Colorado Springs, Colo. – Stockman Kast Ryan + Co, LLP (SKR+CO), the largest locally-owned certified public accounting firm in Southern Colorado, announces staff promotions, photos attached:

Jared has a bachelor’s in business management with an emphasis in accounting from the University of Colorado Colorado Springs.  He has been in public accounting since 2016.

Jennifer has a degree in accounting from the University of Colorado Colorado Springs. She has been in public accounting since 2005.


About Stockman Kast Ryan + Co

SKR+CO is Southern Colorado’s largest independent certified public accounting firm providing a variety of in-depth consulting for businesses and individuals. Advisory services include tax planning, audit and assurance services, outsourced controller and contract CFO, financial reporting, estate planning, business valuations and litigation support. For more information, visit SKR+CO is an independent member firm of the BDO Alliance USA, a nationwide association of independently owned local and regional accounting, consulting and service firms with similar client service goals.



Charitable Deductions

Summertime means cleaning out those often neglected spaces such as the garage, basement, and attic for many of us. Whether clothing, furniture, bikes, or gardening tools, you can write off the cost of items in good condition donated to a qualified charity. The deduction is based on the property's fair market value. Guides to help you determine this amount are available from many nonprofit charitable organizations.

Charitable Travel

Do you plan to travel while doing charity work this summer? Some travel expenses may help lower your taxes if you itemize deductions when you file next year:
  1. You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. 
  2. You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer. You can’t deduct the value of your time or services.
  3. The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip.
  4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
  5. Deductible travel expenses may include:

    • Air, rail and bus transportation
    • Car expenses
    • Lodging costs
    • The cost of meals
    • Taxi fares or other transportation costs between the airport or station and your hotel

Renting Your Vacation Home

A vacation home can be a house, apartment, condominium, mobile home or boat. If you rent out a vacation home, you can generally use expenses to offset taxable income from the rental. However, you can't claim a loss from the activity if your personal use of the home exceeds the greater of fourteen days or 10% of the time the home is rented out. Watch out for this limit if taking an end-of summer vacation at your vacation home. 


Traveling for Business

When you travel away from home, you may deduct your travel expenses – including airfare, train, bus, taxi, meals (generally limited to 50%), lodging – as long as the primary purpose of the trip is business-related. You might have some downtime relaxing, but spending more time on business activities is critical. Note that the cost of personal pursuits is not deductible.

Entertaining Clients

If you treat a client to a round of golf at the local club or course, you may deduct qualified expenses – such as green fees, club rentals, and 50% of your meals and drinks at the nineteenth hole – as long as you hold a "substantial business meeting" with the client before or after the golf outing. The discussion could take place a day before or after the entertainment if the client is from out of state. For information on what does and does not qualify, please contact us.

Using Your Home Office  

Home office expenses are generally deductible if part of a business owner's personal residence is used regularly and exclusively as either the principal place of business or as a place to meet with patients, customers or clients. The IRS provides an optional safe-harbor method that makes it easier to determine the amount of deductible home office expenses. These rules allow you to deduct $5 per square foot of home office space (up to 300 square feet). In addition, deductions such as interest and property taxes allocable to the home office are still permitted as an itemized deduction for taxpayers using the safe harbor.

If you’ve been bitten by the net investment income tax (NIIT) in the past three years, you may now be ready to explore strategies that avoid or reduce your exposure. This surtax can affect  anyone with consistently high income or with a big one-time shot of income or gain.

NIIT Basics – Are you exposed?

Let’s review the basics of the NIIT. Congress passed the 3.8% Medicare surtax on investment income in 2012 to help pay for the Affordable Care Act. The surtax became effective for tax years beginning after December 31, 2012. The NIIT affects taxpayers with modified adjusted gross income (MAGI) above $200,000 for a single person, above $250,000 for a couple, and above $125,000 for a married person filing separately. (MAGI is generally the last number on page 1 of your Form 1040 – your gross income less certain allowable deductions.)  Notably, a marriage penalty is built into this surtax and the surtax threshold levels are not indexed for inflation going forward.

The amount of net investment income subject to the NIIT is the lesser of (1) your net investment income or (2) the amount by which MAGI exceeds the threshold discussed above.

What income is subject to the NIIT? Generally net investment income includes the following: 

Plan now to minimize the bite of the NIIT in 2016 and succeeding years

Strategies to Reduce Your Net Investment Income: 

  1. Sell securities with losses before year-end to offset gains during the year from the sale of securities.
  2.  Donate appreciated securities instead of cash to IRS-approved charities so that gains won’t be included on your return even though you will receive a tax deduction for the donation.
  3. Use installment sales or Section 1031 like-kind exchanges to either spread the gain recognition over several years or defer the gain on the sale of property. These two strategies work best for investment real estate. 

Strategies to Reduce Your Modified Adjusted Gross Income:

  1. Invest more taxable investment funds in municipal bonds. Interest income from municipal bonds is federally tax exempt and also state exempt if bonds are issued by your resident state. If you are subject to the NIIT, be sure to include the 3.8% in your municipal bond interest conversion calculation.
  2. Invest taxable investment funds in growth stocks. Gains won’t be taxed until the stocks are sold. Growth stocks generally do not distribute dividends.
  3. Consider conversion of traditional IRA accounts to ROTH accounts. This idea is part of a long-term strategy and requires careful coordination with your tax and investment advisors. The taxable income from the conversion will increase your MAGI and may result in more of your investment income being subject to the NIIT in the year of the ROTH conversion. In the future, though, this strategy could result in tax savings since the earnings and gains inside the ROTH will be exempt from both income tax and the NIIT when distributed.
  4. Invest in life insurance and tax-deferred annuity products. Earnings from life insurance contracts and annuity contracts generally aren’t taxed until they are withdrawn. Life insurance death benefits are generally exempt from federal income tax.
  5. Invest in rental real estate. Rental income is offset by depreciation deductions, reducing the amount of NII and MAGI.
  6. Maximize deductible contributions to tax-favored retirement accounts such as 401(k) and self-employed SEP accounts.
  7. If you are a cash basis self-employed individual or sole shareholder of an S Corporation, consider accelerating business deductions into 2016 and deferral of business income into 2017.

As you can see, higher income taxpayers with investment income have some planning options when it comes to limiting the impact of the surtax, but in many cases, there may not be a way to avoid it. Bottom line? The NIIT is complex and all strategies should be discussed with your tax and investment advisors before implementation to avoid other unintended tax consequences.