My CPA LLP

If you have a traditional IRA, you may want to consider converting some or all of the balance to a Roth IRA. Such moves typically allow people to turn tax-deferred future growth into tax-free growth and take advantage of a Roth IRA’s estate planning benefits. The converted amount is taxable the year of the conversion. But income tax is currently at historically low rates, potentially making this a smart time to convert. Whether a Roth conversion makes sense for you depends on such factors as your age, whether you can afford to pay the tax now, your current tax bracket, the tax bracket you expect to be in when you retire and your estate planning objectives. Contact us for advice.

The American Institute of CPAs (AICPA) has asked the IRS to act on a seemingly small but troublesome issue affecting some taxpayers. Currently, people and businesses that want to change their address with the IRS must mail paper forms. Businesses needing to change their name must submit a letter and supporting documents. Processing such requests can take weeks, and the IRS may, in the meantime, send letters to incorrect addresses. In fact, taxpayers may be assessed penalties and interest if time-sensitive notices are sent to old addresses. Refunds can also be delayed. The AICPA is proposing a fully automated electronic process that taxpayers can access quickly through their online accounts.

Financial statements play an important role in any manufacturing business. But you may need more granular information for strategic planning. A segmented income statement breaks down revenue and expenses by product line, customer or another useful category, making it easier to spot the segments that are strong and weak performers. Because cost allocations can affect the results, they require careful judgment. Contact us for help identifying useful segments, establishing defensible cost drivers and incorporating segment analysis into your regular financial reporting. We can also help you use the results to evaluate pricing, budgets, product mix, capacity and other key decisions.

Football season is about to kick off. If you’ll be betting on college and NFL games this year, it’s time to brush up on the tax rules associated with gambling. Federal tax law requires taxpayers to report winnings on their tax returns, even if they don’t receive a Form W-2G for gambling winnings. Also a major gambling rule change went into effect this year: Gamblers can deduct from their winnings only 90% of their losses for a tax year. This means some gamblers could owe tax even if they break even or incur a net loss. And losses generally are deductible only if you itemize deductions. If you’re unsure of the tax rules regarding gambling, please contact us or visit: https://bit.ly/4zQQ2pS

Tax revenues reached a record level during fiscal year (FY) 2025, but revenue from tax audits took a hit, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA). Taxpayers paid the IRS $5.3 trillion, a 4.2% increase from FY 2024 and the most tax revenue ever paid by taxpayers, without adjusting for inflation. However, TIGTA reports IRS enforcement revenue decreased to $93.8 billion in FY 2025. TIGTA said this is mainly attributable to a 35% decline in examination-related revenue from FY 2024 to FY 2025. Also of note: The IRS lost nearly 27% of its Examination and Collection staff from FY 2024 to FY 2025. Read TIGTA’s report: https://bit.ly/4zOCESZ

When owners provide funds to their businesses, proper classification matters. Depending on the facts and circumstances, an advance may be classified as debt or an equity contribution under U.S. Generally Accepted Accounting Principles (GAAP). Relevant considerations include the intent to repay, the terms of the advance and the business’s ability to repay. How an advance is treated in tax filings and other records may provide additional evidence about the parties’ intentions. Clear documentation from the start can help support the appropriate treatment and related disclosures. Contact us for help classifying and reporting shareholder advances.

You don’t have to engage with the IRS on your own. The tax agency allows third-party authorizations, meaning you can ask a family member, friend, tax advisor or attorney to help with tax matters you specify. You may provide power of attorney to professionals authorized to practice before the IRS. They can represent and sign for you and receive your IRS communications. Other designations include “tax information authorization,” which enables someone to view your tax data and “third-party designee,” which lets someone discuss your return with the IRS. If you bring someone to an IRS meeting, the attendee only requires an “oral disclosure.” You can revoke an authorization at any time.

Do you hold an interest in a business that’s closely held or family owned? If so, a buy-sell agreement should be a component of your estate plan. It provides for the orderly disposition of each owner’s interest after a “triggering event,” such as death, disability, divorce or withdrawal from the business. It accomplishes this by permitting or requiring the company or the remaining owners to purchase the departing owner’s interest and specifying the method for determining the value of an interest. We can help develop a buy-sell agreement in conjunction with your estate plan or evaluate whether your existing agreement’s provisions still fit your business and estate planning objectives.

The Taxpayer Advocate Service (TAS) is sharing tips for taxpayers who may be eligible for the IRS’s Automatic Exemption from Penalty (AEP) program. You may qualify if you have a history of timely filing and payment compliance. The AEP fully replaces the First Time Abate program for original returns with due dates on or after Jan. 1, 2027, and also may apply to 2025 original returns and 2026 quarterly returns. The TAS says you shouldn’t ignore an IRS notice assessing a penalty. If you don’t receive a separate notice explaining that AEP was applied and you think you may be eligible, call the IRS at the toll-free number on your notice to request penalty relief. For details: https://bit.ly/3Ug5yvf

There are many reasons individuals may need to access their tax transcripts. They include the need to file a tax return or apply for a mortgage or loan. In a Tax Tip (2026-25), the IRS lists several types of tax transcripts available for free to taxpayers. A tax return transcript shows most line items from the taxpayer’s original Form 1040-series tax return, along with any forms and schedules. It’s available for the current and three prior tax years. A tax account transcript shows basic information such as filing status, taxable income and payment types. It’s generally available for the current and nine prior tax years. To learn about other available transcripts: https://bit.ly/4qGb7za