October 2018 – Internal Revenue Code Simplified

Anyone having Long term capital gains or short term capital gains can now save on tax by investment in qualified opportunity fund (QOF), which was created under the new code Sections 1400Z-1 and 1400Z-2 of the Tax Cuts and Job Act . This is in addition to Section 1031 exchange rule under which one can defer tax on capital gains now!The purpose of the introduction of Qualified Opportunity Funds is to promote investment in certain economically distressed communities in Qualified Opportunity Zones. What is Qualified Opportunity Funds? Basically, the QOF or Qualified Opportunity Fund is a special investment vehicle, organized as a corporation or a partnership for the purpose of investing in properties after December 31, 2017, within qualified opportunity zones.

There is good news for business onwers- IRS has just issued Notice 2018-76 that pertains to deductions for meals and entertainment. As you know , under the pre-TCJA law, businesses could deduct upto 50 percent of the amount of the entertainment expense under Code Section 274(n)(1) if the said entertainment expense was directly related to taxpayer’s trade or business. The expense on food & beverages was all part of “Entertainment Expenses”.However, The Tax Cut & Jobs Act (TCJA ) did not define circumstances under which food and beverages might constitute entertainment . Thus , expense on meals is not deductible, even if that was indeed incurred entirely for the business purpose

Month: October 2018

Qualified Opportunity Fund (QOF) : New Way to Defer Capital Gains

IRS Notice 2018-76-Five Conditions for Claiming Meal Deduction