How your business can use AI to strengthen customer service

Strong portfolio performance can bring an unwelcome surprise: an additional 3.8% federal tax. The income thresholds for the net investment income tax (NIIT) aren’t annually adjusted for inflation and haven’t changed since the tax took effect in 2013. So the NIIT is hitting more taxpayers. If your income is near or above the applicable threshold, year-end planning may help reduce its impact. When you’ll owe the NIIT The NIIT applies to some or all net investment income once a taxpayer’s modified adjusted gross income (MAGI) exceeds certain levels. Net investment income generally includes taxable gains from stocks, bonds, mutual funds and investment real estate, as well as interest, dividends, nonqualified annuity income, royalties and rents. It also can include income from a passive trade or business and from a business that trades financial instruments or commodities. You’ll generally owe the NIIT if you have net investment income and your MAGI exceeds: $200,000 if you’re a single or head-of-household filer, $250,000 if you’re married filing jointly, or $125,000 if you’re married filing separately. The amount subject to the NIIT is the lesser of your net investment income or the amount by which your MAGI exceeds the applicable threshold. Many types of income aren’t included in net investment income. Examples include tax-exempt interest, the excluded portion of a gain from the sale of your primary home, qualified retirement plan distributions, Social Security benefits, wages and self-employment income. However, taxable retirement plan distributions, wages and self-employment income can increase your MAGI and cause some or all of your net investment income to become subject to the NIIT. Planning may therefore focus on managing your net investment income, your MAGI or both. Adjust your investment mix If your income is high enough to trigger the NIIT, shifting some income-producing investments to tax-exempt municipal bonds could reduce your exposure. Interest from qualifying tax-exempt municipal bonds generally isn’t included in MAGI or net investment income. Before making a change, consider the bonds’ risks and after-tax return as well as your broader investment objectives. Qualified-dividend-paying stocks are taxed at the same rates as long-term capital gains: The maximum rate is 20%, but the rate becomes 23.8% with the NIIT. Generally, however, dividends are taxed in the year they’re paid, and you can’t control when they’re paid. Quarterly dividend payments are common. As a result, you may want to consider rebalancing your investment portfolio to emphasize growth stocks over dividend-paying stocks. Although the capital gain from these investments will be included in net investment income and subject to capital gains tax and potentially the NIIT, this generally doesn’t happen until you recognize the gain by selling the stock — so you can control the timing. Also, recognized capital losses can offset capital gains. Investment and diversification considerations should drive any decision to rebalance, however. Leverage retirement accounts Tax-advantaged retirement accounts offer both opportunities and risks when it comes to the NIIT. One opportunity relates to annual contributions. Deductible or pretax contributions to a tax-deferred retirement plan reduce current MAGI. So maximizing your contributions may help keep you below the NIIT threshold or reduce the amount of your income that’s subject to the NIIT, depending on your circumstances. Small business owners may have particular flexibility to establish or make large 2026 contributions to retirement plans — possibly even after December 31, 2026. Retirement plan distributions come with both risks and opportunities. They generally aren’t included in net investment income, but taxable distributions can increase MAGI and trigger the NIIT on other income. Your ability to control the timing of retirement plan distributions provides an opportunity. Consider the potential NIIT impact when timing discretionary distributions (or Roth IRA conversions, which also increase MAGI). If you’re subject to annual required minimum distributions (RMDs), you must take your annual RMD by the deadline or face a penalty on the amount you should have withdrawn but didn’t. But if you’re charitably inclined, a qualified charitable distribution (QCD) directly from your IRA to charity can satisfy your RMD while excluding the distributed amount from your MAGI. Review your options Other year-end strategies that may reduce or eliminate NIIT liability include harvesting capital losses, timing investment gains, donating certain appreciated investments and reviewing passive activities or rental income. The NIIT consequences of any move will depend on both your net investment income and your MAGI. We can help you estimate your potential NIIT and evaluate possible strategies before year end. © 2026 

