Growth Profits and Wealth Blog

These are the Top 200 industries primed for growth (with risks) using the projected Compound Annual Growth Rate (CAGR) from 2021-2026.

​In addition to the CAGR numbers, this data can be sorted and filtered by total industry revenue, number of businesses, growth trajectory and risk score to explore possible industries that could be in need of additional accounting and advisory services due to continued growth yet elevated risk.

To download the information please follow this link where you can submit your information and get the report.

www.accountingtoday.com/top-200-growth-industries-2021-to-2026

Industry 

In very simple terms, a like-kind exchange is a tax-deferred transaction that allows one asset to be swapped with another, similar asset without generating a capital gains tax liability from the sale of the first asset.

Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), the IRS permitted the exchange of certain personal property, intellectual property and intangible property as long as that property was then exchanged for other personal property. The TCJA narrowed the scope of Internal Revenue Code Section 1031 like-kind exchanges to the exchange of real property that is of the same nature and character, even if it differs in grade or quality. It defined real property as "land and improvements to land, unsevered natural products of land, and water and air space superjacent to land."

Primary residences, inventory, corporation common stock and indebtedness or notes are specifically excluded from Section 1031 like-kind exchanges. In addition, exchanges of machinery, equipment, intellectual property, intangible business assets, etc., generally do not qualify as real property exchanges. Exceptions to this rule include certain exchanges of stock in mutual ditch, reservoir or irrigation companies.
The result is that any personal property transferred in a Section 1031 like-kind exchange is treated as if it were bought and sold in separate transactions, and any capital gains on the sale cannot be deferred. Practically speaking, this means every distinct asset included in the exchange must be analyzed separately from every other asset to determine whether it meets this definition.

As might be expected, the rules are complex. A qualifying exchange must adhere to the following rules:
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• Both properties must be in the United States.
• The taxpayer has 45 days from the date when the sale of the relinquished property closes to identify a potential replacement property and 180 days to acquire that property. The two periods run concurrently, which means the maximum time period for the exchange to be completed is 180 days, not 225 days.
• In an exchange in which the seller does not acquire the new property at the same time he or she relinquishes the old one, sometimes called a delayed exchange, the "seller" of the first property cannot hold the cash until the new property is acquired. A neutral third party, called a qualified intermediary (QI), facilitates the deal. Relatives and any people who have been your agents or employees in the two years preceding the sale of the relinquished property cannot serve as the QI.
• There is no limit to the number of exchanges a taxpayer can make. As long as the laws and regulations are followed, taxpayers can make even sequential like-kind exchanges.
• Federal law defines what constitutes real property for purposes of a like-kind exchange, but state laws mandate how states tax the sale. This may prove important when the sold property is in one state and the purchased property is in another.
• Depending on the properties being exchanged, any previously claimed depreciation may be recaptured and taxed as ordinary income.
• Any cash left over after the property is exchanged may be taxed as partial sales proceeds. This includes monies from a decrease in liabilities or a change in the amount of a mortgage. Usually, such amounts are taxed as capital gains.
• Taxpayers claiming a like-kind exchange must file Form 8824 for the year in which the exchange occurs.
• New legislation is being discussed that may make this strategy less attractive. Anyone considering a like-kind exchange should carefully monitor the developments regarding potential federal tax reform. 

Section 1031 like-kind exchanges can be an excellent way to discharge appreciated property that would generate a high capital gains tax if it were sold. It may also be the best choice in other circumstances, such as if the property would otherwise have been sold at a loss.
This is just of summary of a series of complex provisions. If you think a Section 1031 like-kind exchange is right for you, be sure to get professional advice from the start.

​In COVID Tax Tip 2021-123, the IRS clarifies some of the confusion surrounding the powerful but complex Employee Retention Credit.

The IRS is addressing changes made by the American Rescue Plan Act of 2021 that apply to the third and fourth quarters of 2021.

These changes include:

• Making the credit available to eligible employers that pay qualified wages after June 30, 2021, and before Jan. 1, 2022.
• Expanding the definition of "eligible employer" to include recovery startup businesses.
• Modifying the definition of "qualified wages for severely financially distressed employers."
• Providing that the employee retention credit does not apply to qualified wages considered as payroll costs in connection with a shuttered venue grant or a restaurant revitalization grant.

For business managers who had questions and needed authoritative answers, the IRS is answering various questions about the credit for tax years 2020 and 2021, including:

• The definition of a full-time employee and whether that definition includes full-time equivalents.
• The treatment of tips as qualified wages, and the interaction with the credit for the portion of employer Social Security taxes paid with respect to employee cash tips.
• The timing of the qualified wages deduction disallowance and whether taxpayers who already filed an income tax return must amend that return after claiming the credit on an adjusted employment tax return.
• Whether wages paid to majority owners and their spouses may be treated as qualified wages.

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Reporting clarifications

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their employment tax returns, generally, Form 941 Employer's Quarterly Federal Tax Return, for the applicable period. If a reduction in the employer's employment tax deposits is not sufficient to cover the credit, certain employers may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

This is just a summary of a series of detailed and technical provisions. The IRS has provided all the details in Notice 2021-49. Managers should consult with a qualified tax professional to make sure they get all the benefits they're entitled to without inadvertently violating the provisions.