100% Exclusion for Qualified Small Business Stock Held for Five Years

Starting a small business is full of challenges and an entrepreneur will have many concerns, especially with ensuring adequate operating capital and meeting funding requirements. The federal government does recognize the importance of small business and the challenges faced by entrepreneurs, including cash issues, and reacted by making permanent the 100% qualified small business stock (QSBS) exclusion in December of 2015.

Originally, in 1993, Section 1202 of the Internal Revenue Code was enacted, encouraging investment in small business by excluding 50% of capital gains from the sale of QSBS held for 5 years. Over the years, the exclusion changed and evolved until 100% of capital gains from the sale of QSBS held for 5 years was excluded, if the required conditions were met. The 100% exclusion was set to expire at the end of 2015, but the exclusion was made permanent in the Protecting Americans from Tax Hikes (PATH) Act, enacted in December 2015.

The 100% QSBS exclusion, although permanent, is nuanced and the stock itself must be held for five years, be in a C corporation, be in a Corporation with less than $50 million of assets at the time the stock was issued, have acquired the stock at its original issue, and have over 80% of the corporation assets being used in the active conduct of a qualified business during the entire time holding the stock. Active conduct is similarly defined under the tax code, excluding investment vehicles, brokerage services, farming business, and other inactive business. For those looking to utilize the QSBS exclusion or attract new capital from investors under this exclusion, a proper evaluation should be conducted to ensure the stock qualifies.

© 2016 Vandenack Williams LLC
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As Small Business Week Ends, A Reminder of a Few Resources Available to Entrepreneurs

As small business week comes to a close, including special resources and webinars available at various federal government entities only during the week, a variety of different resources remain available for the entrepreneur from the federal government. For example, the resources at the Internal Revenue Service (IRS) include instructional publications, tax calculators, and informational videos on the varied tax requirements for small business. Further information can be found at the following link: https://www.irs.gov/uac/IRS-Marks-Small-Business-Week-2016-with-Four-Webinars

The Small Business Administration (SBA) also offers a variety of resources for a small business, including information ranging from securing a SBA loan to creating a business plan. During small business week, the SBA hosts informational webinars about issues facing entrepreneurs, most notably securing capital to operate and grow. Further information from the SBA can be found at the following link: https://www.sba.gov/nsbw/

For those entrepreneurs in Nebraska, the state offers resources through the Department of Economic Development. Information about local taxes, lenders, and business registration in Nebraska can be found at the following link: http://www.neded.org/business/start-a-business

© 2016 Vandenack Williams LLC
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DOL Revises The Family and Medical Leave Act (FMLA) Poster

by Joshua A. Diveley

The Department of Labor (DOL) revised The Family and Medical Leave Act (FMLA) poster which certain employers must display at employment locations. The revisions were released in late April, 2016. The poster was revised to clarify language and include additional information not contained in the prior February 2013 version of the poster.

All covered employers, generally those with at least 50 employees, are required to display the poster and keep it displayed. The poster summarizes the major provisions of FMLA and informs employees how to file a complaint for non-compliance by an employer. The poster must be displayed in a conspicuous place where employees and applicants for employment can see it. A poster must be displayed at all locations even if there are no eligible employees.

A copy of the revised poster is available at: http://www.dol.gov/whd/regs/compliance/posters/fmlaen.pdf.

The February 2013 version of the FMLA poster is still permitted and can be used to fulfill the posting requirement. Although displaying the revised poster is not mandatory, it is still a good idea for an employer to display the most recent version of the poster. Use of the most current poster shows a good faith effort to make employees aware of the latest information relating to employment laws.

An employer who willfully violates the posting requirement may be assessed a civil fine of $110 for each separate offense.

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New Nebraska Tax Credit for Volunteer Emergency Responders

In an effort to aid in the recruiting and retention of volunteer emergency responders, volunteer firefighters, and volunteer rescue squad members, Nebraska passed LB 886, known as the Volunteer Emergency Responders Incentive Act. By enacting this law, volunteer first responders are potentially eligible for a $250 refundable tax credit.

To qualify for the tax credit, the volunteer must be an active rescue squad member, active volunteer firefighter, or active emergency responder. To meet the activity requirements, the law uses the point system currently in place, requiring the volunteer to acquire 50 points out of a potential 100 in the given year. These points are awarded based upon the volunteer responding to emergency calls, participating in training, and other similar activities.

The point system will be maintained by each volunteer department, which will annually certify a list of volunteers meeting the points threshold to the Nebraska Department of Revenue. Starting with the second year that a volunteer is certified on the list, the volunteer can claim the $250 refundable tax credit.

© 2016 Vandenack Williams LLC
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Nebraska Bill Recognizing Fantasy Sports Fails to Pass

by M. Tom Langan, II

A bill seeking to recognize fantasy sports as a game of knowledge and skill (and not illegal gambling) failed to pass through the Nebraska Legislature.  In addition to permitting fantasy contests for cash prizes, LB862 would have required fantasy contest operators to register with the Department of Revenue and implement certain safeguard features, such as preventing employees from participating and/or sharing confidential “insider” information.  The bill was met with heavy opposition and was indefinitely postponed on April 20, 2016 leaving the legal status of fantasy contests for cash prizes uncertain in Nebraska.

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Initial Steps for Victims of Tax Related Identity Theft

As the 2016 tax season comes to a close, many taxpayers may have discovered they were victims of identity theft. Taxpayers often discover that they have been a victim of identity theft after they receive information that a tax return has already been filed using their social security number. If you are e-filing and a return has already been filed, your filing will likely be rejected. If the IRS suspects identity theft, you will receive Letter 5071C, which will request you verify your identity. Such verification can be completed online at https://idverify.irs.gov/IE/e-authenticate/welcome.do.

 After discovering that you have been a victim of identity theft, you should take multiple actions to protect your identity and correct any fraudulent returns with the IRS. It is recommended that you contact the FTC at identitytheft.gov and contact one of the major credit bureaus to place a fraud alert on your credit. If you have received a notice from the IRS or your attempt to e-file a return was denied, you should immediately contact the IRS. If your e-filing has been denied and you believe it is related to identity theft, you must complete Form 14039, Identity Theft Affidavit. Form 14039, a paper copy of your return, and any required payment of tax should be mailed to the IRS.

 If issues persist related to any fraudulently filed tax returns, additional information can be obtained from the IRS’s website, https://www.irs.gov/, or by contacting Vandenack Williams LLC.

© 2016 Vandenack Williams LLC
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Tempted to Ask for An Employee’s Personal Password? Just Say No

By Eric W. Tiritilli

If you’ve ever had the inclination to ask a job applicant or employee for their log-in information or passwords to their personal accounts, you should run – and not walk – away from such ideas.  Not only is requiring an employee to reveal passwords to their personal accounts unlikely to win any points with the employee, it will become illegal in Nebraska once a bill passed by the Nebraska legislature is signed by the Governor.

Legislative Bill 821 will make it illegal to require an employee or an applicant to disclose their user name or password to a personal internet account, to require them to log into their personal account in front of the employer, to require them to change their personal account settings, to add someone (including the employer) to their personal account or to penalize an employee for failing to take such actions.

LB 821 does not prohibit employers from maintaining polices regarding the use of the employer’s equipment and internet (but don’t forget that the NLRB has had a lot to say on these topics).  Nevertheless, the new law would prohibit an employer from intruding on the “personal” internet accounts of an employee.  So, if you’ve ever been tempted to ask an employee for a peek at their personal internet accounts – just say no!

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