Over the years, you’ve invested blood, sweat and tears into building a successful small business. Now it’s time to sell and move on to the next chapter of your life. What are the tax implications of selling — and how can you reduce or defer your taxes? One possible solution is an installment sale. How it works With an installment sale, you don’t receive a lump-sum payment when the deal closes. Instead, you receive installment payments over time. Typically, the buyer makes a down payment at closing and issues a note requiring principal and interest payments over an agreed-upon period. Each principal payment generally includes a tax-free return of basis and taxable gain, while the interest is taxed separately as ordinary income. This spreads your gain over several years. It’s important to note that the rules are more complicated when a deal is structured as an asset sale rather than a sale of an ownership interest. Installment sales are still possible for eligible assets included in an asset sale, but you must allocate the purchase price among the business’s assets and calculate each asset’s gain or loss separately. If you’re contemplating an asset sale, we can provide more details. Potential tax benefits Generally, installment sale gains qualify as low-taxed long-term capital gain or as Section 1231 gain for sales of property held for business purposes. Sec. 1231 gains are usually also taxed at the lower long-term capital gains rates. The 3.8% net investment income tax (NIIT) and state income tax may apply, too. An installment sale generally defers tax, because you pay most of the tax liability as you receive the payments. It may also reduce your overall tax obligation from the transaction if the arrangement allows you to stay under the thresholds for triggering the 20% long-term capital gains rate or the NIIT for each tax year of the note’s term. For 2026, the 20% long-term capital gains rate kicks in when taxable income exceeds: $545,500 for single filers, $579,600 for heads of households, $613,700 for married couples who file jointly, and $306,850 for married filing separately. If your taxable income for the tax year is below the applicable threshold, you’ll likely pay 15% on your long-term capital gains. However, if your taxable income for the tax year is modest, you could pay no federal long-term capital gains tax. For 2026, the 0% rate applies to those with taxable income up to $49,450 (single and separate filers), $66,200 (heads of households) and $98,900 (joint filers). For 2026, taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 for joint filers and $125,000 for separate filers) may owe NIIT on some or all of their investment income. Beyond taxes An installment sale also might help you close a deal or get a better price for your business. For instance, an installment sale might appeal to a buyer that lacks sufficient cash to pay the price you’re looking for in a lump sum. Or a buyer might be concerned about the ongoing success of your business without you at the helm or because of changing market conditions or other economic factors. An installment sale that includes a contingent amount based on the business’s performance might be the solution. Of course, you should evaluate the buyer’s credit risk before entering into an installment arrangement. Consider collateral, personal guarantees and other protections. Your note may also be subordinated to financing provided by the buyer’s bank. Beware of potential tax pitfalls An installment sale isn’t without tax risk for sellers. For example, you must report depreciation recapture as a gain in the year of sale, no matter how much cash you receive. Depreciation recapture generally results from deductions previously claimed for the property. It may be taxed at ordinary income tax rates, which can be as high as 37%. But in the case of certain depreciated real property, the maximum federal rate on depreciation recapture is generally 25%. The 3.8% NIIT and state income tax may apply, too. If depreciation recapture is an issue, you could owe tax that year without receiving enough cash proceeds from the sale to pay the tax. Also, beware: If the installment note doesn’t charge adequate interest on the deferred principal payments, the complicated original issue discount (OID) rules can transform some of the payments from principal to interest. That’s unfavorable because interest income recognized by an individual taxpayer is taxed at higher ordinary income rates. Finally, today’s federal tax rates are relatively low compared to historical rates. If Congress passes legislation that increases the long-term capital gains or NIIT rates (or lowers the applicable thresholds), you could wind up paying more overall tax on your gain from the sale. Weigh this risk carefully against the potential benefits of an installment sale. One size doesn’t fit all transactions As you can see, installment sales have both pros and cons. To determine whether one is right for you and your business — and find out about other tax-smart options — please contact us. © 2026 

President Trump recently signed the Doug LaMalfa Federal Disaster Tax Relief Certainty Act (LaMalfa Act) into law. Among other things, it extends tax relief for victims of certain federally declared disasters. That relief temporarily removes two significant barriers to claiming the personal casualty loss deduction. This means victims of presidentially declared disasters in recent years who normally couldn’t claim a casualty loss deduction may now be able to claim one. It also extends certain relief for wildfire victims. Timing of the LaMalfa Act’s provisions The LaMalfa Act generally extends tax relief provided by the Federal Disaster Tax Relief Act, signed into law in December 2024, and briefly extended by the One Big Beautiful Bill Act (OBBBA). Specifically, the new law extends the relief to qualifying disasters whose incident periods begin before