4 Tips to Save at the Pump With or Without a Gas Tax Holiday

This article explains that the Biden Administration has proposed a federal gas tax holiday in order to help US citizens with the current gasoline prices. Unfortunately, Patrick De Haan, head of petroleum analysis at GasBuddy, said “if a gas tax holiday coincides with rising wholesale fuel prices, consumers won‚Äôt see much of an impact at the pump because the tax move would be offset by the higher cost.” The national average for gas was over $5 but with the tax holiday in place, it is now sitting at a $4.94 national average. Hourly wage workers' pockets are hurting with gas prices being so high as “roughly 81% said higher gas prices have had a negative effect on their ability to pay for basic necessities.” In order to help save as much as possible, try tracking gas prices with an app for help finding the cheapest prices, pay with cash, carpool, and sign up for loyalty programs. For more information on how to save on fuel, click the link!

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Tax-Avoiding Schemes Are at the Top of the 2022 “Dirty Dozen” List

This article explains some tax-avoiding strategies that the IRS will be flagging down. Some strategies include “concealing assets in offshore accounts and improper reporting of digital assets, non-filing of income tax returns by high-income individuals, abusive syndicated conservation easements, and abusive micro captive insurance arrangements.” The article proceeds to categorize other sources of taxable income, all of which the IRS will punish if found to be abused.

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Ways Technology Can Improve Business Cash Flow

Cash flow awareness is vital in the day-to-day activities of a business. Keeping track of the inflows and outflows helps a company make better plans and decisions, such as choosing the right time to expand. Cash flow knowledge reveals where a business is spending money and can protect business relations, among other benefits. However, tracking cash flow is a challenge for many businesses.

To avoid business failure due to poor cash flow management, business owners are investing in software applications to help manage cash flow challenges. Modern technology enables access to these applications over the cloud, allowing small- and medium-sized businesses to benefit from them. These cash flow management tools help companies improve cash flow in various ways.

Remove Manual Paper Systems that Cost Time and Money

Using a cash flow automated system, it's possible to create and send invoices directly to clients through email. This saves on time that would otherwise be used for printing invoices, mailing them, making bank trips, and going through paperwork comparing details. It is also possible to automate recurring invoices, saving the time used to create and send invoices.

Makes it Easy for Clients to Pay

Paying invoices takes time if a client has to keep confirming the payment details. However, an automated invoice can contain a pay now link, which facilitates quick payments for applications that include access to online payment options.

Helps Avoid Data Entry Errors and Reduces Risks

There is no need to move from one platform to another to check details, manually enter details, verify figures, etc. This ensures fewer errors, such as those generated when copying details like bank information to a check or paying the wrong amount. Sorting out these errors takes time, hence delaying payments.

Cash Flow Forecast

The applications offer access to account insights in real-time using cloud-based software and mobile apps, making it possible to forecast when clients are likely to pay and when bills are due. Access to live data also means there is no more dealing with complicated spreadsheets and paper ledgers. This way, a business can plan its actions to ensure positive cash flow. For instance, a business can delay paying vendors and plan when best to pay bills without running out of standby cash.

Avoid Late Payments

Late payments can result in fines that will cost the business unnecessary losses. However, with software that automatically sends invoice reminders, it is possible to make timely payments.

Centralized Cash Flow System

All activities involving cash transactions are located in one system, offering the ability to see cash inflows and outflows at a glance. As a result, a business can streamline its accounts and monitor cash flow. Plus, since it includes real-time reporting, it’s easy to spot any red flags and solve problems that could adversely affect a business.

Leverage on Data Analytics

A centralized system collects data and stores it in one place. By deploying artificial intelligence technology that performs data analysis, a business can better forecast its cash flow. This also provides insight into how changes such as new products or price adjustments affect cash flow.

 Choosing a Cash Flow Tool

Cash flow automation enables a business to maintain a positive cash flow and have cash in its reserves to afford reinvesting in its operations, settling debts, and handling other operating costs. However, before investing in an automation tool, it’s recommended to analyze different tools to find the best fit for your business. Each tool is different and built to address various business problems.

Some features to look out for include integration with the existing accounting system, payments and invoicing, accepting a variety of payment methods, and security.

Besides getting the most suitable application, there are other considerations to establishing a healthy cash flow. Technology has its benefits, but it does not act as a cure for a poorly implemented system. For instance, if employees don’t know how to use new technology, its impact will be limited. Therefore, a business should establish a workflow process before implementing any new technology. 

Tax Break for Commercial Real Estate Investors

COVID-19 impacted the economy dramatically, and commercial real estate was no exception in terms of decreased values. Often, the real property could no longer service the debt used to finance it. This debt restructuring and resulting debt forgiveness can result in taxable income.

Taxable Income and Debt Cancellation

If you have an $80,000 loan and the bank reduces the amount you owe down to $50,000, then you have an economic benefit of $30,000, which should be treated as taxable income. This is indeed how the cancellation of debt is treated, but there are exceptions, such as in the case of bankruptcy or insolvency. There is another unique scenario that applies only to commercial real estate.

Assuming that the taxpayer is not a C-corporation, debt cancellation is excludable from taxable income if it results from qualified real property business indebtedness (QRPBI). QRPBI is debt taken on to buy real property used for commercial purposes. Starting in 1993, debt used for building or improving a property also qualifies.

As we all know, there is no such thing as a free lunch. For debt cancellation to not be considered current taxable income, the taxpayer must reduce their basis in the real property by this same amount. This does not cancel the income; instead, it defers its recognition and helps cash flow as a result. Below, we look at an example of how this works.

Illustrative Example

Assume David bought a property in 2017 and he uses it for business purposes. In 2022, the property has a first mortgage of $200,000 and a second mortgage of $100,000 (both with the same bank), with a fair market value (FMV) of $240,000. He negotiates with the bank to reduce the second mortgage down to $20,000, resulting in income from the cancellation of debt of $80,000.

