Category: Blog

Defining An Activity Cost Driver

3 min read

Defining An Activity Cost Driver, What is An Activity Cost DriverAn activity cost driver is anything that causes a company’s variable costs to either reduce or grow. Since measuring an activity cost driver is a way to streamline the administration of managing production costs, it’s an integral part of activity-based costing.

Examples of activity-cost drivers are warehouse expenses, modifying engineering designs, and retooling, setup, and maintenance costs for machining needs. This can include higher warehouse expenses due to increased rents or leases, which add to the final amount of the product or service’s sales price. Machining costs include initial setups for initial production and ongoing maintenance costs for continued runs. If production needs to be re-engineered to different production parameters, those professional revision costs need to be added to the ultimate product or service cost calculations.

These cost drivers are used as a starting point to project the business’ operational and profitability goals through the use of activity-based costing (ABC), a type of managerial accounting.

ABC accounting is a way to determine the expenses of each output by looking at the inputs used during the company’s operations, be it power for the machinery, Information Technology (IT) needs, or labor.

It’s important to know that one variable expense can impact multiple single activity cost drivers. For example, wage costs and machining expenses can be identified as activity cost drivers in connection with production. The first step is looking at how ABC accounting can determine indirect costs.

Activity-Based Costing Illustration

A business wants to look at how its production space and its lease or real estate and property tax costs are attributable to individual widgets or services, based on the percentage dedicated to the respective product or service. If it’s not allocated properly, determining sales prices and profitability can be negatively impacted.

If a company has two product lines with the same retail prices and production quotas, with direct costs of $700 and $250, it’s important to see how the production area for each product impacts the company’s overall operations. If the first item uses 40 percent of the production area and the second item uses 60 percent of the production area, and the rent is $1,500, the rent needs to be factored in. The first item would see an additional cost of $600 plus the original $700, or a total of $1,300. The second item’s cost would be $900 for the rent and $250 for the item, or a total of $1,150. While the initial direct cost for the first item seems higher than the second item, when factoring in all costs, this time it’s still true – but that’s not always the case.

Once this has been established, and then a company receives a new order, the following illustrates how measuring an activity cost driver, such as performing maintenance on machines after a production run, will cost the company to have it ready for their next order. If it costs a company $200 for machine maintenance and it produces 1,000 widgets, a $0.20/widget cost would be factored into margins and retail pricing.

While this provides an overview of how activity cost drivers work, it is part of a comprehensive approach to how businesses measure their margins and ultimately profitability. 

What Seniors Actually Got in the Latest Tax Bill

4 min read

What Seniors Actually Got in the Latest Tax Bill, SS CreditCampaign messaging would have you believe retirees just scored a major victory. The talking point is everywhere: Social Security benefits are now tax-free. But anyone who reads the One Big Beautiful Bill Act will discover something different. The legislation contains nothing that removes Social Security from federal taxation. Zero provisions. The tax structure that has applied to benefits for over four decades remains fully intact.

So, what did pass? A new deduction aimed at older Americans. And through some rhetorical gymnastics, that deduction is being sold as something it fundamentally is not.

A Deduction Is Not an Exemption

The OBBBA creates an additional deduction exclusively for seniors. Single filers get $6,000 while married couples receive $12,000. This stacks on top of what they already claim through the standard deduction, lowering their overall taxable income.

For retirees whose financial situation falls in a particular range, this extra write-off might be enough to cancel out whatever portion of their Social Security would normally face taxation. But here’s the catch: the deduction applies to all income equally. It doesn’t single out retirement benefits for protection. If your earnings came entirely from investments or a workplace pension, the math would work identically.

Decades of Unchanged Rules

Federal taxation of Social Security benefits dates back to 1983. President Reagan signed that change with support from both parties, making up to half of benefits taxable for seniors with higher earnings. Then in 1993, Congress and President Clinton pushed the ceiling higher. Under current rules, as much as 85 percent of benefits can count toward taxable income for upper-income retirees.