January 1, 2027. Important: Relief provided by the act doesn’t apply to disasters declared only at the state level, even if they now qualify as eligible disasters under the OBBBA for purposes of the personal casualty loss deduction in general. Overall, the LaMalfa Act generally applies to tax years beginning after December 31, 2024, superseding the earlier temporary provisions for those years. It covers qualifying federally declared disasters whose incident periods begin on or after December 28, 2019, and before January 1, 2027. Tax relief extended by the LaMalfa Act A casualty loss deduction can offset some unreimbursed costs if an eligible disaster damages your home or personal property. However, there are several rules and limits to the deduction. For example, the deductible loss is generally the smaller of the property’s adjusted tax basis or decline in value, reduced by any insurance or other reimbursement. If reimbursement covers the entire loss, you can’t claim a casualty loss deduction. If your insurance doesn’t cover the entire loss, then without the tax relief extended by the LaMalfa Act, you generally must subtract $100 (per casualty event) from the uncovered amount. But under the extended relief, you must subtract $500 per qualifying casualty event. This may sound like a negative, but the relief makes two other changes that, for many taxpayers, will provide tax benefits that far outweigh any negative impact of this $500 reduction. First, the relief eliminates the income-based floor. Without the relief, a floor equal to 10% of adjusted gross income (AGI) applies. So you can deduct only the uncovered loss (reduced by $100 per casualty event) that exceeds 10% of your AGI for the year you claim the loss deduction. If, say, you had one casualty loss event, your AGI is $100,000 and your casualty loss (after subtracting insurance proceeds and $100) is $11,000, you can deduct only $1,000 on your federal income tax return. For a qualified disaster-related personal casualty loss under the relief extended by the LaMalfa Act, the 10% floor doesn’t apply. So under the same example, your casualty loss deduction would be $10,600 ($11,000 − the additional $400 per casualty loss you must subtract). Second, the relief allows taxpayers to claim a qualified disaster-related personal casualty loss without having to itemize deductions. Itemizing is beneficial only if your total itemized deductions exceed the standard deduction for your filing status. So without the relief, if your total itemized deductions don’t exceed your standard deduction, losses otherwise eligible for the casualty loss deduction won’t provide any tax benefit. Expanded tax relief for wildfire payments Generally, certain wildfire relief payments can be excluded from federal taxable income. Under the LaMalfa Act, the exclusion may apply even if you don’t receive compensation until years after the wildfire. Previously, qualifying payments generally had to be received in 2020, 2021, 2022, 2023, 2024 or 2025. The LaMalfa Act eliminates that 2025 payment cutoff, extending the potential tax benefit to later payments. The exclusion generally covers qualifying payments made to compensate individuals for losses, costs or damages associated with certain federally declared wildfire disasters. Eligible expenses and losses may include additional living costs, wages lost and not reimbursed by an employer, and financial damages related to personal injury, death or emotional distress. To qualify, the wildfire must have been part of a federally declared disaster occurring after December 31, 2014, and before January 1, 2027. There are important limitations. The exclusion applies only to losses or expenses not reimbursed by insurance or another source. In addition, taxpayers generally can’t receive a double tax benefit: Expenses covered by an excluded wildfire relief payment can’t also be used to claim a deduction or credit, and the tax-free payment can’t be used to increase the basis of affected property. Do you qualify under the new law? Recovering from a natural disaster can bring significant financial challenges, particularly when insurance doesn’t cover the full extent of the damages. The LaMalfa Act provides relief by allowing more affected taxpayers to deduct qualifying personal casualty losses or exclude wildfire relief payments. Because eligibility and timing depend on the circumstances of the disaster and the loss, contact us to determine whether a deduction or exclusion is available and how best to claim it. © 2026 

If your estate plan includes gifts, bequests or other transfers to grandchildren, great-grandchildren or other beneficiaries decades younger than you, the generation-skipping transfer (GST) tax deserves careful attention. Without proper planning, transfers that skip a generation can potentially trigger a significant federal tax in addition to gift or estate taxes. GST tax rules at a glance The GST tax is designed to prevent families from avoiding transfer tax at one or more generational levels. Generally, this tax applies to certain transfers to a “skip person.” A skip person may be a grandchild or another family member who’s two or more generations below the person making the transfer. An unrelated individual generally is considered a skip person if he or she is more than 37½ years younger than the transferor. GSTs generally fall into three categories: direct skips, taxable distributions