2016 YEAR-END
TAX GUIDE
Throughout this Guide, we address traditional tax planning concepts and set out alternatives should certain provisions not be reinstated, along with the impact of any new provisions.
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2016 TAX GUIDE
INTRODUCTION

Over the past few years, my introductory note to this annual Tax Guide has focused on change and significant legislation. At some point, we all hope Congress "gets the tax code right" so we can continue to build our businesses and personal financial wealth with tax certainty. We all know 2017 will not bring that certainty, as no matter who is in the White House, and no matter who controls Congress, change is sure to come.

As the head of Marcum's tax practice, I deal with change every day. We are continually expanding and improving our delivery of services and broadening our tax specialties, while focusing on being the best tax professionals in the industry. All of this occurs while the federal and state tax world around us is constantly in flux. It is a challenge I cherish and look forward to every day.

The end of the year is the last chance for business owners to evaluate the current and future status of their operations and the associated tax implications. Businesses must understand the tax law changes that impact their industries, operations and, ultimately, their profitability.
The Protecting Americans from Tax Hikes (PATH) Act was signed into law and enacted in December 2015 and is considered to be taxpayer-friendly, encompassing several provisions that affect both individuals and businesses. The PATH Act renewed many of the temporary tax provisions that had previously expired.
There are many questions about the continuing vitality of the Affordable Care Act. Whatever its future, however, employers and individuals must be prepared for the changes which have occurred in 2016. The law will have a greater impact in 2016 than in prior years.
In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to more accurately reflect the original intent of the Fair Labor Standards Act, of providing fair compensation to employees. On December 1, 2016, the Final Rule (also known as the "Overtime Rule") will become effective.
Although 2016 did not have significant tax cases to assist in navigating year-end planning, the following did help clarify certain important questions.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 modified filing dates of returns and statements relating to employee and non-employee compensation, and created a safe harbor on de-minimis errors on information returns and payee statements effective for the 2016 filing season.
After many years as an expiring tax provision, the Federal Research & Development Tax Credit (R&D) has gained a permanent home in the U.S. tax code. The credit was first introduced over 30 years ago as a temporary incentive and has been included in extender legislation numerous times.
More than almost any other industry, construction contractors need to spend time and resources planning for their income taxes before the end of their fiscal year.
Just what you need, right? One more time-consuming task to be taken care of between now and the end of the year. But taking a little time out from the holiday chores to make some strategic saving and investing decisions before December 31 can affect not only your long-term ability to meet your financial goals but also the amount of taxes you'll owe next April.
Year-end investment decisions may sometimes result in substantial tax savings. Tax planning may allow you to control the timing and method by which you report your income and claim your deductions and credits.
In last year's article, we wrote that legislation was pending that might prevent minority interest and lack of marketability discounts for certain family-owned entities. On August 2, 2016, the U.S. Treasury and Internal Revenue Service issued proposed regulations covering that topic.
When was the last time you wrote a letter and put it in the mailbox, paid a bill by writing a check, or took your camera's film to be developed? In this day and age, most people have a digital presence.
On May 4, 2016, the Treasury Inspector General for Tax Administration in its published audit report found that the Internal Revenue Service can improve its methods for identifying high-income taxpayers who may be offsetting their income with "hobby losses" from unprofitable business activity.
On June 26, 2015, a decision handed down by the U.S. Supreme Court forever changed the lives of members of the LGBT community. With the landmark case of Obergefell v. Hodges, it was established that same-sex couples have the fundamental right to marry under the Fourteenth Amendment to the United States Constitution.
A variety of credits or deductions are available from federal and state taxing authorities to assist taxpayers in meeting the increasing cost of a college education. A review for eligibility of such credits and deductions should be part of any family tax planning.
The landscape of state taxation is ever–changing, with states seeking to tax an increasingly larger portion of both individual and corporate income. Over the past decade, states have implemented laws to expand their ability to subject a person or entity to tax.
Prior Marcum Year-End Tax Guides included a complete discussion of the detailed documentation requirements for charitable deductions, including this caveat: "CAUTION. Failure to have the correct documentation could cost you your charitable deduction."
Tax scams continue to be on the rise. It is important to use caution when viewing emails and receiving telephone calls supposedly from the Internal Revenue Service (IRS). Falling victim to one of these scams can not only be costly, but also aggravating in the time it can take to straighten out the resulting mess.
The European Union's ("EU") antitrust regulator, the European Commission ("Commission"), has changed the way the world looks at transfer pricing and tax-favored regimes.