Nicole Sithithavorn

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At-Risk Rules Can Limit Tax Deductions

The at-risk limitations are the result of Congress’ concern that taxpayers were deducting losses from tax-sheltering activities far in excess of their economic amount at risk in the activities. The thrust of the rules is that you can deduct losses only to the extent you bear a real economic risk of loss.

Amounts considered at risk

You are considered at risk for:

The money and adjusted basis of property you contribute to an activity
Amounts you borrow for use in the activity, if you’re personally liable for repayment, or property you pledge (other than property used in the activity) as security for amounts borrowed

For example, if you borrow money to buy rental property, you’re considered at risk if you’re personally liable for repayment of that loan. You’re also at risk if amounts borrowed are secured by property (i.e., pledged property) other than property used in the activity. In this case, the amount considered at risk is the net fair market value of your interest in the pledged property. However, no property is considered as security if it’s directly or indirectly financed by debt that’s secured by property you contributed to the activity.

Since the IRS often scrutinizes real estate loss deductions, it’s important to have a professional appraiser document the fair market value of property involved in these transactions.

Further, even if (1) you’re personally liable for the repayment of an amount you have borrowed or (2) you secure a borrowed amount with property other than property used in the activity, you aren’t considered at risk if you borrowed the money from a person having an interest in the activity or from someone related to a person (other than you) having an interest in the activity.

Amounts not considered at risk

You aren’t considered at risk for amounts protected against loss through nonrecourse financing, guarantees, stop-loss agreements or other similar arrangements. Nonrecourse financing is financing for which you aren’t personally liable. If you borrow money to contribute to an activity and the lender’s only recourse is to take your interest in the activity or the property used in the activity, the loan is a nonrecourse loan.

Additionally, any capital you have contributed to an activity isn’t at risk if you’re protected against economic loss by an agreement or arrangement for compensation or reimbursement.

Example: George and Ann own a building, which they rent to a group of dentists. The rental income is used to pay the mortgage on the building. George is personally liable for the mortgage; however, he separately obtained insurance to compensate him for any payments he must actually make because of his personal liability. George is considered at risk only to the extent of the uninsured portion of the personal liability to which he is exposed. He can include in the amount he has at risk the amount of any premium that he paid from his personal assets for the insurance.

Reductions of amounts at risk

The amount you have at risk in any activity is reduced by losses allowed in previous years under the at-risk rules. It may also be reduced because of certain distributions received. If the amount you have at risk is reduced below zero, your previously allowed losses are subject to recapture, thus resulting in income to you.

As you can see, calculating the amount you have at risk for an activity, which in turn affects the amount you can deduct on your tax return, is complicated. It’s best to engage tax professionals to help document your at-risk amounts in case of a future IRS audit.

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How to Survive Tariff Turbulence

Nicole Sithithavorn Blog Contingency Planning, Forecasting, planning, Scenario Forecasting, tariffs

Tariffs are a long-standing tool of economic policy, but that doesn’t make them easy for companies to navigate. Recently, tariffs have been imposed, lifted and then revised, making it difficult for companies to predict short-term costs. U.S. businesses may face different rates depending on whether they’re importing finished goods or components for domestic assembly. And finally, the latest wave of tariffs has arrived just as supply chains had begun to stabilize following years of pandemic-related disruption.

How to plan

The global reach of modern tariffs, combined with ever-changing rules about what’s included and at what rate, has shaken confidence in the systems businesses rely on. One thing is certain: Higher prices are an inevitable result of tariffs. That leaves companies with a difficult set of choices: Raise prices, absorb the added cost or try some mix of both.

In response, companies are testing a range of pricing strategies. Some fold tariff costs into their base price. Others list them as a separate surcharge. A few hold pre-tariff sales to stimulate demand. Each approach has trade-offs; what matters most is acting with intention.

Rather than wait for certainty, some businesses are building short- and medium-term strategies based on how the situation might evolve. Scenario planning includes possibilities such as:

There are no new tariffs.
Tariffs increase.
Tariffs are eliminated or reduced.
Exemptions are extended.
Pauses are lifted.
Retaliatory tariffs (from other countries) are imposed.

If your company opts to plan this way, be sure that each scenario accounts for how suppliers, lenders and customers might respond. For example, banks may tighten underwriting standards in response to tariff volatility. Consumers, especially those in discretionary markets, may delay spending when tariffs and recession fears coincide.