None of that changed with this bill.

The thresholds determining who pays what have remained frozen since the Clinton era. Single filers earning under $25,000 and couples under $32,000 owe nothing on their benefits. Those in the middle tier face taxes on up to half. And couples bringing in more than $44,000 can see 85 percent of their Social Security added to their taxable total.

Because these cutoffs have never adjusted for inflation, more retirees get pulled into taxable categories every single year. The OBBBA leaves this problem completely unaddressed.

Looking at the Administration’s Own Math

Treasury Department calculations highlighted by the White House reveal how limited the benefit truly is. Picture a single retiree receiving $40,000 annually from Social Security alongside another $40,000 from retirement accounts like an IRA or 401(k). Current law would put their 2026 tax bill at $7,190. Under the new legislation, the amount drops to $5,685, a reduction of roughly $1,500. The senior deduction accounts for approximately $900 of those savings.

Helpful? Sure. But this person still owes thousands in federal taxes. Their Social Security benefits remain part of the calculation. The deduction simply chips away at overall liability without treating retirement benefits any differently than other income sources.

Temporary Relief with Built-In Limits

Unlike corporate tax provisions and cuts benefiting wealthy taxpayers, which received permanent status in the bill, the senior deduction disappears after 2028. It was written with an expiration date from the start.

Income limits further narrow who benefits. Single filers with earnings above $75,000 and married couples exceeding $150,000 see the deduction phase-out entirely. Ironically, these higher-earning retirees facing the steepest Social Security taxation are exactly the ones shut out from this supposed fix.

Conclusion and Why This Framing Succeeds

Announcing a supplemental deduction for older taxpayers generates little excitement. Declaring that Social Security taxation has ended makes waves. Political strategists understand that most people absorb information through headlines rather than legislative analysis. Few voters examine IRS guidance or compare statutory language.

The outcome is clever stagecraft masquerading as meaningful reform. Benefits remain taxable under the same formulas established decades ago. Inflation continues to drag more retirees across taxation thresholds, and this temporary, income-restricted deduction is merely wrapped in revolutionary packaging.

Passive Income 101

3 min read

What is Passive Income 101If you’re tired of the 9-to-5 grind, then passive income could be for you. While not a get-rich-quick scheme, it’s a way to build systems that contribute to financial stability and extra money. It can even support long-term goals like early retirement. Here’s a high-level look at what it is and how it works.

Types of Passive Income Sources

  1. Investment Income
    This includes individual stocks or mutual funds, interest payments from corporate bonds, or capital gains from selling securities at a profit. While they all involve risk, these types of investments can compound and grow over time.
  2. Rental Income
    Depending on where your property is, this could be a cash cow. The money you earn can cover the mortgage, taxes, maintenance, and other miscellaneous expenses. The best part? You could earn a sweet sum of money.
  3. REITs and Crowdfunded Real Estate
    REITs (real estate investment trusts) and crowdfunded real estate platforms allow you to invest in properties without having to buy them yourself. You earn net rental income in the form of dividends without the headache of managing the property. Not bad, right?
  4. Business Income
    You earn this money by not actually participating in the operations. For example, you might invest in a restaurant. Others run the daily business while you receive a percentage of the profits. Sweet.
  5. Intellectual Property Royalties
    Pen a book. Write a song. Create an online course. You’ll reap the rewards long after the work is completed.
  6. High-Yield Savings Accounts
    Yes, this might yield small returns, but it’s a great way to put your money to work.

What are the benefits? There are many.

  • Wealth Building
    When you reinvest your dividends, save and invest your rental profits and royalties, you’ll steadily create a nest egg that will compound and grow, grow, grow.
  • Financial Freedom
    While this type of capital building takes time, it can supplement, if not replace, your day job.
  • Time Flexibility
    You don’t have to work on this revenue stream every day, which is the beauty of it. It clears up time for you to live your life.
  • Diversification
    When you have more than one income source, it can act as somewhat of a safety net, should your main way of earning a living dry up.

