Leaving specific assets to specific heirs may lead to unintentional outcomes

The future often weighs heavier on the shoulders of family business owners. Their companies aren’t just “going concerns” with operating assets, human resources and financial statements. The business usually holds a strong sentimental value and represents years of hard work involving many family members. If this is the case for your company, an important issue to address is how to integrate estate planning and succession planning. Whereas a nonfamily business can simply be sold to new ownership with its own management, you may want to keep the company in the family. And that creates some distinctive challenges. Question of control From an estate planning perspective, transferring ownership of assets to the younger generation as early as possible allows you to remove future appreciation from your estate, thereby minimizing estate taxes. Proactive planning may be especially relevant today, given the federal estate and gift tax regime under the Tax Cuts and Jobs Act. For 2025, the unified federal estate and gift tax exemption is $13.99 million ($27.98 million for a married couple). Absent congressional action, this lifetime exemption is scheduled to drop by about half after this year. As of this writing, Congress is working on tax legislation that could potentially extend the current high exemption amount. However, when it comes to transferring ownership of a family business, you may not be ready to hand over the reins — or you may feel that your children (or others) aren’t yet ready to take over. You may also have family members who aren’t involved in the company. Providing these heirs with equity interests that don’t confer control is feasible with proper planning. Vehicles to consider Various vehicles may allow you to transfer family business interests without immediately giving up control. For example, if your company is structured as a C or S corporation, you can issue nonvoting stock. Doing so allows current owners to retain control over business decisions while transferring economic benefits to other family members. Alternatively, there are several trust types to consider. These include a revocable living trust, an irrevocable trust, a grantor retained annuity trust and a family trust. Each has its own technical requirements, so you must choose carefully. Then again, you could form a family limited partnership. This is a legal structure under which family members pool their assets for business or investment purposes while retaining control of the company and benefiting from tax advantages. Finally, many family businesses are drawn to employee stock ownership plans (ESOPs). Indeed, an ESOP may be an effective way to transfer stock to family members who work in the company and other employees, while allowing owners to cash out some of their equity in the business. You and other owners can use this liquidity to fund your retirements, diversify your portfolios or provide for family members who aren’t involved in the business. If an ESOP is structured properly, you can maintain control over the business for an extended period — even if the ESOP acquires most of the company’s stock. Not easy, but important For family businesses, addressing estate and succession planning isn’t easy, but it’s important. One thing all the aforementioned vehicles have in common is that implementing any of them will call for professional guidance, including your attorney. Please keep us in mind as well. We can help you manage the tax and cash flow implications of planning a sound financial future for your company and family. © 2025 

As the use of digital assets like cryptocurrencies continues to grow, so does the IRS’s scrutiny of how taxpayers report these transactions on their federal income tax returns. The IRS has flagged this area as a key focus. To help you stay compliant and avoid tax-related complications, here are the basics of digital asset reporting. The definition of digital assets Digital assets are defined by the IRS as any digital representation of value that’s recorded on a cryptographically secured distributed ledger (also known as blockchain) or any similar technology. Common examples include: Cryptocurrencies, such as Bitcoin and Ethereum, Stablecoins, which are digital currencies tied to the value of a fiat currency like the U.S. dollar, and Non-fungible tokens (NFTs), which represent ownership of unique digital or physical items. If an asset meets any of these criteria, the IRS classifies it as a digital asset. Related question on your tax return Near the top of your federal income tax return, there’s a question asking whether you received or disposed of any digital assets during the year. You must answer either “yes” or “no.” When we prepare your return, we’ll check “yes” if, during the year, you: Received digital assets as compensation, rewards or awards, Acquired new digital assets through mining, staking or a blockchain fork, Sold or exchanged digital assets for other digital assets, property or services, or Disposed of digital assets in any way, including converting them to U.S. dollars. We’ll answer “no” if you: Held digital assets in a wallet or exchange, Transferred digital assets between wallets or accounts you own, or Purchased