and taxable terminations. Depending on the circumstances, the GST tax may apply to an outright gift or bequest to a skip person, a distribution from a trust, or a termination of a beneficiary’s interest that leaves only skip persons with interests in the trust. The GST tax rate is 40%. Fortunately, a $15 million GST tax exemption is available. It’s separate from the $15 million gift and estate tax exemption. But under the annual gift tax exclusion, you can exclude from gift tax certain gifts of up to the annual exclusion amount — $19,000 per recipient for 2026 (twice that if your spouse elects to split the gift with you or you’re giving community property) — without using up any of your gift and estate tax exemption. And annual exclusion gifts are generally also exempt from the GST tax. Beware of a few pitfalls Automatic allocation rules for the GST tax exemption can reduce the risk that you’ll inadvertently fail to allocate it to GSTs. For example, the GST tax exemption generally will be automatically allocated to certain direct skips and to transfers to trusts that meet the definition of a “GST trust.” Automatic allocation can be useful, but it doesn’t always produce the desired result. For example, depending on the trust’s beneficiaries and your estate planning objectives, the exemption may be allocated to a trust that has little chance of generating a GST tax, wasting your exemption. To avoid this result — and preserve your exemption for transfers that are more likely to trigger GST taxes — elect to opt out of automatic allocation on a timely filed gift tax return. If you neglect to opt out, you may still be able to obtain relief from the IRS. Doing so allows you to make a late election so long as you can demonstrate that you acted reasonably and in good faith. Another potential issue can arise when a trust has both skip-person and non-skip-person beneficiaries and the GST exemption has been allocated to only part of the trust. The trust then will have an “inclusion ratio” between zero and one. A trust’s inclusion ratio refers to the portion of a trust’s assets that will be subject to the GST tax if a taxable event occurs. If you haven’t allocated any of your exemption to a trust, its inclusion ratio is 1.0. If the exemption protects a trust’s assets, its inclusion ratio is 0.0. So, if the inclusion ratio is, for example, 0.5, then only 50% of the distributions to skip persons will be exempt from the GST tax. In some situations, it may be possible to divide, or sever, a trust into separate trusts so that one has an inclusion ratio of zero and the other has an inclusion ratio of one. This approach may make it easier to administer the trusts and direct GST-exempt assets toward skip persons. Review your GST tax strategy regularly If your estate plan includes multigenerational trusts or significant transfers to grandchildren or other younger beneficiaries, review your GST exemption allocation, trust provisions and previous gift tax returns periodically. We can help determine whether your current strategy is using the available exemption effectively and identify opportunities to minimize unnecessary GST tax exposure. © 2026 

Whether your small business is new or you’ve run it for decades, you may not fully understand which expenses are potentially tax-deductible and which aren’t. After all, that’s why you have a tax advisor! But it’s worth keeping up with tax law because your daily decisions could significantly reduce your business’s taxable income — and increase its profitability. The basics Deductible business expenses must be both ordinary (common and accepted in your field) and necessary (helpful and appropriate for your business). Expenses don’t, however, need to be indispensable to qualify as necessary. The cost of inventory is recovered through “cost of goods sold,” so it’s not generally deducted immediately. And the cost of buildings, equipment and other capital assets is usually recovered over time through depreciation or amortization. Personal expenses aren’t deductible at all. However, the business portion of mixed-use expenses, such as internet and phone service or vehicle costs, may qualify as deductible if you can support your cost allocation. Travel and vehicle costs Reasonable expenses for business travel away from your tax home — including transportation, lodging and certain incidental costs — may be deductible. Convention expenses may also qualify when attendance benefits your business, but restrictions apply to events held outside North America. If you use your own vehicle for business travel, you may deduct eligible costs using either the actual expense method or the IRS standard mileage rate method. Either way, maintain a mileage log that records dates, destinations, distances and business purposes. Note that ordinary travel between your home and regular workplace is considered a nondeductible personal commuting expense. This is true even if you work on your laptop or make business calls during the trip. Historically, small business owners recovered the cost of vehicle purchases over several years through depreciation. Current tax law may allow certain qualifying vehicles to be written off more quickly and, in some cases, fully in the first year, through 100% bonus depreciation or Section 179 expensing. To claim either tax break for the 2026 tax year, you generally need to place the vehicle in service before year end. Passenger-vehicle