Risks and Taxes

While passive income can and does build wealth, it’s not without risks. Markets may fluctuate. Property values might decrease. Companies that are part of third-party crowdfunding could shut down. You’ll also have to pay taxes, as you must report your earnings. Selling stocks or properties can trigger capital gains.

Passive income has pros and cons. Only you can decide how risk-averse or tolerant you are. If this type of investing is for you, the sooner you start, the sooner you’ll create financial security – and freedom.

Sources

https://www.crediful.com/what-is-passive-income/

 

What Frictionless WebAR Means for Creators, Brands and Small Businesses

4 min read

What Frictionless WebAR MeansThe way people interact with the web is changing fast. Attention spans are shorter, app fatigue is real, and users no longer want to download, sign up, or navigate complex interfaces just to engage with content. New technologies like frictionless web-based augmented reality (WebAR) are emerging as powerful solutions.

This shift opens great opportunities for creators, brands, and small businesses.

What is Frictionless WebAR?

Every extra step between a user and an experience reduces engagement. Downloading apps, dealing with permissions, updates, and onboarding screens all create friction. However, frictionless WebAR is delivered directly through a web browser. It uses web standards like WebXR and WebGL to deliver digital content without downloads or installations. With a shift in how value is created, communicated, and converted, it is possible to have interactive storytelling, experiential funnels, immersive education, and hyper-local marketing. All this is without the costs and complexity involved in traditional AR.

Transitioning from the attention economy to the experience economy has been driven by content overload from content, ads, and interfaces competing for clicks. As a result:

  • Users avoid downloading new apps
  • Click-through rates are declining
  • Trust is harder to build through a flat screen alone
  • Static content struggles to hold attention

Frictionless WebAR addresses these barriers.

Users can easily scan a QR code or tap a link and instantly see a product, explore a story in 3D form, or interact with information visually.

From a business perspective, the value lies in zero-friction entry, instant immersion, and seamless connection between physical and digital worlds. This is because WebAR does not require large development teams or app store approvals. It is lightweight, fast, and accessible. This makes it viable not only for big brands but also for solo creators and small businesses.

From Passive Content to Active Experiences

With most digital content, users scroll, read, watch, and move on. Frictionless WebAR is built to turn audiences into participants. Instead of reading about a product, users can see it in a 3D model. Instead of watching a story, they can step inside it. When audiences interact with something in their own environment:

  • Engagement time increases
  • Emotional connections deepen
  • Information is remembered longer
  • Purchase confidence improves

Practical Opportunities for Creators

For filmmakers, artists, game developers, and content creators, frictionless WebAR transforms static content into dynamic, interactive narratives. For instance, scanning a QR code in a physical comic book brings a character to life. This deepens immersion and extends the narrative beyond the printed book. Other examples include AR-enhanced portfolios that showcase work in 3D, behind-the-scenes experiences tied to a QR code, and interactive course previews.

Creators can also monetize WebAR by offering premium AR experiences, bundling AR with digital products, launching interactive experiences for sponsors, and enhancing membership or community access. This makes WebAR part of a creator’s intellectual property and not just a marketing tool.

Practical Opportunities for Brands

Brands leverage WebAR for immersive marketing. Experiential funnels leverage WebAR, allowing brands to engage customers in ways traditional advertising cannot. A good example is a brand launching a new shoe, and customers can scan a QR code on a poster and “try on” the virtual sneakers to see how they look in real time. Luxury brands can offer “virtual showroom” experiences with interactions that deepen the emotional connection.

The low-barrier interaction means higher engagement rates as potential customers are more likely to participate in an experience that doesn’t demand an app download or login.

Practical Opportunities for Small Businesses

Small businesses often struggle to compete with larger brands online. However, now they can access cost-effective WebAR without native app development. This equalizer offers sophisticated marketing and customer engagement tools without the need for a massive budget or IT team. This saves on resources and enables quick campaigns like seasonal promotions.