It’s also helpful to build in transparency. Early, clear communication about possible pricing changes and the potential timing of those changes builds trust with both B2B and B2C customers. Some may still choose to cut back or walk away, but others will appreciate your company’s respect for how they too need to plan.

Your company is best likely to weather tariff turbulence if it plans ahead, acts deliberately and stays nimble as conditions change. As always, consult tax and financial professionals before making structural changes to your business.

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Supply Chains and Logistics

Nicole Sithithavorn Blog Inventory, Manufacturing, Strategy, Supply Chain

Supply chain management involves controlling the upstream and downstream flow of materials and finances — from sourcing to manufacturing and distributing to retailing and finally to the hands of the consumer.

It encompasses planning, designing, purchasing, production, logistics and quality. Supply chains work through collaborations and partnerships to gain efficiencies, such as just-in-time manufacturing systems that operate very small inventory reserves.

The proper monitoring of supply lines is critical. Many companies touch a product before it reaches the customer. Companies in a supply chain exchange information about fluctuations in availability, timing, shipping and seasonal variability.

Accountants can help in identifying costs and value add to processes across organizational boundaries and to support different types of relationships between companies. The cluster of businesses that make up the supply chain need to be appropriately configured and networked to a central database, sharing forecasting systems with real-time updates.

Efficient supply chain management ensures that a company maintains a constant flow of fresh products at an optimal level that matches customer demand while keeping inventory levels lower in order to minimize carrying costs.

In running a business, you’ll be dealing with large volumes of goods, which translates to high carrying costs, as you have to ensure that your products are stored well and in good condition to reach your retailers.

You want to be able to spot slow-moving shipments and track warehouse management functions, especially if you have stock in different locations. You want all relevant parties to have access to timely information — real-time stock updates to minimize the risk of overselling.

Here’s where accounting comes in handy: It’s important for logistics to cut excess costs and to deliver products faster and cheaper by controlling internal inventories, production, distribution and inventories. Accountants play increasingly vital roles in strategies, as well as planning and execution of supply chain management.

An accountant serving on design and implementation teams will provide analytical expertise, an economic perspective and an objective mindset to help examine, evaluate and prioritize the opportunities and challenges of the supply chain. Accountants can meet with the team charged with design, development and execution of supply chain planning. What can they bring to the table?

Financial analysis — Prepare a financial analysis of the costs and benefits of supply chain management.
Performance benchmarks — Create performance benchmarks, milestones, and key performance indicators, or KPIs, and measure to support the management of the supply chain.
Evaluation — Provide an economical and nonfinancial evaluation of alternative improvement opportunities to facilitate the management of supply chain priorities.
Database and technology — Enable supply chain transactions by participating in identifying and implementing new database and information technology.
Identifying efficiencies — Play a vital role in redesign processes to remove waste and reduce or increase the flexibility and responsiveness of financial transactions across the supply chain.
Problem solving — Collaborate with finance and operations professionals in partnering organizations to find creative ways to solve logistics and support problems.
Decision-making — Provide analytical support to supply chain management teams — estimating, for example.
Reporting — Create management reports and evaluation tools so that you meet objectives and performance improvements.
Data integrity — Ensure the integrity of internal control procedures, proprietary technologies and processes

Accountants work to facilitate long-term sustainability of supply chains and add value to their management by creating competitive advantage through improvements.

By keeping an eye on the total costs of supply chains, you’ll be working to maximize efficiency when goods are moving from original suppliers to end users. By helping to control the flow of materials — and finances — you’ll ultimately get better business results.

Is This Your Situation- Your Internal Controls Are Weak

Is This Your Situation: Are You Concerned About Your Firm’s Cash Collections?

Nicole Sithithavorn Blog Cash Flow, Professional Services

Chasing after clients to collect money owed is no fun. That’s why attorneys often avoid the task until their coffers reach dangerously low levels. This is not a good idea. You can’t run or grow a firm without a reliable cash flow, which not only means attracting business but devising a system to collect what clients owe.

Here are ways to improve the accounts receivable column of your ledger.

Get Involved

Nobody likes calling clients and asking for money, especially lawyers, who can’t claim collections as billable hours. That’s why most law firms assign collecting receivables to lower-level employees, like paralegals or secretaries. Although this technique frees up partners and associates to do more productive work, it often is not effective. It’s easier to dodge the call of an assistant than it is to avoid the call of the attorney who’s handling your divorce.

If attorneys in your firm balk at getting involved with collections, you could tie their compensation to the money they actually collect, rather than what they bill. Also, tell them that every dollar collected is a dollar earned without putting in extra hours.