limits, Sec. 179 limits and business-use requirements may restrict the deduction. New meal and entertainment rules Beginning in 2026, most meals provided to employees through an employer-operated eating facility or for the employer’s convenience aren’t deductible (with limited exceptions). Recreational events primarily benefiting non-highly compensated employees — such as holiday parties or company picnics — remain fully deductible under the applicable rules. Business meals are typically 50% deductible so long as: They aren’t lavish or extravagant, The owner or an employee is present, and They have a valid business purpose. However, entertainment expenses, including event tickets and most club dues, aren’t deductible. But if you purchase food during an entertainment activity with a business purpose, you may be able to deduct it if the bill itemizes costs separately. Business gifts usually are deductible up to $25 annually per recipient. You may exclude incidental engraving, packaging and shipping costs from that limit if they don’t add substantial value to the gift. Documentation is critical We can apply these expense deduction rules for your business, but only you can supply the facts and documentation supporting each expense. Hold on to itemized receipts, mileage logs and other business records (and don’t rely solely on bank or credit card statements). Contact us for help claiming deductions available to you and identifying tax-saving opportunities throughout the year. © 2026 

Tax law changes taking effect this year will increase alternative minimum tax (AMT) risk for some higher-income taxpayers. If you may be affected, consider the AMT before implementing income or deduction timing strategies. A move that would reduce your 2026 regular tax might provide little or no benefit under the AMT — or could trigger it. Background and changes The AMT is a separate federal income tax system that disallows some deductions and treats certain income items differently. You must pay the AMT if your AMT liability exceeds your regular tax liability. The AMT rates are 26% or 28% (versus regular rates ranging from 10% to 37%), but the AMT applies to a larger taxable income base. An AMT exemption may apply when calculating your AMT income. For 2026, the exemption amount is $90,100 ($140,200 for married couples filing jointly, half that for married taxpayers filing separate returns). But at higher income levels, the AMT exemption phases out, increasing the odds that you’ll owe the AMT. For 2026, the exemption phaseout threshold has been reduced to $500,000 ($1 million for married couples filing jointly). For 2025, the exemption began to phase out when AMT income exceeded $626,350 ($1,252,700 for joint filers). In addition, the exemption phases out twice as fast for 2026 as it did for 2025. As a result of these changes, more taxpayers may owe the AMT — or owe more AMT — for 2026. Common triggers Numerous factors can affect whether AMT liability will exceed regular tax liability and cause you to have to pay the AMT. Here are some of the more common AMT triggers: High income that causes your AMT exemption to be partially or completely phased out, Large state and local tax (SALT) deductions because you can’t deduct SALT expenses under the AMT rules, Incentive stock option (ISO) exercises because when you exercise an ISO and hold the shares beyond year end, the bargain element (the difference between the shares’ market value on the exercise date and your exercise price) generally isn’t income under the regular tax rules but is included as income under the AMT rules, and Interest from certain private activity municipal bonds that’s tax-free for regular tax purposes but taxable under the AMT rules. If you’re self-employed, own a pass-through business or invest in a business or a rental real estate activity that’s passive to you, other potential triggers may be accelerated depreciation or passive activity adjustments that can produce different results under the regular and AMT systems. Impact on timing strategies Often, deferring income to the next year and, if you itemize deductions, accelerating deductible expenses into the current year is a good idea. Why? Because it will defer tax, which is usually beneficial. But in some cases, such actions could have a negative impact because of the AMT. So, if you’re at AMT risk this year or next, it’s important to first project your regular tax and AMT liability for both 2026 and 2027. This can help you determine whether you can time income or expenses to avoid the AMT, reduce its impact or benefit from its lower maximum rate. The appropriate strategy depends on which tax system is expected to apply to each year: If you could be subject to the AMT this year, consider accelerating income and short-term capital gains into 2026, which may allow you to benefit from the lower maximum AMT rate. Also consider deferring expenses you can’t deduct for AMT purposes until 2027 — you may be able to preserve those deductions (but watch out for the annual limit on the SALT deduction). Additionally, if you defer expenses you can deduct for AMT purposes to next year, the deductions may become more valuable because of the higher maximum regular tax rate. Finally, carefully consider the tax consequences of exercising ISOs. If you could be subject to the AMT next year, consider taking the opposite approach. For instance, defer income to 2027, because