Since WebAR works through web browsers, a business can gain detailed analytics, such as user behavior. For instance, getting detailed data on dwell time or how long people engage in the experience can indicate how compelling the content is. Spatial analytics, on the other hand, measure how much time users spend on specific scenes, helping make necessary tweaks to optimize user experience. The data collected helps better understand customers and how they engage with content.

Conclusion

Frictionless WebAR represents a fundamental change in how value is delivered online. For creators, brands, and small businesses, it offers a way to stand out by inviting people into meaningful experiences.

In a crowded digital space, ease of access is a competitive advantage. 

Improving Military Benefits, Relaxing Energy Regulations and Increasing Aviation Regulations

3 min read

Improving Military BenefitsVeterans’ Compensation Cost-of-Living Adjustment Act of 2025 (S 2392) – This Act was introduced by Sen. Jerry Moran (R-KS) on July 23. It passed in the Senate on Nov. 9, the House on Nov. 17, and was signed into law on Nov. 25. The purpose of this bill is to increase rates of compensation for veterans with service-connected disabilities, as well as the rates of dependency and indemnity compensation for the survivors of certain disabled veterans. The rate hikes became effective on Dec. 1.

Fairness for Servicemembers and their Families Act of 2025 (HR 970) – This bipartisan Act was introduced on Feb. 4 by Rep. Marilyn Strickland (D-WA). It authorizes increases to servicemember and veteran life insurance packages in order to account for inflation and higher costs of living. It passed in the House on April 7, in the Senate on Nov. 20, and was enacted by the President on Dec. 12.

Veteran Fraud Reimbursement Act of 2025 (HR 1912) – The Veterans Benefits Administration has experienced negligence and fraud that have prevented many veterans from receiving benefits. In the past, the case-by-case system of investigation into misuse led to further delays; in some cases, veterans passed away before ever receiving remuneration. The purpose of this bill is to allow the Veterans Benefits Administration to reimburse victims of fraud via a streamlined process, so that the investigation occurs after the affected veterans have been reimbursed. The bill, which was introduced by Rep. Gerald Connolly (D-VA) on March 6, passed in the House on May 5, in the Senate on Nov. 20, and was signed into law on Dec. 12.

SPEED Act (HR 4776) – The purpose of this bipartisan legislation is to streamline the existing environmental analysis requirements for energy projects (e.g., offshore drilling, mining, pipeline development). Provisions include reducing litigation challenges to a 150-day challenge window, developing standardized federal action criteria, and defining procedural deadlines. The Act was introduced by Rep. Bruce Westerman (R-AR) on July 25 and passed in the House on Dec. 18. Its fate currently rests with the Senate.

ROTOR Act (S 2503) – Prompted by multiple incidents this year, including military aircraft such as the Washington, D.C., helicopter collision, this bipartisan bill seeks to improve aviation safety and Federal Aviation Administration (FAA) oversight. The legislation would specifically require all aircraft to incorporate ADS-B technology, which displays nearby planes and weather data on cockpit screens. The legislation was introduced by Sen. Ted Cruz (R-TX) on July 29. It passed in the Senate on Dec. 17 and awaits consideration by the House.

Lower Health Care Premiums for All Americans Act (HR 6703) – Sponsored by Rep. Mariannette Miller-Meeks (R-IA), this healthcare bill proposes expanding association health plans, increasing transparency requirements for pharmacy benefit managers, and funding some cost-sharing reductions for qualifying Health Insurance Marketplace enrollees. It does not include extending the enhanced premium tax credits that expired on Dec. 31, 2025. The bill was introduced on Dec. 15 and passed in the House on Dec. 17. Its fate now lies with the Senate.

Accounting for Net Charge Offs

3 min read

Accounting for Net Charge OffsWhen it comes it understanding a net charge-off (NCO), it’s the difference between any recovery of delinquent debt and gross charge-offs a business sees in a defined accounting time frame. NCOs are debts a company projects with a low likelihood of being collected. It can happen when a customer stops paying outstanding invoices or sees a decline in their credit rating.  

