The Brinker decision is set to come out on April 12, 2012. We have postured for the release of this case decision for the last few years.

Brinker is an important appeal decision to be delivered by the California Supreme Court. At the lower court it was determined that employers must provide (not confirm) breaks and meal periods, that breaks do not always need to be taken in the middle of the work period. This was a record decision that was promptly appealed. Prior to the lower court’s ruling on Brinker, the theory was that employers must confirm or ensure that workers took all their allocated meal and rest periods for each shift.

The Brinker decision from the California Supreme Court will determine if employers must:     Make meal and rest breaks available; OR     Confirm that employees have actually taken meal and rest breaks.

The decision will also address the timing of the breaks, how many breaks during a shift and when employees must take breaks. Worker claims for any missed meal and...

Businesses that use independent contractors have always been in the crosshairs of federal and state taxing agencies.  Taxing agencies are unusually aggressive, because they feel it is easier to collect taxes from the companies who use independent contractors rather than the independent contractors themselves.

Independent contractor audits are again becoming a hot priority for the IRS. The legal rules really haven’t changed, it’s just that the IRS is becoming increasingly aggressive in targeting companies that use independent contractors to raise revenue. The state of California is even worse, because the state rules for independent contractor treatment are even less favorable than the federal rules.

The federal rules incorporate a “safe harbor” that most taxpayers don’t know about. The “safe harbor” is contained in the provisions of the Revenue Act of 1978. There are definite strategies involved in positioning businesses to take advantage of the safe harbor. The safe harbor allows a taxpayer to successfully...

A client recently shared a very handy health insurance tip for access to group health plans. The Orange County Association of Realtors has an interesting Affiliate Program. Once an individual is registered as an affiliate of OCAR, the individual has access to the OCAR group health plans. This affiliate program is not limited to realtors or businesses. A fee to register as an affiliate is required. There are networking opportunities, classes and meetings and advertising opportunities for OCAR affiliates along with insurance benefits for an additional cost.

The details of the affiliate program are at: http://www.ocar.org/page.php?tut=become-an-affiliate&tid=202&pid=2

The last time I spoke with the representative for the OCAR Group Plans, they offered: Pacificare (HMO)  -  3 group medical plans United Healthcare (PPO)  -  2 group medical plans Kaiser Permanente (HMO)  -  13 group medical plan options

** 4...

California employers should be aware that a new law (California’s Wage Theft Prevention Act of 2011 codified as Labor Code Section 2810.5) went into effect on January 1, 2012 that requires California employers to provide all new nonexempt hires with written notice of specific wage information at the time of hire, including:

•    The employee's rate or rates of pay (including overtime rates), and whether the employee is paid hourly, by the shift, by the day, by the week, by salary, by piece, by commission, or otherwise. •    Any allowances claimed as part of the minimum wage (i.e., allowances for meals or lodging). •    The regular payday. •    The name of the employer, including any D/B/A names the employer uses. •    The physical address of the employer's main office or principal place of business, and a mailing address if it is different. •    The employer's telephone number. •    The name, address, and telephone number of the employer's workers' compensation insurance carrier. •    Any other...

Happy New Year.  All Employer’s should be on notice that the use of 1099 labor is under scrutiny by the state of California in 2012.  The hunting season started January 1, 2012, based on a bill signed by Gov. Brown in October (SB 459).  The new legislation targets the use of any 1099 labor from individuals.  If an employer has individuals providing contract or 1099 labor, the relationship needs to be addressed right away.  The contractor, if truly a contractor, needs to incorporate or form another legal business entity other than a sole proprietorship.  If the contractor can or should be classified as an employee, the change needs to be implemented without delay and payroll taxes must be paid.

Organized labor and Democratic legislators promoted this new law that includes up to a $25,000 penalty per incident for Employers with a pattern of improper use of contract labor or willfully misclassifying such labor. The max penalty is $25K and the minimum is $5K per violation.  The fines can extend to CPA’s and...

We tax lawyers like to talk about all the creative ways our clients can transfer wealth and save millions in taxes.  For transfers of operating businesses (including a real estate portfolio), there are a number of often overlooked business issues. 