Don’t Delay

Clients won’t pay a bill they don’t receive, so it pays (literally) to send out invoices quickly and regularly. Don’t wait until the end of a case to bill clients, who then have no incentive to pay quickly.

Invoice Often

It’s easier for a client to ignore one bill than regular, monthly statements that remind them of how much they owe. Monthly statements inform clients of the terms of your service, how much they owe, and when you expect to be paid. Make sure statements have easy-to-read contact information so clients can call or e-mail you with payment questions or problems.

Become Tech Savvy

Technology may not be your specialty, but today’s billing software is so easy to use that it pays to invest in a program that regularly invoices clients and keeps track of those who fall behind on payments. If such software makes you shutter, consider outsourcing your accounts receivable division. You’ll pay money to collect money, but when you consider the billable hours wasted while you chase receivables, or the wages you pay someone else in your firm to collect funds, outsourcing won’t seem that expensive and, ultimately, could pay for itself.

Collecting money for services rendered can be a nasty task. Give us a call, so we can help you set up an accounts receivable system that collects more and hurts less.

Pro Tip: Letting Go

Nicole Sithithavorn Blog, Pro Tip Business Tips, pro tip, Small Business

It can be hard, as a small business owner, to let go of control of essential tasks in your business. Trying to determine how to do this is a constant topic of conversation with clients. How can you begin to move forward with it?

1. Create documented processes for essential tasks you complete.

2. Develop standardized methods to keep a pulse on the tasks you’ve handed off.

3. Ensure your financial controls and reporting processes are set up well and timely.

4. Create a standard schedule for yourself to watch these things and meet with people that allows you to let go and be confident.

Best of luck!

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What Is a Pay Equity Review?

Nicole Sithithavorn Blog HR, risk management, Staffing

Pay equity assessments or audits ensure that all employees receive proper compensation regardless of age, race, gender or disability status. The assessments create a workplace where employees can reach their full earning potential. Further, they show that the company understands that pay inequity increases wealth disparities in such areas as generational wealth and home ownership.

A pay equity audit will also help insulate your firm from potential wage discrimination lawsuits. State and federal governments, media, and regulators such as the Equal Employment Opportunity Commission are all turning their attention to wage gaps.

Salaries for positions should be consistent internally and competitive with companies similar to yours in the same geographical area.

Once a pay equity audit is complete and competitive rates are established, HR will be more able to attract and retain superior employees. HR will also be able to offer equitable opportunities for current employees to advance or be promoted both laterally and vertically within the company.

Conducting a successful pay audit

Identify the purpose of the audit and its timeline, then choose which methodology you will use, which personnel will conduct the audit and what budget is required. Set a communication policy to establish stakeholder buy-in.
Learn how pay rates have been determined at your company by researching pay rates historically. Identify the root causes of any pay inequities.
Gather data, including job titles, job grades or levels, and job descriptions (detailing each position’s responsibilities), as well as the company’s organizational chart. Next gather the genders, races, ages, education levels, beginning salaries, overtime pay rates and bonus amounts for all employees, along with hire dates, performance reviews and level of experience in a specific field.
Compare the organizational data to similar positions at other companies. This information can be found in online salary surveys and databases, by purchasing information from data reporting companies or compensation specialists, by reviewing any surveys or networking opportunities conducted by your industry, by reviewing job postings, or through accessing government data (like the Bureau of Labor Statistics’ Occupational Employment Statistics for wage data by occupation and geographic area). Compare employees to workers with substantially similar skills and responsibilities. Do they have similar titles and working conditions? Is the compensation similar?
Analyze the data, seeking to determine whether differences in wages can be tied to gender, race or age. Your analysis is determined by the measurable criteria and type of compensation. Your goal is to determine whether pay differences are legally justifiable — that is, if they are based on seniority, merit, or a system that measures earnings or quantity or quality of production. You also want to address any outliers in employee compensation (employees who are paid significantly more or less than their counterparts).
Take action to mitigate pay differences. Your company may need to adjust salaries (but it is generally not advisable to reduce employee compensation). Finance and HR will need to be part of any effort to raise pay rates. Record what you’ve discovered to inform any future hiring/wage decisions.
Keep a summary of recruitment activities, including how many times a position was posted, how many candidates were interviewed, and how many declined the position and why.
Remember that equity reviews and any resulting salary adjustments should not be used to address performance issues.

