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I love the holidays, it’s great to visit friends and family and then arrive home with a day or 2 to settle in before jumping back into work.  This year we pushed visiting time to the max giving us little time to settle in, but we wanted to squeeze every possible second in during our visits.  Although we missed seeing and visiting with Jessie’s good friends who are her California family, we were so grateful we were able to stay in their home while we visited.  I am not sure what was better, the peloton in their home gym or the orange tree just outside their front door.  I made good use of both.  Once they arrive home, they should also be able to start picking the grapefruits and lemons also growing on those trees in their yard. We were so fortunate that the weather held up and during our stay we were able to take some nice walks along the shore.

Although we would have loved to all be together in Michigan for the holiday, we traded in an early snow for dolphin and seal spotting, plus some beautiful sunset viewing with the “pier 9 sunset crew”…

During my last visit I paddled with the Oceanside CA outrigger club, this visit I was happy to watch from the shore…

Back at home as long as I bundle up in layers of fleece and don gloves, a scarf and hat, I can continue to take a walk on the beach and snap some shots of sunrise before heading into the office…

A quick reminder that we are changing our newsletter/blog format in the next few weeks and will return to more accounting/tax-based blogs and vlogs on a weekly basis with a monthly update where we share our photos.  I am hoping you are all enjoying this holiday season and preparing to attend parties and dinners and spend time with family and friends.  Stay warm and dry and enjoy!

WEEKLY TAKE AWAY

I have been attending more in-person seminars and conferences lately; most where I am speaking and or hosting as well.  When men wear a suit, it’s hard to tell if they are just changing their tie or shirt, tie and suit, (and do we really care).  With women it’s a bit different as our outfits tend to be scrutinized even down to whether the sneakers match, including thoughts (and maybe comments) about wearing sneakers.  Having photos of our panels and my “welcomes” is really helpful; I can make sure I am not wearing the same outfit more than once AND we have already scheduled a BOI reporting update seminar for NCCPAP my professional group for December 18th. Although it’s going to be a webinar, I will be able to make sure I am not wearing the same outfit from speaking at and hosting previous presentations/events.   P.S. our content is really great and our evaluations never mention our outfits!

TAX ISSUES/TAX PLANNING

Nationwide Preliminary Injunction Issued Barring Enforcement of the Corporate TransparencyAct (CTA) for Beneficial Ownership Information (BOI) Reporting

Accounting social media posts have been blowing up with the news:  The case in which the nationwide preliminary injunction was issued is Texas Top Cop Shop, Inc. v. Garland (Docket No. 4:24-CV-478).  The preliminary injunction was sought by the plaintiffs only on behalf of themselves and the National Federation of Independent Business (NFIB)).  The NFIB has approximately 300,000 members. The court determined that a nationwide ban on the CTA’s enforcement would be appropriate, as the NFIB’s membership extends across the country, and the plaintiffs could not receive meaningful relief without a nationwide preliminary injunction. Thus, under the terms of the court’s order, the CTA is enjoined entirely, as is the primary reporting rule (for BOI reporting) that was issued under it by the Financial Crimes Enforcement Network (FinCEN). The court’s order further bars enforcement of the January 1, 2025, BOI reporting deadline.

In English:  This is a preliminary injunction, which MAY give relief from penalties for non-filers depending on the response from FinCEN which is expected in the next week or so AND further court rulings as there is an expectation that this ruling will be appealed.  Depending on final rulings the original deadline may be enforced, should this ruling be reversed-the case result may give relief of non-filing by the original deadline, or not.

We are continuing to discuss the situation with our clients and professional colleagues and use best practices to make our recommendations.  In the end it’s up to the client to make the final decision.  I have seen that we only find fair in the dictionary and this ruling may be overturned with filings required during tax season when we have many deadlines, so…

Once again, I am including the laws and guidelines here, or check out my prior posts detailing BOI reporting under CTA:

Fact Sheet : BOI Reporting Rule Fact Sheet

Brochure:  BOI Informational Brochure

Reference Guide:  BOI Reference Guide

Small Business Entity Compliance Guide: BOI Small Entity Compliance Guide

Reporting Companies

• The rule identifies two types of reporting companies: domestic and foreign. A domestic reporting company is a corporation, limited liability company (LLC), or any entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. A foreign reporting company is a corporation, LLC, or other entity formed under the law of a foreign country that is registered to do business in any state or tribal jurisdiction by the filing of a document with a secretary of state or any similar office. Under the rule, and in keeping with the CTA, twenty-three types of entities are exempt from the definition of “reporting company.”
• FinCEN expects that these definitions mean that reporting companies will include (subject to the applicability of specific exemptions) limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships, in addition to corporations and LLCs, because such entities are generally created by a filing with a secretary of state or similar office.
• Other types of legal entities, including certain trusts, are excluded from the definitions to the extent that they are not created by the filing of a document with a secretary of state or similar office. FinCEN recognizes that in many states the creation of most trusts typically does not involve the filing of such a formation document.