digital assets with U.S. dollars. Reporting the tax consequences of digital asset transactions To determine the tax impact of your digital asset activity, you need to calculate the fair market value (FMV) of the asset in U.S. dollars at the time of each transaction. For example, if you purchased one Bitcoin at $93,429 on May 21, 2025, your cost basis for that Bitcoin would be $93,429. Any transaction involving the sale or exchange of a digital asset may result in a taxable gain or loss. A gain occurs when the asset’s FMV at the time of sale exceeds your cost basis. A loss occurs when the FMV is lower than your basis. Gains are classified as either short-term or long-term, depending on whether you held the asset for more than a year. Example: If you accepted one Bitcoin worth $80,000 plus $10,000 in cash for a car with a basis of $55,000, you’d report a taxable gain of $35,000. The holding period of the car determines whether this gain is short-term or long-term. How businesses handle crypto payments Digital asset transactions have their own tax rules for businesses. If you’re an employee and are paid in crypto, the FMV at the time of payment is treated as wages and subject to standard payroll taxes. These wages must be reported on Form W-2. If you’re an independent contractor compensated with crypto, the FMV is reported as nonemployee compensation on Form 1099-NEC if payments exceed $600 for the year. Crypto losses and the wash sale rule Currently, the IRS treats digital assets as property, not securities. This distinction means the wash sale rule doesn’t apply to cryptocurrencies. If you sell a digital asset at a loss and buy it back soon after, you can still claim the loss on your taxes. However, this rule does apply to crypto-related securities, such as stocks of cryptocurrency exchanges, which fall under the wash sale provisions. Form 1099 for crypto transactions Depending on how you interact with a digital asset, you may receive a: Form 1099-MISC, Form 1099-K, Form 1099-B, or Form 1099-DA. These forms are also sent to the IRS, so it’s crucial that your reported figures match those on the form. Evolving landscape Digital asset tax rules can be complex and are evolving quickly. If you engage in digital asset transactions, maintain all related records — transaction dates, FMV data and cost basis. Contact us with questions. This will help ensure accurate and compliant reporting, minimizing your risk of IRS penalties. © 2025 

The IRS recently released the 2026 inflation-adjusted amounts for Health Savings Accounts (HSAs). Employees will be able to save a modest amount more in their HSAs next year. HSA basics An HSA is a trust created or organized exclusively for the purpose of paying the “qualified medical expenses” of an “account beneficiary.” An HSA can only be established for the benefit of an “eligible individual” who is covered under a “high-deductible health plan” (HDHP). In addition, a participant can’t be enrolled in Medicare or have other health coverage (exceptions include dental, vision, long-term care, accident and specific disease insurance). Within specified dollar limits, an above-the-line tax deduction is allowed for an individual’s contribution to an HSA. This annual contribution limitation and the annual deductible and out-of-pocket expenses under the tax code are adjusted annually for inflation. Inflation adjustments for next year In Revenue Procedure 2025-19, the IRS released the 2026 inflation-adjusted figures for contributions to HSAs. For calendar year 2026, the annual contribution limitation for an individual with self-only coverage under an HDHP will be $4,400. For an individual with family coverage, the amount will be $8,750. These are up from $4,300 and $8,550, respectively, in 2025. There’s an additional $1,000 “catch-up” contribution amount for those age 55 or older in 2026 (and 2025). An HDHP is generally a plan with an annual deductible that isn’t less than $1,700 for self-only coverage and $3,400 for family coverage in 2026 (up from $1,650 and $3,300, respectively, in 2025). In addition, in 2026, the sum of the annual deductible and other annual out-of-pocket expenses required to be paid under the plan for covered benefits (but not for premiums) can’t exceed $8,500 for self-only coverage and $17,000 for family coverage. In 2025, these amounts are $8,300 and $16,600, respectively. Advantages of HSAs There are a variety of benefits to HSAs. Contributions to the accounts are made on a pre-tax basis. The money can accumulate tax-free year after year and can be withdrawn tax-free to pay for a variety of medical expenses such as doctor visits, prescriptions, chiropractic care and premiums for long-term care insurance. In addition, an HSA is “portable” — it stays with an account holder if he or she changes employers or leaves the workforce. Contact us if you have questions about HSAs at your business. © 2025 

