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Jones & Roth is one of the largest CPA and Business Advisory firms with headquarters in Oregon.
Since 1946, we have been recognized as one of Oregon’s most trusted CPA firms. Our services span the areas of Tax, Audit & Assurance, Advisory, and Accounting & Payroll. Our CPAs also provide in-depth experience in over 10 specialty industries. Our goal is to have a positive impact in the lives of our clients, employees, and community.
Executives and other key employees are often compensated with more than just salary, fringe benefits and bonuses: They may also be awarded stock-based compensation, such as restricted stock or stock options. Another form that’s becoming more common is restricted stock units (RSUs). If RSUs are part of your compensation package, be sure you understand the tax consequences — and a valuable tax deferral opportunity.
RSUs vs. restricted stock
RSUs are contractual rights to receive stock (or its cash value) after the award has vested. Unlike restricted stock, RSUs aren’t eligible for the Section 83(b) election that can allow ordinary income to be converted into capital gains.
But RSUs do offer a limited ability to defer income taxes: Unlike restricted stock, which becomes taxable immediately upon vesting, RSUs aren’t taxable until the employee actually receives the stock.
Rather than having the stock delivered immediately upon vesting, you may be able to arrange with your employer to delay delivery. This will defer income tax and may allow you to reduce or avoid exposure to the additional 0.9% Medicare tax (because the RSUs are treated as FICA income).
However, any income deferral must satisfy the strict requirements of Internal Revenue Code Section 409A.
If RSUs — or other types of stock-based awards — are part of your compensation package, please contact us. The rules are complex, and careful tax planning is critical.
Regardless of whether your client is on the paying end or the receiving end of an assignment in the division of an Oregon PERS account, there are new things to be aware of when devising your strategy. Recent changes at PERS have complicated what in the past had been simple choices. The potential for error is very much present because the path to optimal treatment for your client can be counter-intuitive. Some of these choices must be faced at the time of the Marital Settlement Agreement or the General Judgment. QDRO time may be too late.
Attorney’s Guide to Dealing With Oregon PERS Accounts in Divorce
Written by David Gault, CPA & QDRO Specialist, Jones & Roth
Many businesses host a picnic for employees in the summer. It’s a fun activity for your staff and you may be able to take a larger deduction for the cost than you would on other meal and entertainment expenses
Generally, businesses are limited to deducting 50% of allowable meal and entertainment expenses. But certain expenses are 100% deductible, including expenses:
-For recreational or social activities for employees, such as summer picnics and holiday parties,
-For food and beverages furnished at the workplace primarily for employees, and
-That are excludable from employees’ income as de minimis fringe benefits.
There is one caveat for a 100% deduction: The entire staff must be invited. Otherwise, expenses are deductible under the regular business entertainment rules.
Whether you deduct 50% or 100% of allowable expenses, there are a number of requirements, including certain records you must keep to prove your expenses.
If your company has substantial meal and entertainment expenses, you can reduce your tax bill by separately accounting for and documenting expenses that are 100% deductible. If doing so would create an administrative burden, you may be able to use statistical sampling methods to estimate the portion of meal and entertainment expenses that are fully deductible.
For more information about deducting business meals and entertainment, including how to take advantage of the 100% deduction, please contact us.
This post has been contributed by our strategic partner Cascade Employers Association. Cascade is an exceptional, membership-based resource for Northwest employers committed to developing a strong, vital workforce. They offer a complete range of services — from hiring well, to training for excellence, to dismissing effectively.
By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
On June 15, 2016, BOLI filed its final minimum wage rules. The primary subject of both the proposed and final rules is how to determine an employer’s location for purposes of the new minimum wage law. As a reminder, the law created three different minimum wage regions: Non-urban counties (Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa and Wheeler), the Portland Urban Growth Boundary, and everywhere else.
The final rules use an entirely different method for determining an employer’s location than what was put forth in the proposed rules.
Under the proposed rules, an employee would be paid at the rate of pay for the region where the employer is located, unless the employee worked more than an incidental amount of time in a different region. An incidental amount of time was defined as working less than four hours of compensable time in a region during any workweek. Additionally, driving through a different region with no employment or work-related stops was considered incidental.
The final rules do away with the concept of incidental time. Instead, the rules create the concept of a fixed employer location. An employer can pay an employee based on the region where its fixed location is – regardless of whether work is performed in another region – in either of two scenarios. The first scenario occurs if an employee performs more than 50% of his or her work at the fixed location during a pay period. The second scenario occurs if an employee who makes deliveries begins and starts his or her work day at that fixed location.
If neither of these scenarios apply, then the employer must pay the employee in one of two ways. One option is to pay the employee for all the employee’s work at the highest minimum wage for the regions in which the employee works. The second option is to track where the employee performs work and pay the employee at least the minimum wage for each region where the work is performed.
It is important to note that under the proposed rules, the minimum wage region was determined on a weekly basis. Under the final rules, the region is determined on a pay period basis, which could be weekly, biweekly, semimonthly, or monthly.
For any organization that has minimum wage employees, these rules will likely affect your pay practices, time tracking, how you assign work, and potentially the pay periods you choose.
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