Beneficial Owners

• Under the rule, a beneficial owner includes any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company. The rule defines the terms “substantial control” and “ownership interest.” In keeping with the CTA, the rule exempts five types of individuals from the definition of “beneficial owner.”
• In defining the contours of who has substantial control, the rule sets forth a range of activities that could constitute substantial control of a reporting company. This list captures anyone who is able to make important decisions on behalf of the entity. FinCEN’s approach is designed to close loopholes that allow corporate structuring that obscures owners or decision-makers. This is crucial to unmasking anonymous shell companies.
• The rule provides standards and mechanisms for determining whether an individual owns or controls 25 percent of the ownership interests of a reporting company. Among other things, these standards and mechanisms address how a reporting company should handle a situation in which ownership interests are held in trust.
• These definitions have been drafted to account for the various ownership or control structures reporting companies may adopt. However, for reporting companies that have simple organizational structures it should be a straightforward process to identify and report their beneficial owners. FinCEN expects the majority of reporting companies will have simple ownership structures.

ECONOMY

US Economy Grows at 2.8% Pace in Third Quarter on Consumer Spending

As reported in this recent article from APNews.com:  “The American economy expanded at a healthy 2.8% annual pace from July through September on strong consumer spending and a surge in exports, the government said Wednesday, leaving unchanged its initial estimate of third-quarter growth.  U.S. gross domestic product — the economy’s output of goods and services — slowed from the April-July rate of 3%, the Commerce Department reported Wednesday. But the GDP report still showed that the American economy — the world’s largest — is proving surprisingly durable. Growth has topped 2% for eight of the last nine quarters.  Within the GDP data, a category that measures the economy’s underlying strength rose at a solid 3.2% annual rate from July through September, up from 2.7% in the April-June quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.”

Here’s Where Consumers Could Feel the Price Pain if Trump’s Tariffs Go into Effect

As reported in this recent article from NBCNews.com:  “President-elect Donald Trump campaigned on tariffs. This week, he promised even more. Trump said Monday he intends to impose a 25% tariff on products imported to the U.S. from Mexico and Canada while increasing a previously proposed tariff — as much as 60% — on all Chinese goods by an additional 10%.   The tariffs would be a significant escalation of Trump’s previous proposal, which was already a major increase on more targeted tariffs enacted during Trump’s first administration and kept in place by President Joe Biden.  An estimate from The Budget Lab at Yale shared Wednesday with NBC News found that the cost to consumers from Trump’s proposed tariffs could reach as much as $1,200 in lost purchasing power on average based on 2023 incomes, assuming retaliatory duties on U.S. exports are put into place.  Mexican President Claudia Sheinbaum has already warned that any new tariffs imposed by the U.S. would be met with retaliatory ones by her country. Canada is similarly considering its own options, including possible tariffs on U.S. goods, according to The Associated Press.  America’s biggest import from Canada is oil — and any increase in energy prices would likely be felt throughout the economy.  “Another way to think about this is it’s 4 to 5 months of a normal year’s inflation in one fell swoop,” Ernie Tedeschi, The Budget Lab’s director and the former chief economist under the Biden administration, said in an email.  The three countries Trump has selected for a new round of targeted tariff proposals — China, Mexico and Canada — represent nearly half of all U.S. import volumes.  While Trump has insisted other countries end up paying the cost of tariffs, most economists agree those costs wind up getting passed on to shoppers. And at a time when rising prices remain a top concern, the types of goods that could see higher costs are the ones consumers interact with every day.  Some companies are warning that particularly import-heavy parts of the economy could be hit hard. Best Buy CEO Corie Barry warned Tuesday that any added costs on U.S. imports “will be shared by our customers.” Electronic goods account for the largest share of U.S. imports from China as of 2023.”

US Economy Holds Firm in Early Q4; Inflation Stuck Above Federal Reserves’s Target

As reported in this recent article from Reuters.com:   “U.S. consumer spending increased slightly more than expected in October, suggesting the economy retained much of its solid growth momentum early in the fourth quarter, but progress on lowering inflation appears to have stalled in recent months.

• Consumer spending increases 0.4% in October
• Core PCE rises 0.3%; up 2.8% on year-on-year basis
• Weekly jobless claims fall 2,000 to 213,000
• Core capital goods orders drop 0.2% in October”

Homebuyer Mortgage Applications Jump 12%  in One Week

As reported in this recent article from TheEpochTimes.com:   “More homebuyers applied for mortgage loans to purchase homes following a dip in interest rates, according to the Mortgage Bankers Association (MBA). Overall mortgage loan application volume, including applications for buying homes and refinancing, rose by 6.3 percent for the week ending Nov. 22 from the previous week, according to a Nov. 27 statement from MBA.”

Federal Reserve Officials See Interest Rate Cuts Ahead; But Only Gradually

As reported in this recent article from NBCNews.com:  “Federal Reserve officials expressed confidence that inflation is easing and the labor market is strong, allowing for further interest rate cuts albeit at a gradual pace, according to minutes from the November meeting released Tuesday.

GENERAL RESOURCES

• IRS resources for stimulus payments:
  • Use the Get My Payment tool to check on EIP payment status
  • Eligibility and general information about Economic Impact Payments
  • A list of frequently asked questions for stimulus payments
• IRS information about the Advance Child Tax Credit Payments
  • A list of frequently asked questions on the advance Child Tax Credit Payments
• IRS links for disaster relief
• SBA link for Disaster assistance
• FinCEN link for BOI reporting
• The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
• Our prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• The New York Times has an online newsletter on K-12 and higher education
• The Wall Street Journal has a collection of articles on education
• The Louvre has digitized 482,000 artworks from its collection
• How to create a strong password

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.

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