Software Club 210: Light Red/Club_Software_210_Light_Red_Micro_Star_1997.iso/sba/f235.sbe

Text File | 1997-02-04 | 47KB | 951 lines

            ┌───────────────────────────────────────┐
            │ UPDATE INFORMATION--CHANGES IN RECENT │
            │ QUARTERLY RELEASES OF THIS PROGRAM:   │
            │                                       │
            │ (Numbers in brackets indicate YEAR/QTR│
            │  when update or new feature was added)│
            └───────────────────────────────────────┘


        HIGHLIGHTS OF FEDERAL DEVELOPMENTS IN THIS RELEASE:
        ───────────────────────────────────────────────────

  .  IRS REVOLUTIONIZES ENTITY-SELECTION PROCESS.  The IRS
     has now finalized the long-awaited "check-the-box"
     regulations, which allow, after 1996, an unincorporated
     business to file a short IRS form and check a box on
     the form to choose whether it will be taxed as a
     corporate entity or as a partnership (or as a sole
     proprietorship, if it has a single owner).  The new
     regulations, effective January 1, 1997, also reverse
     the prior IRS position that a one-person limited
     liability company (LLC), which some state LLC laws
     permit, would be treated as a corporation.  Under the
     new regulations, such a one-owner LLC will be treated
     as a "non-entity" for tax purposes -- that is, as a
     sole proprietorship, rather than as a corporation.
     [97/1]

  .  NEW SEGMENT ADDED ON MEDICAL SAVINGS ACCOUNTS.  A new
     section on Medical Savings Accounts (MSAs) has been
     added to the program.  These new accounts, similar to
     an IRA for certain non-covered medical expenses, became
     available to a limited number of taxpayers on January
     1, 1997.  Use the "INDX" feature of the program to
     look up this newly added item.  [97/1]

  .  NEW IRS PROPOSED REGULATIONS LIBERALIZE SELF-EMPLOYMENT
     TAX TREATMENT FOR LLC MEMBERS.  In late 1994, the IRS
     had issued Proposed Regulations that would have allowed
     members of certain LLCs to be treated like "limited
     partners" and thus not subjected to self-employment tax
     on their income from the LLC.  These proposals have
     been withdrawn and replaced with a new set of simpler,
     more liberal Proposed Regulations, which would generally
     exempt all limited partners in limited partnerships and
     all members of LLCs, unless one of three conditions is
     present:  (1)  The partner has liability for partnership
     debts (relevant to general partners in a limited
     partnership, not to LLCs, generally); (2) the partner
     or member has authority to enter into contracts on
     behalf of the business, under state partnership or
     LLC law; or (3) the partner or member participates
     in the partnership or LLC more than 500 hours a year.
     These exceptions generally don't apply to a professional
     service partnership or LLC, where more than minimal
     services are rendered by the partner or member.  [97/1]

  .  IRS ANNOUNCES NEW STANDARD MILEAGE ALLOWANCE FOR 1997.
     In 1997, you may deduct business mileage at the rate of
     31.5 cents a mile, if you use the optional standard mileage
     rate, instead of depreciation and actual automobile
     operating expenses.  The rate for 1995 was 30 cents per
     mile, and the rate for 1996 was 31 cents.  [97/1]


  .  1997 INFLATION ADJUSTMENTS REFLECTED.  The IRS has
     announced the 1997 inflation adjustments for items
     such as the level at which the excise tax on luxury
     autos takes effect (increased to $36,000 in 1997) and
     the excludable amount for qualified parking fringe
     benefits (increased to $170 per year), all of which
     are now reflected in this program.  [97/1]

  .  WELFARE REFORM ACT ADDS NEW EMPLOYER REPORTING
     RESPONSIBILITIES.  The new federal welfare reform
     bill will soon require all employers in the U.S. to
     report name, address, and social security number
     information on any newly hired employees to a state
     agency within 20 days.  States are required to put
     such reporting requirements into effect not later
     than October 1, 1997.  Some states, like California,
     that already have such a new hire reporting program,
     will be given till October 1, 1998 to revise their
     program to get into compliance with the new federal
     law (H.R. 3734).  [97/1]

  .  UPDATED FOR NEW INDEPENDENT CONTRACTOR RULES.  The
     section of the program on "independent contractors"
     has been updated to reflect liberalizing changes
     in the IRS audit manual, and new laws passed by
     Congress in 1996, which will offer employers more
     safety and certainty in treating some workers as
     independent contractors for tax purposes, rather
     than as employees.  [97/1]

  .  NEW 1997 TAX PLANNING MODULE RELEASED.  Version 96/4
     of this program, after November 1, 1996, now includes
     both a 1996 and a 1997 tax planning module, for doing
     individual and corporate income tax calculations and
     estate tax planning calculations.  [96/4]

  .  UPDATED FOR 1997 INDIVIDUAL TAX RATE BRACKET CHANGES.
     The IRS has announced 1997 tax brackets, as indexed
     for inflation, for the individual income tax.  These
     are now reflected in the text, throughout the program.
     [96/4]

  .  IRS ANNOUNCES NEW MODEL PLAN FORM FOR SIMPLE PLANS.
     The IRS has released Form 5305-SIMPLE, Savings
     Incentive Match Plan for Employees of Small Employers
     (SIMPLE), a model plan that certain small employers
     may adopt as part of a retirement plan, in combination
     with SIMPLE IRAs set up on behalf of each participating
     employee.  While some customization of the plan is
     permitted, it cannot be used if employee IRAs are not
     all to be with a single financial institution.  [96/4]

  .  NEW FEDERAL LAW PREEMPTS MANY STATE BLUE-SKY LAWS.
     Under the National Securities Markets Improvement Act
     of 1996, enacted in October, most state blue-sky laws
     regulating issuance of securities, by registration or
     qualification, have been effectively preempted.  The
     new Act will primarily benefit exchange-listed and
     other large issuers, however, and allows the states
     to continue to regulate most small or intrastate
     offerings of securities, and certain issuances that
     are exempt from federal securities laws.  Thus, it
     will not significantly affect or simplify life for
     most small businesses.  [96/4]

  .  UPDATED FOR INCREASE IN FICA AND SELF-EMPLOYMENT TAX
     WAGE BASE IN 1997.  The program has been updated
     throughout to reflect the 1996 inflation-adjusted
     amounts of income subject to the full rate (15.3%)
     of FICA or Self-employment tax, which was increased
     from $62,700 in 1996 to $65,400 in 1997.  Amounts
     in excess of $65,400 are subject only to the 2.9%
     Medicare portion of the social security taxes. [96/4]

  .  CONGRESS INCREASES MINIMUM WAGE.  Effective October 1,
     1996, the federal minimum wage will increase to $4.75
     an hour, further increasing to $5.15 on September 1,
     1997.  The new legislation permits a subminimum wage
     of $4.25 to be paid to employees under the age of 20
     for the first 90 days after they are hired.  Certain
     computer professionals, including those paid on an
     hourly basis at a wage of at least $27.63 an hour,
     are now exempted from minimum wage coverage.  [96/3]

  .  NEW TAX LAWS CHANGES INCLUDED IN MINIMUM WAGE BILL.
     The new minimum wage bill signed into law by President
     Clinton on August 20, 1996, called the "Small Business
     Job Protection Act of 1996," contained a number of
     significant business-related tax provisions, including:

     . An increase in the $17,500 first year expensing
       deduction for business equipment, which gradually
       will rise to $25,000 over a period of several years.

     . A number of favorable S corporation changes were
       made, including an increase in the maximum number
       of S corporation shareholders from 35 to 75, and