you’ll likely pay a relatively lower AMT rate. Also, before year end, consider selling any private activity municipal bonds whose interest could be subject to the AMT. In either situation, if you could be affected by the differing tax treatment of depreciation or passive activities, be sure to factor that into your planning as well. Run the numbers Because of potentially higher AMT risk in 2026, year-end tax planning decisions warrant a review with the AMT in mind, even if you haven’t owed the AMT in recent years. A move that would reduce your regular tax might provide little or no benefit under the AMT — or could trigger it. Before acting, determine whether you may owe the AMT for 2026 or 2027 and how the move would affect both calculations. We can help project your regular tax and AMT liability for both years and the potential impact of timing strategies. © 2026 

If your small business accepts, uses or invests in Bitcoin, Ethereum or other forms of cryptocurrency, accurate reporting and detailed records are critical for federal tax purposes. The IRS continues to scrutinize digital-asset transactions. Today, business tax returns include a question about digital assets, and brokers are now required to report certain transactions to taxpayers and the IRS on Form 1099-DA. Here’s what you need to know to help you comply with the current tax rules. The basics Unlike cash or credit cards, cryptocurrency still isn’t widely accepted by small businesses for routine transactions. However, some businesses may receive it from customers, use it to make purchases, pay workers with it or hold it as an investment. Cryptocurrencies can be valued in U.S. dollars and digitally traded between users. They may also be purchased or exchanged through online platforms and stored in digital wallets. The IRS uses the broader term “digital assets,” which includes cryptocurrency, stablecoins (a type of cryptocurrency designed to maintain a consistent value) and nonfungible tokens. Tax reporting Buying cryptocurrency with U.S. dollars and holding it generally doesn’t produce taxable income. However, selling it, exchanging it for another digital asset, using it to make a purchase or receiving it as payment for goods or services sold generally creates a reportable transaction. For federal tax purposes, the IRS treats cryptocurrency as property, not currency. As a result, businesses that accept cryptocurrency for goods or services must report gross income based on its fair market value (FMV) when received, measured in U.S. dollars. That amount generally becomes the business’s tax basis in the cryptocurrency. When the business later sells, exchanges or spends the cryptocurrency, it generally recognizes a separate gain or loss for tax purposes. The gain or loss is based on the difference between the asset’s value when disposed of and its adjusted basis. (Adjustments might include additional acquisition costs or transaction fees, certain blockchain events that affect ownership, and other tax adjustments required under IRS rules.) Here’s an overview of the tax treatment of some other common business cryptocurrency transactions: Purchases. From the buyer’s perspective, a purchase made using cryptocurrency may result in a taxable gain if the FMV of the property or services received exceeds the buyer’s adjusted basis in the cryptocurrency. Conversely, a tax loss may result if the value received is less than the adjusted basis. In other words, paying a business expense with cryptocurrency can trigger tax consequences beyond the ones typically associated with a purchase (such as a deduction for the business expense). Employee wages. For federal tax purposes, wages paid using cryptocurrency are taxable to employees and generally must be reported by employers on Form W-2. They’re subject to federal income tax withholding and payroll taxes based on their FMV on the payment date. Applicable federal and state wage-payment laws must also be considered. Payments to contractors. Cryptocurrency payments to independent contractors and other service providers are also taxable. The usual self-employment tax and information-reporting rules apply, and the payer may need to issue Form 1099-NEC. In addition, a business may have a taxable gain or loss from the appreciation or decline in the cryptocurrency’s FMV during the time it was held before it was paid to the employee or independent contractor. Assuming the payer isn’t in the trade or business of buying and selling virtual currencies, the gain and loss will be a capital gain or capital loss (short-term or long-term, depending on how long it was held). Expanded information reporting A digital-asset question now appears on federal returns including Forms 1065, 1120 and 1120-S. Businesses must answer it and report applicable transactions even if they don’t receive an information return for a transaction. Beginning with transactions in 2025, certain custodial brokers must report gross proceeds from digital-asset sales and exchanges on Form 1099-DA. Starting in 2026, they must also report the basis for certain covered digital assets. However, basis generally won’t be reported for assets acquired before 2026 or transferred into the broker’s account. So, a Form 1099-DA doesn’t eliminate the need to maintain your own records. The One Big Beautiful Bill Act didn’t change the basic tax treatment of digital assets. Its changes to Form 1099-K apply to third-party