The first step considers it as a gross charge-off; if any amount is recovered, it’s subtracted to arrive at net charge-offs. If businesses can recover a percentage of what’s been charged off, the recovered monies can be net against the gross charge-offs to realize net charge-offs. A business’ loan loss provision is lowered by the net charge-off amount at the end of the accounting time frame and then refilled for the next accounting time frame based on new estimates for loan losses. This is part of a business’ provision for credit losses (PCL) that projects a certain percentage of accounts unable to be collected.

Accounting in Detail

The following formula calculates net charge-offs (NCO). This assumes a gross charge-off booking of 6 percent of all outstanding loans, with 1 percent ultimately being recovered during a particular accounting time frame.

Net Charge-Offs = Gross Charge-Offs – Amount of Recovered Debt

= 6 percent – 1 percent = 5 percent

Once the figure is calculated, the 1 percent collected adjusts the loan loss provision in the accounting statements.

Financial Institutions Illustrate Accounting Considerations

Banks’ business models and financials demonstrate their ability to pay their depositors competitive interest rates while also being able to make loans. Since banks earn profits via net interest margin, earning a spread between what banks pay depositors on interest rates and what borrowers are charged on loans, the spread is integral to measuring profitability. To generate the total value of a bank’s balance sheet, it’s imperative for banks to estimate and project their charge-offs as accurately as possible.

Financial institutions determine credit loss provisions by analyzing their balance sheets and the level of risk represented by outstanding loans. They look at the ratio of loan losses to overall losses, which is their net charge-off rate. The net charge-off rate is used to evaluate a loan’s book quality against other banks.

How Different Risks Impact Net Charge-Off Levels

Banks that have different loan mixes will see different risk and reward payoffs. If one bank offers primarily secured loans, while it may have lower net interest margins, it will also have lower charge-offs because the collateral backing them is less risky overall. This is compared to other lenders that have a higher level of unsecured loans, such as credit cards and commercial loans. This scenario, in the case of riskier loans, may result in higher net interest margins, but also greater potential for higher losses.

Journal Entry Examples

The following journal entries illustrate how to account for bad debts. Using the direct write-off method, when debt collection efforts have been exhausted, bad debts are recorded as follows:

Expenses for bad debt: Debit $750

Accounts Receivable: Credit $750

If, however, the business recovers anything from the customer’s outstanding invoices, the following journal entries would be added if $200 were received:

Cash: Debit $200

Accounts Receivable: Credit $200

Conclusion

While this is primarily for early-stage companies with a low percentage of credit sales, it illustrates how businesses can update their books when projecting their numbers to account for net charge-offs.

Partial Government Funding, Promoting Transparency and Protecting Against Foreign Terrorism

3 min read

Government Promoting TransparencyEpstein Files Transparency Act (HR 4405) – The purpose of this bill is to require the Department of Justice to release all documents and records in its possession of investigations and court cases related to Jeffrey Epstein. Epstein was previously convicted of soliciting prostitution from an underage girl, and also faced new sex trafficking charges prior to his 2019 death in custody. The files are expected to reveal the names of other people involved in the sex trafficking scheme. The act was initially introduced by Rep. Ro Khanna (D-CA) on July 15. It was updated and passed in the House on Nov. 18, in the Senate the next day, with only one opposing vote between the two chambers. The bill was signed into law by the president on Nov. 19. The DOJ has up to 30 days to release the documents, which may be lightly redacted to protect against unwarranted invasion of privacy, such as victim names and medical data.

Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (HR 5371) – This is the bill that ended the federal government shutdown. It includes funding for the remainder of the fiscal year for the food assistance program SNAP, the Department of Agriculture, the FDA, the military, Veterans Affairs, and Congress through Sept. 30, 2026. However, it stops short of funding approval beyond Jan. 30, 2026, for Commerce, Justice and Science (CJS); Defense, Energy and Water; Financial Services and General Government (FSGG); Homeland Security; Interior, Environment, and Related Agencies; Labor, Health and Human Services, and Education (LHHS); State, Foreign Operations and Related Programs; Transportation; and Housing and Urban Development. The continuing resolution did contain a few ancillary provisions, including mandatory backpay and rehiring of all federal employees furloughed or laid off during the shutdown. The original version of the bill was introduced on Sept. 16 by Rep. Tom Cole (R-OK). It passed in the House on Sept. 19 and failed in the Senate 14 times before a revised bill was passed on Nov. 10. The final bill, with changes, passed in the House on Nov. 12 and was signed into law on the same day.

District of Columbia Cash Bail Reform Act of 2025 (HR 5214) – This bill was introduced on Sept. 8 by Rep. Elise Stefanik (R-NY). It represents Republicans’ ongoing battle over who has jurisdiction over Washington, D.C.’s law enforcement and justice system. The bill would return to a cash bail system and require automatic detention of those charged under a wider set of offenses. The new confinement rule counters D.C.’s long-standing system of judge discretion regarding detention or supervised release. The bill passed in the House on Nov. 19 and currently lies in the Senate.

Strengthening Cyber Resilience Against State-Sponsored Threats Act (HR 2659) – This bipartisan legislation represents a federal strategy to strengthen U.S. cyber defenses to counter China’s attempts to actively target American infrastructure. Unfortunately, the bill does not apply to other hostile state-sponsored cyber actors such as Russia, Iran, or North Korea. Introduced by Rep. Andrew Ogles (R-TN) on April 7, the bill passed in the House on Nov. 17 and currently rests with the Senate.

Department of Homeland Security Vehicular Terrorism Prevention and Mitigation Act of 2025 (HR 1608) – This bipartisan bill seeks to address the rising threat of vehicle-based attacks, including the possible misuse of autonomous vehicles, rideshare platforms, and connected vehicle technologies. The legislation was introduced by Rep. Carlos Gimenez (R-FL) on Feb. 26 and passed in the House on Nov. 17. It currently awaits consideration by the Senate.

How to Account for Additional Paid-in-Capital (APIC)

3 min read

APIC, What is Additional Paid-in-Capital?According to the May 2019 Financial Stability Report from the Board of Governors of the Federal Reserve System, there was more than $15 billion in outstanding commercial credit. While there are many ways companies can obtain funding, additional paid-in-capital (APIC) is one way to accomplish this goal.

Defining APIC

This term refers to the gap between a share’s par value and the distribution price. If an investor pays more than what the company sets for its IPO price offer, that is what determines APIC.

Defining Par Value

Par value is the initial offer price a publicly traded company decides to offer shares to investors during its initial public offering (IPO) on exchanges. Depending on the actual initial price for an IPO, it can be done for publicity reasons, to reduce litigation risks and to aid in improving shareholder return on investment.

Market Value

Based on how well a publicly traded company performs, this is the prevailing price that investors assign to the share price, which varies dynamically.

Determining APIC

Calculating APIC is done as follows:

APIC = (Issue Price – Par Value) x Number of Shares Acquired by Investors

If a company establishes a stock price of $2 per share, investors can decide to bid up each share price to $3 or $7 or $20 via their purchases. If there are 2 million shares outstanding selling for a total of $44 million, the excess of $40 million (beyond the $4 million in par value) is the APIC.

Based on these circumstances, a company’s balance sheet should have the following entries:

– $4 million (paid-in-capital)

– $40 million (additional paid-in-capital)

When accounting for these stock purchases in this scenario, APIC is recorded on the balance sheet under the shareholder equity (SE) section. This can be seen as increasing a company’s bottom line because it results in them receiving additional cash from stockholders.

When it comes to recording the journal entry, the total cash generated by the IPO is recorded as an asset (debit) on the balance sheet, while the common stock and APIC are recorded as equity (credits).

