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Fair market value (FMV): What is it and how to defend it

So what is fair market value (FMV)? According to the IRS, it's the price that property would sell for on the open market. This is the price that would be agreed on between a willing buyer and a willing seller. Neither would be required to act, and both would have reasonable knowledge of the relevant facts. This is the standard the IRS uses to determine if an item sold or donated by you is valued correctly for income tax purposes. It is also a definition that is so broad that it is wide open to interpretation. Understand when FMV is used Fair market value is used whenever an item is bought, sold or donated and has tax consequences. The most common examples are:

How Do You File an Amended Tax Return?

Its’ easy to make mistakes when you’re doing your own tax preparation. The IRS has a special procedure for fixing them. That sense of accomplishment you feel after you’ve filed your income taxes can turn quickly to dread if you realize later that you made a mistake. What do you do now? The IRS knows that this will happen to some taxpayers every year. The tax code is so complex, and if you prepare your taxes manually, you’ve probably been shuffling a lot of papers around. So, first: Don’t panic. You can fix this. The IRS offers what’s called an amended return, the Form 1040X, for just this type of situation.

If you’ve made
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You’re getting audited – here’s what to do

Most of us will never be audited. But when it does happen, it might feel a little scary. The truth of the matter is IRS auditors do audits every day. They know what to look for and can ask questions that you may easily answer incorrectly. Here's how you can be more prepared if it happens to you:

Putting your tax refund into a retirement account? Read this

If you plan on having the IRS deposit your tax refund into one or more individual retirement accounts (IRAs), most of the hard part is already done: You've already decided that you want to save the money instead of spending it on new patio furniture or a trip to Jamaica. Still, you're not in the clear yet. Here are a handful of possible obstacles that might mess up your tax refund on its way through the direct deposit process:

Winner takes all (or a quarter)

Be honest – you've thought about what it'd be like to win the lottery. What you might not have considered is the amount you'd actually end up with once you collect your winnings. After factoring in how much you spent on your lottery tickets, plus cuts from retailers and state and federal taxes, you're looking at about 25 percent or less of that big winning number you initially laid eyes on.
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Debt forgiveness and taxes

Did you know that any amount of canceled debt is typically taxed as ordinary income? If you receive debt forgiveness for home, car or student loans, or credit card interest and debt, you may create a tax liability. There are some exceptions, like when debt is forgiven as part of a Chapter 11 bankruptcy, or when a person's total debt is more than the value of the assets he or she owns.
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What Is a Vendor Credit, and How Do You Record One?

Whether you’re getting a vendor credit for a refund or a return, you can record it in QuickBooks Online. When you’re dealing with your company’s vendors, you’re probably accustomed to money flowing in one direction: theirs. Maybe you send them purchase orders and they send you invoices. Or they send you bills and you pay them. Or you walk into a store and buy something your business needs. Sometimes, though, vendors owe you money. Probably the most common scenario is a return of merchandise, products that you’ve sent back to the supplier for any of a variety of reasons. You may be issued a credit of some kind simply because you’ve been a loyal customer, and a vendor wants to reward you.
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Beware of email hacks

One of several identity theft scams IRS Commissioner John A. Koskinen spoke about at a recent IRS Nationwide Tax Forum is a client email hack scam. This happens when a thief uses a taxpayer's email address to send an email to a tax preparer with instructions to redirect refunds into a different bank account. Protect your tax returns this tax season by ensuring your email accounts and important data is kept safe with strong passwords, malware protection and other security measures.
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Considering leasing your business real estate?

If your business is incorporated, it may be a good idea for you to own the business real estate and lease it to your corporation. That's because there are a number of tax and nontax concerns relating to real estate ownership. Before you acquire new business property or change the ownership of property you already have, give us a call. We can discuss tax considerations.
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4 smart ways to cut business costs

Keeping costs under control is crucial in today's challenging business environment. Without a doubt, one of the quickest ways for a business to cut costs is through staff reduction. But cutting jobs is not always the best cost-cutting strategy. Drastic job cuts can lead to a vicious cycle of reduced productivity, followed by even slower growth and decreased profitability. Replacing skilled workers when times improve may be difficult, leaving your company to struggle longer still. Take a look at some alternative cost-control strategies:

  1. Review your facility costs. If your company owns expensive office space, consider moving to a less costly location that will not mean losing clients or business. If a move is out of the question, consider sharing office space
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