The amount of debt cancellation that can be deferred is equal to the amount of the second mortgage before the debt cancellation, less the FMV minus the first mortgage. In David’s case, before debt cancellation, the FMV ($240k) minus the first mortgage ($200k) was $40,000. The balance of the second mortgage ($100k) exceeded this by $60,000. Out of the total debt cancellation of $80,000, this $60,000 is subject to deferral, with only the remaining $20,000 reported as immediate taxable income.

The $60,000 is not considered as taxable income only to the extent that David has sufficient adjusted tax basis in the depreciable real property to absorb this as a reduction in basis. Assuming this is the case, the basis reduction applies the first day of the tax year after the debt cancellation (unless the property is sold before year-end — then it applies immediately).

In the example above, David would include the $10,000 of cancellation of debt income on his 2022 tax return and adjust his basis in the real property by $60,000 as of Jan. 1, 2023.

Filing Mechanics

For real estate held via partnerships instead of by individuals, determining if a debt is QRPBI qualified happens at the entity level, although reductions of basis are done at the individual level for each partner, allowing individual planning. The election to defer the cancellation of debt income is recorded on Form 982.


The COVID pandemic caused many real estate investors to restructure their debts. The option to defer debt income cancellation offers a great tax planning opportunity by delaying taxable income and improving cash flows.

How to Calculate the Cash Conversion Cycle

The Cash Conversion Cycle, also known as the Net Operating Cycle, answers the question, “How many days does it take a company to pay for and generate cash from the sales of its inventory?” However, before an analysis like this can take place, it’s important to consider the company’s primary line of business.

If the company sells software, it's more challenging to measure performance because it generates revenue primarily on intellectual property — by developing computer code and licensing its use to clients. For online marketplaces, especially those that make the majority of their profits from third-party sellers that manage product sourcing, listing their inventory and shipping products on their own won't measure the online marketplace's inventory. Since these types of businesses don't act like a manufacturer that produces and sells products to other businesses or the general public, this type of analysis will be less helpful.

The formula for the Cash Conversion Cycle (CCC), is calculated as follows:

CCC = Days of Sales Outstanding (DSO) + Days of Inventory Outstanding (DIO) – Days of Payables Outstanding (DPO)

Days of Sales Outstanding, Defined

DSO is the average number of days it takes a company to collect payment once a sale has been completed. The beginning and ending Accounts Receivable figures from a fiscal year are added together and then divided by two. Then revenue from the income statement for the entire fiscal year must be divided by 365 days to get a daily average.

DSO = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2 = Revenue / 365 days

The fewer the days, the better; however, it can't be so fast that such tight payment terms push customers away.

Days of Inventory Outstanding, Defined

DIO is the average number of days a business keeps its inventory before it's purchased.

The beginning and ending inventories of a fiscal year are added together and divided by two to find an average. The resulting figure is then divided by the daily average of the cost of goods sold over a fiscal year, which is often 365 days.

DIO = (Beginning Inventory + Ending Inventory) / 2 = Cost of Goods Sold / 365 days

The lower the number, the faster inventory is sold. While there's nothing wrong with moving inventory quickly, there is the danger that orders might not be able to be fulfilled.

Defining the Operating Cycle

As the CFA Institute explains, putting DIO and DSO together constitutes the Operating Cycle. This is defined as the period of days that it takes a business to transform basic materials and/or goods into stock and obtain money from the completed transaction. When this number is small, it means the product is moving and customers have no issue making prompt payments.

Days of Payable Outstanding, Defined

Days of Payable Outstanding refers to the number of days a business takes to fulfill its debts to suppliers.

DPO = (Beginning Accounts Payable + Ending Accounts Payable) / 2 = Cost of Goods Sold / 365 days

Considerations for DPO include finding a balance between how long a business can take to pay their suppliers, but also not missing out on pre-payment discounts or being penalized with late fees, financing charges, etc.

Going Beyond the Results

Analyzing the Cash Conversion Cycle for the right type of company can provide great insight into that organization’s efficiency in regards to collecting billings, the length of time that inventory is up for sale, and the time it takes to become current with its own suppliers. Depending on the results of the CCC analysis, performing financial analyses can provide insight into not only how the company is performing financially, but why the company is performing financially.



R&D Tax Credits for Startups

This article explains the significant benefits that startups in 2022 receive when using R&D tax credits. For companies to qualify for R&D tax credits, their ideas must be a new or improved business component for a permitted purpose, include activities technological in nature, have elimination of uncertainty, and use the process of experimentation. The amount companies get back in R&D research “depends on the sum of your Qualified Research Expenses (QRE), which can include wages, contractor costs, and supply costs.” Start-ups can now use the R&D tax credit to offset up to $250,000 of their FICA payroll tax for their first five taxable years. Less than one-third of companies are aware that they qualify for the R&D tax credit. Be sure to hit the link for more information on the benefits of R&D tax credit!

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Gas Saving Tips for Your Summer Travel

This article explains the best money-saving methods for travelers hitting the road this summer. All 50 US states have hit the $4 per gallon mark, and the national average is currently at $4.59. According to AAA spokesperson Andrew Gross, “gas prices are now $1.56 more than a year ago and $1.05 more than they were when the war in Ukraine started in February.” Several tips to help save on the high gas prices include filling up your tank in the middle of the week rather than on Friday, getting your car a tuneup so that it may run smoothly, keeping the windows up, and setting your vehicle to cruise control. More suggestions include downloading a gas tracking app, paying with cash instead of a credit card, signing up for gas station chain loyalty programs, and traveling closer to your home. To learn more on ways to save money on traveling this summer, click the link!

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