For example, does the next generation have the management capability to run the business?  How will new lines of authority be established?  (You can’t have three CEO’s).  Does the next generation have the desire to manage the business?  What about all the interpersonal dynamics—sibling rivalry, spouses, etc.—that can affect business operations after the founder is gone? 

There are also external business issues.  How will key customers react if the founder of the business is no longer around?  What will the reaction of key employees be?  Has the next generation had a chance to establish independent relationships with key employees, or are those personal to the founder?  What will the impact of successor management’s relationships with banks and key vendors...

 Wall Street Journal, Family Businesses Catch a Big Break, by Anne Tergesen:

The Small Business Jobs Act of 2010 creates a special rule that allows self-employed individuals to deduct health insurance costs incurred in 2010 for determining net earnings from self-employment for the purposes of calculating the tax on self-employment income.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

The Small Business Jobs Act of 2010 removes cell phones and similar telecommunications equipment from the definition of “listed property.” Consequently, for tax years beginning after December 31, 2009, the heightened substantiation requirements and special depreciation rules that apply to listed property no longer apply to cell phones. This makes it easier for almost all small businesses to deduct or expense the use of cell phones.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

Under Internal Revenue Code Section 280F, first-year depreciation deductions for passenger autos, light trucks and vans are subject to dollar limits that are annually adjusted for inflation. For 2010, the dollar limit cap for passenger autos is $3,060, and $3,160 for light trucks and vans. The Small Business Jobs Act of 2010, however, increases the first-year depreciation limit by $8,000. Therefore, the maximum depreciation deduction for a passenger auto that is put into use in 2010 just increased from $3,060 to $11,060 (i.e., this deduction is more than tripled in 2010). If the vehicle is a light truck or van, the maximum first-year depreciation just increased from $3,160 to $11,160.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

In order to help small businesses quickly recover the cost of certain qualifying property - generally, machinery, equipment and certain software - small business taxpayers had, subject to Internal Revenue Code Section 179 limitations, been able to elect to write off the cost of some or all of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. The Small Business Jobs Act of 2010 encourages capital investments by allowing for faster cost recovery of business property, including certain qualified real property, and extends bonus first-year depreciation through 2010.

Section 179 Expensing Increased to $500,000, but only for 2010 and 2011

For tax years beginning in 2010 and 2011, the Act increases the Section 179 limit from $250,000 to $500,000, and the investment ceiling/phase-out threshold from $800,000 to $2,000,000. These expensing changes will create a windfall for those businesses that have already placed in service Section 179 eligible property...

For entrepreneurs that started a new business or who are planning to start a new business in 2010, the Small Business Jobs Act of 2010 provides an increased deduction for start-up expenditures.

For tax years beginning in 2010 only, the Act increases the amount of start-up expenditures a taxpayer can elect to deduct from $5,000 to $10,000. The Act also increased the deduction phase-out threshold from $50,000 to $60,000 (i.e., the $10,000 amount is reduced, but not below zero, by the amount in which the cumulative start-up expenditures exceeds $60,000). The remainder of the start-up expenditures can be claimed as a deduction over the 180 month period beginning with the month the active trade or business began.

To see the entire blog and read about some of the Act’s additional tax breaks for entrepreneurs and small businesses, click on the link below.

Tax Breaks for Entrepreneurs and Small Businesses in Small Business Jobs Act of 2010.pdf

President Obama recently signed into law H.R. 5297, the Small Business Lending Funding Act. The tax title of this bill, the “Small Business Jobs Act of 2010” (the Act, P.L. 111-240), contains a number of significant tax provisions affecting individuals and businesses. The Act includes approximately $12 billion in tax cuts - most notably an increase in asset expensing and a continuation of bonus depreciation - and attempts to ease credit lending to small businesses.

This blog entry highlights some of the Act’s tax breaks and incentives that may provide an immediate benefit to entrepreneurs and small businesses, including:

Increased Deduction for Start-up Expenses;

Increased Expensing Deductions plus Extension of Bonus Depreciation;

First-Year Depreciation for Autos and Trucks Increased by $8,000;

Cell Phones Removed from Definition of “Listed Property;” and

Deduction for the cost of Health Insurance in Calculating Self Employment Taxes.

The blog entries to follow...