Establishing pay equity can be complicated. But in addition to being a legally enforceable concept (equal pay for equal work), pay equity is an ethical solution that secures economic viability while boosting individual and organizational outcomes. Paying each employee fairly creates a better work environment, enhances company culture and increases employee satisfaction.

Employee Stock Ownership Plan write on a book isolated wooden table.

ESOPs: Are They Right for You?

Nicole Sithithavorn Blog Exit Planning, Strategy, Tax

If you’re thinking about offering ESOPs to your employees, you might find them appealing because of the way they can help reward those employees who helped you build your business. After all, an ESOP is an aspect of an employee’s retirement plan, and like other tax-advantaged retirement accounts, your employees won’t owe taxes on any money in their ESOP account until money is withdrawn, making it an enticing benefit in the eyes of employees as well.

Why are ESOPs an attractive benefit?

An ESOP can serve as a mighty powerful motivator for employees. Every employee who participates in this benefits-focused plan will own a stake in the corporate ownership of the company. This can be particularly significant if your company is successful.

How do ESOPs work?

With this type of benefits plan, you’ll start by establishing a trust that allows for stocks in your company. Each year, you’ll make tax-deductible contributions that will serve as shares in your company. The trust account that you created will allocate your company shares to the accounts of employees who are participating in the ESOP.

The advantages of an ESOP

If a company is owned by multiple people, an ESOP can only purchase shares from owners who want to sell theirs. This differs from outside buyers who typically want to obtain full ownership of a company.

With an ESOP, owners can sell their shares of the company to ESOPs at their own pace. This makes it possible to gradually withdraw from the company, whether that means stepping into a more limited role or exiting the company entirely, which is a level of flexibility that is hard to achieve with other business sale methods.

That said, even after you sell your shares to an ESOP, you can still stay involved with the company. For instance, you can remain on the company’s board of directors or take on a role that provides guidance to the company.

If your business is a C corporation and you choose to sell your shares of the company to an ESOP, you can defer capital gains taxes indefinitely. According to Internal Revenue Code Section 1042, all you need to do is reinvest the proceeds in the form of stocks and bonds for U.S.-based companies.

On the other hand, since an S corporation does not typically pay corporate income taxes, you — as the S corporation owner — can sell any amount of your company shares to an ESOP and elect to sell even more later if you wish.

If you decide that you only want to sell a portion of your stake in the company, an ESOP provides the opportunity to purchase any percentage of your company’s shares while upholding the option to buy even more over time. This is particularly ideal if private investors are not interested in purchasing stakes in the company.

The disadvantages of an ESOP

One of the limitations of an ESOP is that you can only establish them for C corporations or S corporations, not businesses that are classified as partnerships. Furthermore, private companies with ESOPs must buy back shares from employees who depart from the business, and this can be costly if many employees leave at once or multiple employees retire simultaneously.

ESOPs can be expensive to set up, though they are often less costly than alternative options. Just note that legal fees for the establishment and maintenance of ESOPs typically start at a base level of $125,000.

For companies that employ fewer than a few hundred people, the annual costs associated with ESOP administration and valuation range from $20,000 to $35,000. That said, a simple ESOP that only receives shares or funds to purchase other shares is relatively less expensive.

Furthermore, the tax benefits of an ESOP tend to outweigh the maintenance costs over time. Also, an ESOP cannot pay more than the fair market value for shares. This value is determined by an independent valuation expert, especially when your stock is not publicly traded, so an ESOP might not match a higher offer from a motivated buyer.

You cannot use ESOPs as a means of rewarding specific employees while denying participation to others. Instead, all eligible employees must be included in ESOPs. Also, note that ESOPs require ongoing cash contributions, and your company might need to contribute more to the ESOP than you would to other retirement plans.

If you have an ESOP loan in place, your company will subsequently have limited flexibility in terms of managing cash flow and the timing of payments. Additionally, private companies are responsible for repurchasing shares from former employees once they are vested and have left the company.

For very small companies that employ no more than 20 people, the costs of an ESOP may outweigh the benefits. Therefore, ESOPs are most suitable for companies with sufficient profits as this will give the company the means to afford setup expenses and maintenance costs while still operating successfully and making all necessary ESOP contributions.

As you can see, ESOPs are a way to establish a transition plan. They create a market for your company’s stock, and, in this way, you can then sell your business gradually instead of having to exit suddenly.