payment networks and don’t replace the separate Form 1099-DA rules. Under the Infrastructure Investment and Jobs Act of 2021, businesses will eventually be required to report certain digital-asset receipts exceeding $10,000 on Form 8300. However, until the IRS issues regulations to implement the change, businesses aren’t required to file Form 8300 solely because they receive more than $10,000 in digital assets. As a result of the expanded reporting requirements, the IRS now receives more third-party information about digital-asset transactions, making discrepancies easier to identify. Businesses that engage in crypto transactions should maintain records showing the date, number of units, dollar value, tax basis, transaction fees and business purpose of each transaction. Transfers between wallets should also be documented so they aren’t mistaken for taxable transactions. Review your records As year end approaches, review your 2026 digital-asset transactions and reconcile your records with statements from brokers and payment processors. Also keep in mind that Congress is considering bills that would change selected digital-asset tax rules. We can help you stay on top of any new developments. Contact us for assistance evaluating your transactions and meeting the current reporting requirements. © 2026 

Estate plans are often designed around rules that assume spouses and other family members are U.S. citizens. When one spouse isn’t a citizen — or when an individual owns U.S. property but lives abroad — those assumptions can create unexpected estate tax consequences. Citizenship, domicile, and the location and type of property owned can all affect how U.S. gift and estate taxes apply. For families with international connections, understanding these distinctions is an important first step toward avoiding unnecessary taxes. Domicile matters more than you might think Noncitizens can become subject to U.S. gift and estate taxes if they’re domiciled in the United States. Under IRS guidelines, an individual becomes domiciled in a country “by living there, for even a brief period of time, with no definite present intention of later removing therefrom.” The IRS considers several factors in determining “present intention,” including: The amount of time spent in the United States; Green card or visa status; Location of business interests and residences; Location of health care providers, jobs, places of worship and community ties; Place where vehicles are registered and where the individual is licensed to drive; Place where the person is registered to vote; and The domiciles of friends and family members. Noncitizens who are deemed to be domiciled in the United States are subject to U.S. gift and estate taxes on their worldwide assets, much like U.S. citizens. And, like U.S. citizens, these U.S. “domiciliaries” are eligible for the federal gift and estate tax exemption ($15 million for 2026) and the gift tax annual exclusion ($19,000 per recipient for 2026). Marriage to a noncitizen changes the rules A significant difference between U.S. citizens and noncitizens, and a potential tax trap for the unwary, is that the marital deduction isn’t available for transfers to noncitizens, even if they’re U.S. domiciliaries. Ordinarily, married couples can transfer an unlimited amount of assets between each other — during their lifetimes or at death — without triggering gift or estate taxes. However, estate planning strategies that rely on the marital deduction may not be available to noncitizen domiciliaries. There are ways to manage this limitation. For example, during life, an individual can make tax-free gifts to his or her noncitizen spouse using a special annual exclusion. For 2026, up to $194,000 of qualifying present-interest gifts may be transferred to a noncitizen spouse without gift tax. This is substantially higher than the regular $19,000 annual exclusion. Larger transfers may also be possible by using the donor spouse’s available gift and estate tax exemption. Beware of a tax trap A person who’s neither a U.S. citizen nor a U.S. domiciliary — that is, a “nonresident alien” — is subject to U.S. gift and estate taxes only on assets that are “situated” in the United States. Intangible property — such as corporate stock, bonds or promissory notes — is generally deemed to be situated in the United States for estate tax purposes (but typically not for gift tax purposes) if it’s issued by a domestic corporation or by a U.S. citizen or the U.S. government. Here’s where the potential tax trap comes into play: The exemption amount for U.S.-situated assets owned by nonresident aliens is only $60,000, compared with $15 million for U.S. citizens or domiciliaries. Depending on the value of a person’s property in the United States, this can result in significant gift and estate taxes. In some cases, tax treaties between the United States and a nonresident alien’s country of citizenship may provide some relief. Otherwise, one strategy to avoid these taxes may be holding the assets through a properly structured and operated foreign corporation. Turn to us for help If you or your spouse is a noncitizen, talk to us about the potential gift and estate planning ramifications. We can evaluate your citizenship, domicile, asset ownership and family circumstances and develop a plan that addresses the special tax rules that may apply. © 2026 