The U.S. House of Representatives has passed its budget reconciliation bill, dubbed The One, Big, Beautiful Bill. Among other things, the sweeping bill would eliminate clean vehicle credits by the end of 2025 in most cases. If you’ve been pondering the purchase of a new or used electric vehicle (EV), you’ll want to buy sooner rather than later to take advantage of available tax credits. Here’s what you need to know. The current credit The Inflation Reduction Act (IRA) significantly expanded the Section 30D credit for qualifying clean vehicles placed in service after April 17, 2023. For eligible taxpayers, it extended the credit to any “clean vehicle,” including EVs, hydrogen fuel cell cars and plug-in hybrids, through 2032. It also created a new credit, Sec. 25E, for eligible taxpayers who buy used clean vehicles from dealers. That credit equals the lesser of $4,000 or 30% of the sale price. The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1) critical minerals and 2) battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750 credit. The Sec. 30D and Sec. 25E credits aren’t refundable, meaning you can’t receive a refund if you don’t have any tax liability. In addition, any excess credit can’t be carried forward if it’s claimed as an individual credit. A credit can be carried forward only if it’s claimed as a general business credit. If you’re eligible for either credit (see below), you have two options for applying it. First, you can transfer the credit to the dealer to reduce the amount you pay for the vehicle (assuming you’re purchasing the vehicle for personal use). You’re limited to making two transfer elections in a tax year. Alternatively, you can claim the credit when you file your tax return for the year you take possession of the vehicle. Buyer requirements To qualify for the Sec. 30D credit, you must purchase the vehicle for your own use (not resale) and use it primarily in the United States. The credit is also subject to an income limitation. Your modified adjusted gross income (MAGI) can’t exceed: $300,000 for married couples filing jointly or a surviving spouse, $225,000 for heads of household, or $150,000 for all other filers. If your MAGI was less in the preceding tax year than in the year you take delivery of the vehicle, you can apply that amount for purposes of the income limit. Note: As initially drafted, the GOP proposal would retain the Sec. 30D credit through 2026 for vehicles from manufacturers that have sold fewer than 200,000 clean vehicles. For used vehicles, you similarly must buy the vehicle for your own use, primarily in the United States. You also must not: Be the vehicle’s original owner, Be claimed as a dependent on another person’s tax return, and Have claimed another used clean vehicle credit in the preceding three years. A MAGI limit applies for the Sec. 25E credit, but with different amounts than those for the Sec. 30D credit: $150,000 for married couples filing jointly or a surviving spouse, $112,500 for heads of household, or $75,000 for all other filers. You can choose to apply your MAGI from the previous tax year if it’s lower. Vehicle requirements You can take advantage of the Sec. 30D credit only if the vehicle you purchase: Has a battery capacity of at least seven kilowatt hours, Has a gross vehicle weight rating of less than 14,000 pounds, Was made by a qualified manufacturer, Underwent final assembly in North America, and Meets critical mineral and battery component requirements. In addition, the manufacturer suggested retail price (MSRP) can’t exceed $80,000 for vans, sport utility vehicles and pickup trucks, or $55,000 for other vehicles. The MSRP for this purpose isn’t necessarily the price you paid. It includes manufacturer-installed options, accessories and trim but excludes destination fees. To qualify for the used car credit, the vehicle must: Have a sale price of $25,000 or less, including all dealer-imposed costs or fees not required by law (legally required costs and fees, such as taxes, title or registration fees, don’t count toward the sale price), Be a model year at least two years before the year of purchase, Not have already been transferred after August 16, 2022, to a qualified buyer, Have a gross vehicle weight rating of less than 14,000 pounds, and Have a battery capacity of at least seven kilowatt hours. The sale price for a used vehicle is determined after the application of any incentives — but before the application of any trade-in value. Don’t forget the paperwork Form 8936, “Clean Vehicle Credits,” must be filed with your tax return for the year you take delivery. The form is required regardless of whether you transferred the credit or chose to claim it on your tax return. Contact us if you have questions regarding the clean vehicle tax credits and their availability. © 2025 

For many people, pets are more than just animals — they’re cherished members of the family. Yet, when it comes to estate planning, their future care can be overlooked. Including your pets in your estate plan ensures they’ll continue to receive love and care if something happens to you. Unless you arrange for their care and support after your death, they’ll go to the residuary beneficiary in your will. If you don’t have a will, they’ll be transferred according to the laws of intestate succession, which are unique to each state. Formally appoint a caregiver Start by identifying a trusted family member or friend who’s willing and able to take responsibility for your pets. You can formalize this by naming the person as the caregiver in your will. Although you can’t use your will to leave money or other property to your pets, you can provide