. She also had no expertise in the industry and appeared motivated in part by a discount she received on products she bought for herself. And her losses included travel expenses that appeared to be personal, not business-related. (TC Memo 2018-116)

New Bill Passed

Category : Blog , sccm

The U.S. House passed a bill that would repeal the 2.3% medical device tax. The excise tax is scheduled to be imposed on importers and manufacturers of medical devices beginning in 2020. It was part of the Affordable Care Act (ACA). The House also passed a bill that would expand the ACA’s religious conscience exemption to exempt individuals who rely solely on a religious method of healing. It would exempt these individuals from the requirement to buy and maintain health care coverage because accepting medical services is inconsistent with their religious beliefs.

Consider these financial reporting issues before going private

Category : Blog , sccm

Issuing stock on the public markets isn’t right for every business. Some public companies decide to delist — or “go private” — often due to the high costs of complying with the requirements of the Securities and Exchange Commission (SEC). But going private can be nearly as complex as going public, so it’s important to dot your i’s and cross your t’s.

SEC requirements

The SEC scrutinizes going-private transactions to ensure that unaffiliated shareholders are treated fairly. A company that’s going private — together with its controlling shareholders and other affiliates — must, among other requirements, file detailed disclosures pursuant to SEC Rule 13e-3.

The SEC allows a public company to deregister its equity securities when they’re held by fewer than 300 shareholders of record, or fewer than 500 shareholders of record if the company doesn’t have significant assets. Depending on the facts and circumstances, a company may no longer be required to file periodic reports with the SEC once the number of shareholders of record drops below the above thresholds.

Detailed disclosures

To comply with SEC Rule 13e-3 and Schedule 13E-3, companies executing a going-private transaction must disclose:

  • The purposes of the transaction, including any alternatives considered and the reasons they were rejected,
  • The fairness of the transaction, both substantive (price) and procedural, and
  • Any reports, opinions and appraisals “materially related” to the transaction.

The SEC’s rules are intended to protect shareholders, and some states even have takeover statutes to provide shareholders with dissenters’ rights. Such a transition results in a limited trading market to be able to sell the stock.

Failure to act with the utmost fairness and transparency can bring harsh consequences. SEC scrutiny can lead to costly damages awards and penalties if your company is guilty of treating minority shareholders unfairly or making misleading disclosures.

Handle with care

Companies that pursue going-private transactions should exercise extreme caution. To withstand SEC scrutiny and avoid lawsuits, it’s critical to structure these transactions in a manner that ensures transparency, procedural fairness and a fair price.

In addition to helping you comply with the SEC rules, we can evaluate whether going private can help your company reduce its compliance costs or allow it to focus on long-term goals rather than satisfying Wall Street’s demand for short-term profits.

© 2018

Can you prove it?

Category : Blog , sccm

Business owners can generally deduct ordinary and necessary expenses, if they can prove the costs are bona fide and business related. In one case, a married couple were officers in a mortgage business. The U.S. Tax Court ruled they were eligible to deduct the cost of a promotional mailer as an advertising expense. As proof, they used the husband’s credible testimony and a copy of the original invoice, and showed a bank debit for the same amount. Other deductions, however, such as office rent and furniture, were limited, due to lack of proof. (TC Memo 2018-102)

Paycheck Checkup

Category : Blog , sccm

Do you need a “paycheck checkup”? Since the Tax Cuts and Jobs Act became effective, the IRS has been urging taxpayers to determine the best amount to have withheld for their individual circumstances. Major changes to the tax law make a “checkup” a good idea. They include an increase in the standard deduction, the removal of personal exemptions, new tax rates and an increase in the child tax credit. Tools that can help: the IRS’s “withholding calculator” at and Publication 505, “Tax Withholding and Estimated Tax,” at