Category Archives: Trucking & Transportation

Pay No Federal Tax on Qualified Small Business Stock

incorporation_packages_img1Qualified Small Business Corporations (QSBCs) are a special category of corporation, the stock of which can potentially qualify for three different gain exclusion breaks. The hot news is that QSBC shares issued between now and December 31, 2013 are eligible for a 100 percent gain exclusion break if you hold shares for more than five years before selling.

Here are the basics about tax-favored QSBC stock, which is covered under Internal Revenue Code Section 1202.

General 50 Percent Gain Exclusion Rule

Under the general gain exclusion rule, QSBC shareholders (other than C corporations) are potentially eligible to exclude from taxation up to 50 percent of their gains on sale of QSBC stock.

Special 75 Percent Gain Exclusion Rule

The American Recovery and Reinvestment Act of 2009 increased the gain exclusion percentage from the longstanding 50 percent to 75 percent. However, the 75 percent exclusion rate only applies to sales of QSBC shares that were issued between February 18, 2009 and September 27, 2010.

Extra-Special 100 Percent Gain Exclusion Rule

Legislation enacted in 2010 and 2013 created an unbeatable 100 percent gain exclusion deal for sales of QSBC shares issued between September 28, 2010 and December 31, 2013. The 100 percent gain exclusion translates into a 0 percent federal income tax rate on gains when QSBC shares are sold down the road.

Holding Period Requirement

The gain exclusion breaks are only allowed for QSBC stock that you’ve held for more than five years.

Summary

  • The general 50 percent gain exclusion is potentially available for QSBC shares issued before February 18, 2009 and QSBC shares issued after December 31, 2013.
  • The special 75 percent gain exclusion deal is potentially available for QSBC shares issued between February 18, 2009 and September 27, 2010. Due to the more-than-five-year holding period requirement, the earliest possible date to cash in on the 75 percent gain exclusion is February 18, 2014.
  • The extra-special 100 percent gain exclusion is potentially available for QSBC shares issued between September 28, 2010 and December 31, 2013. Due to the more-than-five-year holding period requirement, the earliest possible date to cash in on the 100 percent gain exclusion is September 28, 2015. For QSBC shares that have not yet been issued, the 100 percent gain exclusion deal will only be available for sales that occur sometime in 2018 at the earliest.

The gain exclusion percentage is scheduled to drop back to 50 percent for shares issued after 2013 — unless Congress acts to extend it. Therefore, a December 31, 2013 share issuance deadline applies if you want to take advantage of the 100 percent exclusion deal. Consult with your tax adviser about your situation.

When & What to Expect with a DOT Trucking Audit

I have been driving trucks for years as an employee of a company.  I have recently started my own logistics company.  Will the Department of Transportation (DOT) perform an audit on my records?

The answer to this is, yes.  The following three items could influence having the DOT request an audit:

  • Newly formed logistic businesses – usually, a new logistic carrier should expect a request for an audit by the DOT within 18 months of the start of the business.
  • Poor roadside inspections.
  • Reportable accidents.

Items the DOT will request to view may contain driver qualification files, proof of financial responsibility, an accident register report, information relating to drug testing, drivers hours records and maintenance records.  One should consider keeping the driver qualification files separate from driver history files.  The accident register should only consist of recordable accidents and should not include reportable accidents.  Drug testing reports should consist of pre-employment, post accident, random and reasonable suspicion tests completed.  Drivers’ hours records should be complete and accurate.  Maintenance records should reflect the company’s maintenance policy.  If the policy states routine maintenance check will be conducted every 3 months on each cab and trailer, rest assured the DOT will check to ensure a maintenance check was done at minimum once every three months.  This does not include the pre and post driver inspections.

These are only a few of the items the DOT may request to view.  If you feel you may be subject to a DOT audit in the near future, you may want to ensure you have the proper documentation and paperwork to aide you in having minimal issues with the Department of Transportation.  If you feel you may have a problem or need further clarification, please contact your William Vaughan Company representative today.

By: Ryan Leininger, CPA