Offering paid family and medical leave (PFML) can help businesses attract and retain employees while providing workers with financial support when they need time away to care for themselves or their families. The Section 45S PFML tax credit can help eligible employers offset some of the costs. The One Big Beautiful Bill Act (OBBBA) made the credit permanent and expanded it beginning in 2026, potentially making it available to more employers. The IRS has issued Notice 2026-28 to provide guidance on the expanded credit. Employers that offer PFML should familiarize themselves with the new rules to determine whether they qualify and how best to take advantage of the credit. Employers that don’t currently provide PFML may want to consider whether doing so might now be more feasible because of the expanded credit. What’s the PFML tax credit? The PFML tax credit was created by the Tax Cuts and Jobs Act (TCJA) and is available to employers that provide qualifying employees with paid leave consistent with the Family and Medical Leave Act (FMLA), regardless of whether the FMLA applies to them. Under the TCJA, eligible employers can claim a general business credit for a portion of the actual cost of PFML wages that have been paid out, with the percentage depending on how PFML wages compare with the employee’s normal wages. If PFML wages are 50% of normal wages, the credit is 12.5% of PFML wages paid. The rate climbs to 25% ratably as PFML wages increase from 50% of normal wages to 100%. The amount of PFML wages for which an employer can claim the credit is limited to 12 weeks per employee per year. A qualifying employee is a full- or part-time employee who’s worked for the employer at least one year. The employee also can earn no more than 60% of the “highly compensated employee” limit (for 2026, no more than $96,000). The credit is available only for leave taken after the employer has a written PFML policy in place. Among other things, the policy must provide at least two weeks of PFML annually (prorated for part-time employees), FMLA protections and a PFML rate of payment of at least 50% of normal wages. Under the TCJA, leave paid by a state or local government or required by state or local law wasn’t taken into account when determining whether an employer’s written policy includes a PFML rate of at least 50% of normal wages. Notably, an employer must reduce its deduction for wages (or salaries) paid or incurred by the credit amount. Also, wages used to determine any other general business credit may not be used to calculate the PFML credit. What are the changes under the OBBBA? The OBBBA modifies the PFML credit in several critical ways. Here are some of the most important: Instead of calculating the credit based on actual PFML wages paid, an employer can opt to calculate the credit based on premiums paid or incurred for insurance policies that provide PFML for qualifying employees — regardless of whether any leave is actually taken in the tax year. Leave required by state or local law or paid for by state or local governments is taken into account when determining the amount of PFML the employer provided for purposes of determining eligibility for the credit but not when calculating the amount of the credit. Qualifying employees are limited to those customarily employed for at least 20 hours per week. Employers can elect to include employees after six months of employment. Employers can’t claim a deduction for the portion of premiums paid or incurred that’s equal to that portion of the PFML credit claimed. The new guidance focuses on the OBBBA’s “premium method” (as opposed to the “wage method”) for determining the credit amount. The premium method guidance The guidance explains that an employer can claim the PFML credit only for a premium that funds a benefit for which a credit would be available under the wage method if the benefit were actually paid — what’s referred to as “creditable coverage.” If any portion of a premium funds leave that wouldn’t qualify for the credit under the wage method, that portion also isn’t eligible for the credit under the premium method. The following types of coverage aren’t considered creditable: Coverage for leave that isn’t PFML, Coverage for leave that would be payable to a nonqualifying employee (evaluated at the time the premium is paid or incurred), Coverage for leave required by state or local law or paid for by a state or local government, and Coverage that provides a benefit other than wages. The guidance also addresses the allocation of a premium for coverage that 1) provides both qualifying PFML and other types of leave, or 2) applies to both qualifying and nonqualifying employees. In such circumstances, an employer can use any “reasonable” allocation method that’s consistent with the policy terms and supported by contemporaneous records. The IRS will allow an employer to use the wage method for some leave and the premium method for other leave. But the employer can’t use the wage method to claim the credit for wages paid if it also claims a credit using the premium method for coverage that funds such benefits (or vice versa). Relying on the guidance The IRS expects to issue proposed regulations that will mirror this guidance. These regulations will apply prospectively, but taxpayers can rely on the current guidance for tax years beginning after 2025 and before the proposed regulations are issued. If you have questions regarding the PFML credit, contact us. © 2026