funds to their caregiver to cover expenses. But keep in mind that the caregiver has no legal obligation to use the money for your pets, so choose cautiously. It’s wise to name a backup caregiver, just in case. Also, be sure to let your executor know about your plans. If you don’t have a trusted caregiver in mind, another option is to leave your pets to an animal sanctuary or rescue organization with a program designed for this purpose. Draft a pet trust You might also consider establishing a pet trust. It’s legal in all 50 states plus Washington, D.C. These trusts come at a cost, but they offer several advantages over other arrangements. For example, a pet trust allows you to leave money that the named caregiver is required to use for your pets, to provide specific instructions on how your pets should be cared for, and to provide for the care of your pets during your life in the event you’re unable to do so. Plus, if necessary, your representative can go to court to enforce the terms of the trust. Turn to us for help Ultimately, including your pet in your estate plan gives you peace of mind and ensures that your beloved companion won’t be left to chance. Your estate planning attorney can help you incorporate these provisions into your estate plan in a way that aligns with your overall goals. © 2025 

Creating a marketing strategy for any company isn’t a “one and done” activity. As you’ve no doubt experienced, the approach you use to connect with your audience needs to adapt to factors such as the economy, marketplace changes, and customer and prospect preferences. Let’s take a step back and review some of the big-picture tasks associated with sharpening your marketing strategy. Refine target selection Consider each prospect, existing customer and target group as an investment. Estimate your net profit after subtracting production, sales and customer service costs. More desirable customers will buy in sizable volumes with enough frequency to provide a steady income stream over time rather than serve as one-time or infrequent buyers. They’ll also be potential targets for cross-selling other products or services to generate incremental revenue. Bear in mind that you must have the operational capacity to fulfill a prospect’s demand. If not, you’ll need to expand your operations to take on that customer, which will cost you more in resources and capital. Also, be wary of becoming too dependent on a few large customers. They can use this status as leverage to lowball you. Or, if they decide to pull the plug, it could be financially devastating. Adjust price points Your price points are another key factor. It’s a tricky balance: Setting prices low may help attract customers, but it can also minimize or even eliminate your profit margin. In addition, think about what payment terms you’re prepared to offer. Sluggish accounts receivable can strain cash flow. Establishing a timely payment schedule with customers is critical to sustaining operations and supporting the bottom line. If you must spend a substantial amount of cash to set up a new customer, such as buying new equipment, consider offering initial pricing that includes a surcharge for a specified period. After you’ve recovered the cost of the equipment plus carrying charges, you might offer the customer a volume- or loyalty-based discount. Craft your messaging When you know who you want to sell to and what you’re going to charge, it’s time to craft your messaging. This is obviously the key step — literally marketing your products or services. So, clarity and consistency are key. Begin by identifying your core value proposition. This is what sets your business apart from competitors. Communicate it in simple, direct language. Generally, you want to avoid jargon unless you’re working in a very specific context where industry terminology or technical knowledge is critical to sales. Be persuasive by providing remedies for your audience’s pain points. You may need to tailor messaging to different market segments. For example, established customers usually respond best to a marketing message that reminds them of your company’s reliability and the total value of your mutually beneficial relationship. Meanwhile, prospects and newer customers probably need more persuasion and “proof of value.” Carefully choose the right marketing channels as well. These may include print, email, social media and in-person outreach. Finally, watch out for inconsistency. Even if you vary your exact wording when addressing different market segments, your overall messaging needs to be uniform in look, tone and details. Disjointed communication — especially when it comes to things like pricing and product or service specifications — can sink a marketing strategy fast. Today and tomorrow An ineffective approach to marketing can quietly sap a company’s financial strength as sales leads diminish in number or value and competitors gain more attention in the marketplace. Conversely, a strong and timely marketing strategy can be a real revenue driver. We can analyze your marketing costs, as well as your price points, and help you develop a viable strategy for today and tomorrow. © 2025 