Navigating a Business Tax Audit

Nicole Sithithavorn Blog audit, Tax

If your business is being audited, take a deep breath and understand the reasons behind it. Audits may be random or triggered by issues specific to small businesses, such as excessive expenses, misclassified employees or questionable deductions. While an audit doesn’t necessarily mean you’ve done something wrong, it is the IRS’s way of verifying your reported information and ensuring that the correct taxes have been paid.

Audits can vary in complexity. A correspondence audit is conducted through written communication and may only require copies of receipts or bank statements to resolve. In contrast, desk or field audits involve face-to-face meetings with an IRS representative to address discrepancies. Desk audits will always be held at an IRS office, but you can choose the location for a field audit; it’s a good idea to select a venue such as your accountant’s or attorney’s office. Schedule the audit at a time that allows you to gather necessary documents such as invoices, bank statements, accounting records, leases or property titles. If the IRS believes that your business engaged in fraud or owes a significant amount in taxes, it is advisable to have your attorney present.

Check the details

To prepare for the audit, confirm the accuracy of your tax return, including reported income, deductions and expenses. Respond promptly to all IRS requests, including Information Document Requests, and provide exactly what is asked for (but do not volunteer additional information). Collaborate with your tax professional, who can advocate for your position and ensure compliance. If discrepancies arise, you may need to reconstruct missing documents or clarify your interpretation of tax laws.

At the conclusion of the audit, the IRS may make no changes or may propose adjustments. If you agree, sign the examination report and pay any additional taxes or penalties. If you disagree, you can request a conference with the IRS manager, file an appeal or pursue mediation. You must file the appeal request within 30 days.

Typically, audits begin within a year of filing and are resolved in less than a year. The IRS offers a variety of materials on its website that can be used to prepare for the audit process.

Maintaining thorough records and consulting with a tax professional can simplify the audit process and help prevent future issues while improving your business’s efficiency and compliance.

The OBBBA: An Overview of Major Provisions

Nicole Sithithavorn Blog Legislation, Tax

The One Big Beautiful Bill Act became law on July 4, 2025. The new law, which is generally regarded as pro-business, contains significant tax changes for businesses and individual taxpayers alike. Here is a summary of some of the important highlights of the OBBBA.

Keep in mind that as with all major legislation, the devil is in the details. Consult your tax professional for the advice that will best fit your circumstances.

Provisions affecting individuals:

The OBBBA added one year of inflation adjustment for determining the actual dollar amounts for tax brackets.
The standard deduction enacted by the TCJA was made permanent and increased to $15,750 for single filers or $31,500 for married taxpayers filing jointly. These amounts will be indexed for inflation after 2025.
The so-called Pease limitation, which essentially reduced deductions for high net worth individuals, has been repealed.

And there’s more:

The state and local tax deduction cap was raised to $40,000 for 2025. It will increase to $40,400 in 2026 and by an additional 1% through 2029. However, unless a future Congress takes action, the cap will revert to $10,000 in 2030. Other key changes:

The OBBBA creates a charitable contribution deduction of up to $1,000 for single filers or $2,000 for married taxpayers filing jointly who do not itemize. Taxpayers who itemize are subject to a different rule: The amount of an individual’s charitable contributions for a tax year will be reduced by 0.5% of the taxpayer’s contribution base for that year up to a maximum of 10% of taxable income. Higher alternative minimum tax exemptions and phase-out thresholds were added.
Certain unreimbursed employee expenses for eligible educators are deductible.
The moving expense deduction is permanently eliminated, with an exception for members of the armed forces and certain members of the intelligence community.
The TCJA’s provision limiting the itemized deduction for personal casualty losses to losses resulting from federally declared disasters became permanent. However, the OBBBA expands this deduction to include certain state-declared disasters.
A car loan deduction was created for taxpayers who buy an American-made car between 2025 and 2028. These taxpayers will be able to write off up to $10,000 of interest paid on their auto loan. The deduction will be phased out for taxpayers with modified adjusted gross income in excess of $100,000 or $200,000 for married taxpayers filing jointly.
However, taxpayers who buy electric vehicles will lose the $7,500 EV tax credit at the end of September 2025. In addition, individual clean energy credits will be terminated for EV-charging equipment placed in service after June 30, 2026. Also, qualified bicycle commuting reimbursements were removed from the list of qualified transportation fringe and other commuting benefits, making them taxable.
Mortgage interest deduction. The OBBBA also (1) makes permanent the IRC Sec. 163 qualified residence home mortgage debt interest deduction limitation to the first $750,000 or $375,000 for married couples filing separately, (2) permanently excludes interest on home-equity indebtedness from the definition of qualified residence interest, and (3) treats certain mortgage insurance premiums on acquisition indebtedness as qualified residence interest.
Earnings from gambling. The OBBBA changes how gambling winnings and losses are taxed. Under the new law, the deduction is capped at 90% of losses.
Tip income and overtime pay. The OBBBA provides temporary above-the-line deductions for:
- Tip income. Up to $25,000 for qualified tips received by an individual in an occupation that customarily and regularly receives tips. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 or $300,000 for a joint return. This deduction is available for tax years 2025 through 2028, and it will expire on Dec. 31, 2028, unless it is extended by Congress.
- Overtime pay. Up to $12,500 or $25,000 for married taxpayers filing a joint return for qualified overtime compensation received by an individual during a given tax year. The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 or $300,000 for a joint return. This temporary deduction will be available for tax years 2025 through 2028.
Student loan debt. Student loan debt discharged because of death or disability is permanently excludible from gross income.
Social Security. The tax on Social Security income was not eliminated by the OBBBA. However, seniors aged 65 or older with an adjusted gross income of up to $75,000 or $150,000 for married couples filing jointly are eligible for a $6,000 tax deduction or $12,000 for married couples filing jointly. The deduction phases out for people who earn above those amounts. This deduction, which will expire at the end of 2028 unless it is extended by Congress, applies to all of a senior’s income.