The gig economy offers flexibility, autonomy and a way to earn income, but it also comes with tax obligations that can catch many workers off guard. Whether you’re driving for a rideshare service, delivering food, selling products online or offering local services like pet walking, it’s crucial to understand the tax implications of gig work to stay compliant and avoid costly surprises. Understanding your tax status One of the biggest differences between traditional employment and gig work is your classification. Most gig workers are considered independent contractors, not employees. This means that companies you work with typically don’t withhold income taxes, Social Security, or Medicare taxes from your pay. Instead, you’re responsible for tracking and paying these taxes yourself. As an independent contractor, your earnings are considered self-employment income. This status has specific tax consequences and responsibilities, including the need to file Schedule C (Profit or Loss from Business) with your tax return and pay self-employment tax using Schedule SE. Self-employment tax explained Self-employment tax covers Social Security and Medicare taxes for those who work for themselves. In 2025, the self-employment tax rate is 15.3% — 12.4% for Social Security and 2.9% for Medicare. If your net earnings exceed $400 for the year, you’re required to pay this tax, regardless of your age or whether you receive Social Security benefits. It’s important to note that while this may seem steep, self-employed individuals can deduct half (the employer-equivalent portion) of the self-employment tax from their taxable income, which helps offset the burden. Quarterly estimated tax payments Because taxes aren’t automatically withheld from your gig income, you may need to make estimated tax payments to the IRS. These payments are due April 15, June 15, September 15 and January 15 of the following year. (If a due date falls on a Saturday, Sunday or holiday, the due date becomes the next business day.) Failing to pay enough throughout the year could result in penalties and interest, even if you end up getting a refund at tax time. To avoid this, we can help you calculate your estimated tax payments based on your expected income, deductions and credits. Recordkeeping and deductions Maintaining accurate records is essential for gig workers. Keep track of all your income, whether you receive Form 1099-NEC from your customers or not. Many platforms only issue 1099s if you earn $600 or more from them, but all income must be reported, regardless of whether you get a form. On the plus side, gig workers can deduct many business-related expenses to reduce their taxable income. Common deductions include eligible: Vehicle mileage and maintenance expenses, Home office expenses, Advertising and marketing expenses, and Professional services expenses, such as for tax or legal advice. Make sure you keep receipts and records to substantiate these deductions in case of an IRS audit. State and local taxes Don’t forget about state and local taxes. Depending on where you live, you may owe income taxes to your state or city. Some states also have specific requirements for self-employed individuals, such as business licenses or local tax filings. Tips for staying compliant To stay on top of your tax responsibilities, here are four tips to consider: Set aside 25%–30% of your income for taxes. Use accounting software or spreadsheets to track income and expenses. File taxes on time, and don’t ignore IRS correspondence. Consult with us to help you navigate complex deductions and ensure accuracy. Plan ahead for the best results While the gig economy offers many benefits, it also comes with tax responsibilities that workers need to manage proactively. By understanding your obligations, tracking your earnings and expenses and making timely payments, you can avoid penalties and keep more of what you earn. Planning ahead will help ensure your gig work is both profitable and compliant. © 2025 

Many businesses turn to independent contractors to help manage costs, especially during times of staffing shortages and inflation. If you’re among them, ensuring these workers are properly classified for federal tax purposes is crucial. Misclassifying employees as independent contractors can result in expensive consequences if the IRS steps in and reclassifies them. It could lead to audits, back taxes, penalties and even lawsuits. Understanding worker classification Tax law requirements for businesses differ for employees and independent contractors. And determining whether a worker is an employee or an independent contractor for federal income and employment tax purposes isn’t always straightforward. If a worker is classified as an employee, your business must: Withhold federal income and payroll taxes, Pay the employer’s share of FICA taxes, Pay federal unemployment (FUTA) tax, Potentially offer fringe benefits available to other employees, and Comply with additional state tax requirements. In contrast, if a worker qualifies as an independent contractor, these obligations generally don’t apply. Instead, the business simply issues Form 1099-NEC at year end (for payments of $600 or more). Independent contractors are more likely to have more than one client, use their own tools, invoice customers and receive payment under contract terms, and have an opportunity to earn profits or