Provisions affecting businesses

IRC Sec. 199A qualified business income deduction. The OBBBA makes the Section 199A 20% qualified business income deduction permanent. In addition, the limitation phase-in window is increased to $75,000 for single filers or $150,000 for married taxpayers filing jointly.
Capital expenditures and investments. The OBBBA permanently reinstates 100% expensing of qualified assets in the year they were put into service for property acquired beginning Jan. 20, 2025.
Form 1099 reporting. The OBBBA increases the information-reporting threshold for certain payments to persons engaged in a trade or business and payments of remuneration for services to $2,000 in a calendar year. This amount will be indexed for inflation in calendar years after 2026.
New markets tax credit. The OBBBA makes the new markets tax credit permanent.
Research and development. The OBBBA permanently allows domestic research costs to be immediately expensed unless such expenditures are attributable to research conducted outside the United States, in which case the business will be required to capitalize and amortize the expenses over 15 years.
Foreign tax credits:
- Increases deemed paid credits under IRC Sec. 960 to 90%.
- Renames global intangible low-tax income as net CFC tested income deduction and permanently decreases it to 40%.
- Renames foreign derived intangible income to “foreign-derived deduction eligible income” and permanently decreases it to 33.34%.
Base erosion and anti-abuse tax. The OBBBA permanently changes the BEAT rate to 10.5%.
Clean energy tax credits and incentives. The OBBBA limits/eliminates many clean energy tax credits and incentives, including:
- The phaseout of primarily wind, solar and EV clean energy tax incentives created or modified by the Inflation Reduction Act is accelerated.
- Ends the (1) energy-efficient home credit for deductions for qualified property acquired after June 30, 2026, and (2) deduction for energy-efficient commercial buildings for property that begins construction after June 30, 2026.

Estate and gift tax exemption

The OBBBA permanently increases the estate tax exemption and lifetime gift tax exemption amounts to $15 million for single filers or $30 million for married taxpayers filing jointly in 2026. The amount will be indexed for inflation in subsequent years.

In addition, the OBBBA aligned the generation-skipping transfer tax exemption with the estate tax exemption. It also retained the TCJA’s tax brackets for trusts and estates.

This article touches on only some major features in the OBBBA. The law contains many other tax provisions, some affecting narrow constituencies. Also details are still being sorted out, so don’t make any decisions based just on this article — or any other. Work closely with tax and legal professionals to make sure that you are following the correct provisions — and that they are relevant to your situation.

Pro Tip: Month-End Close

Nicole Sithithavorn Blog Financial Reporting, Internal Controls, Month-end, pro tip

Why does it matter if you have a defined month-end close process? Because you need to have consistent financial reporting practices in order to have reliable financial reporting results. The top three issues we see that indicate a lacking month-end close are:

1. Inconsistency in prior period balance sheet account balances. This means that items are being recorded in prior periods after the fact.

2. Unreconciled items outstanding from prior periods in bank/credit card activity.

3. Stagnant accounts on the balance sheet period after period.

These items could indicate that your data is inaccurate!