suffer losses on jobs. Defining an employee What defines an “employee”? Unfortunately, there’s no single standard. Generally, the IRS and courts look at the degree of control an organization has over a worker. If the business has the right to direct and control how the work is done, the individual is more likely to be an employee. Employees generally have tools and equipment provided to them and don’t incur unreimbursed business expenses. Some businesses that misclassify workers may qualify for relief under Section 530 of the tax code, but only if specific conditions are met. The requirements include treating all similar workers consistently and filing all related tax documents accordingly. Keep in mind, this relief doesn’t apply to all types of workers. Why you should proceed cautiously with Form SS-8 Businesses can file Form SS-8 to request an IRS determination on a worker’s status. However, this move can backfire. The IRS often leans toward classifying workers as employees, and submitting this form may draw attention to broader classification issues — potentially triggering an employment tax audit. In many cases, it’s wiser to consult with us to help ensure your contractor relationships are properly structured from the outset, minimizing risk and ensuring compliance. For example, you can use written contracts that clearly define the nature of the relationships. You can maintain documentation that supports the classifications, apply consistent treatment to similar workers and take other steps. When a worker files Form SS-8 Workers themselves can also submit Form SS-8 if they believe they’re misclassified — often in pursuit of employee benefits or to reduce self-employment tax. If this happens, the IRS will contact the business, provide a blank Form SS-8 and request it be completed. The IRS will then evaluate the situation and issue a classification decision. Help avoid costly mistakes Worker classification is a nuanced area of tax law. If you have questions or need guidance, reach out to us. We can help you accurately classify your workforce to avoid costly missteps. © 2025 

One question the family of a deceased person often asks is: What happens to debt after a person dies? It’s important to realize that a person’s debt doesn’t simply vanish after his or her death. An estate’s executor or beneficiaries generally aren’t personally liable for any debt. The estate itself is liable for the deceased’s debt. This is true regardless of whether the estate goes through probate or a revocable (or “living”) trust is used to avoid probate. Contrary to popular belief, assets held in a revocable trust aren’t shielded from creditors’ claims. Assets and debts Generally, an estate’s executor is responsible for managing the deceased’s assets and debts. A personal representative can also carry out this task. With respect to debt, the executor should take inventory of the deceased’s debts, evaluate their validity and order of priority, and determine whether they should be paid in full or allowed to continue to accrue during the estate administration process. In some cases, debt that’s tied to a particular asset — a mortgage, for example — may be assumed by the beneficiary who inherits the asset. Certain assets are exempt, however. These include most retirement plan accounts, life insurance proceeds received by a beneficiary and jointly held property with rights of survivorship that passes automatically to the joint owner. Also, assets held in certain irrevocable trusts, such as domestic asset protection trusts, may be shielded from creditors’ claims. The extent of this protection depends on the type of trust and applicable law in the jurisdiction where the trust was created. Assuming the deceased had a will, the estate’s assets generally are used to pay any debts in this order: Assets that pass under the will’s residual clause — that is, assets remaining after all other bequests have been satisfied, Assets that pass under general bequests, and Assets that pass under specific bequests. Note that some states have established homestead exemptions or family allowances that prohibit the sale of certain assets to pay debts. These provisions are designed to give a deceased’s loved ones a minimal level of financial security in the event the estate is insolvent. When debts are greater than the estate’s value If an estate’s debts exceed the value of its assets, certain debts have priority and the estate’s executor must pay those debts first. Although the rules vary from state to state, a typical order of priority is: Estate administration expenses (such as legal and accounting fees), Reasonable funeral expenses, Certain federal taxes or obligations, Unreimbursed medical expenses related to the deceased’s last illness, Certain state taxes or obligations (including Medicaid reimbursement claims), and Other debts. Secured debts, such as mortgages, usually aren’t given high priority. This is because the recipient of the property often assumes responsibility for the debt and the creditor can take the collateral to satisfy its claim. Seek professional guidance Managing debt in an estate can be complex, especially if the estate is insolvent. If you’re the executor of an estate, consult with us. We can help guide you through the process. © 2025