Utility

The utility metric can yield a considerable amount of a business’ share capital, prior to retained earnings starting to accumulate. It helps provide a financial cushion for the company if retained earnings demonstrate a shortfall.

Companies that issue shares permit the business to not increase its fixed costs. Since this method is chosen instead of issuing bonds, there are no interest payments due to buyers of the bonds. Investors are not due any payments, including no dividend obligations. Business assets are also not subject to investor claims. Once shares are issued to investors, the generated funds are non-restricted, so the company can direct the funds as necessary.

APIC lets businesses produce money without any required assets backing the transaction. Depending on the company’s future performance, buying stock at the IPO can generate massive returns.

Further considerations

When there are additional share offerings post IPO, either common or preferred shares, the APIC levels may grow, necessitating them to be documented on the business’s financial statements. If share repurchases are made, levels can be decreased.

While each business has many options to raise money, if a company uses this method, it’s important to ensure that they are accounted for properly. As always, contact a professional to ensure the best personalized advice.

Seven Tax Moves to Make Before 2025 Ends – Year-End Tax Planning

4 min read

Tax Planning 2025, Year-end tax planning 2025

Tax planning feels like homework nobody wants to do, but here’s the reality: real money is sitting on the table. The One Big Beautiful Bill Act changed the rules this year, and most people are still figuring out what matters for their wallets.

Max Out Everything While You Can

Here’s something many people miss. Every Dec. 31, workplace retirement accounts basically close their books for the year. That’s it, opportunity gone. The limit is $23,500 this year, or $31,000 for those over 50. Also, anyone between 60 and 63 can throw in an extra $11,250 with the new super catch-up provision. That’s serious money that could be working harder instead of going to taxes.

HSAs remain the best-kept secret in tax planning. Most people ignore them until someone explains the magic; it’s literally the only account where taxes never apply. Not when money goes in, not while it grows, and not when it comes out for medical expenses. Singles can contribute $4,300 and families $8,550, with up until the April 2026 tax deadline to make it happen. Starting in 2026, there’s a bonus feature: $150 a month can go toward concierge doctor memberships tax-free.

IRAs deserve attention, too. The contribution limit is $7,000 (or $8,000 for the 50-plus crowd) with that same April deadline. The catch? Income limits and existing workplace plans can complicate things, so checking the rules is important.

Transform Losing Stocks into Tax Wins

Everyone has those regrettable investments. Maybe it was that “sure thing” tech stock or the cryptocurrency experiment that went south. Here’s the good news, selling losers before year-end can offset winners for tax purposes. Even better, losses can erase up to $3,000 of regular income. Whatever doesn’t get used rolls forward indefinitely, like store credit that never expires.

Play the Charity Deduction Game Smart

The standard deduction has increased yet again, standing at $15,000 for singles and $30,000 for married couples. Most people won’t beat that with itemized deductions, but there’s a clever workaround. By bunching several years of charitable giving into 2025, taxpayers can itemize this year and claim the standard deduction in future years. It’s like buying in bulk for tax benefits.

Timing matters because 2026 brings stingier charity rules. Only donations exceeding 0.5 percent of income will count, and high earners face a 35 percent cap. Anyone feeling generous should probably act this year.

Control the Income Timeline

Freelancers and business owners hold the cards on payment timing. That December invoice could easily become January income with a quick conversation. Even employees sometimes have flexibility with bonuses through understanding employers or HR departments. The trick is knowing whether next year’s tax situation will be better or worse.

The Roth Conversion Opportunity

With permanently lower tax rates now locked in, converting traditional retirement funds into Roth accounts makes increasing sense. Yes, taxes are due on the conversion amount today, but then everything grows tax-free forever. Smart planners often execute these moves during lower-income years, like between jobs or early in retirement.

Navigate Required Withdrawals Carefully

Anyone who’s 73 or older must withdraw from retirement accounts by Dec. 31. No exceptions, no excuses. The penalties for forgetting are harsh. First-timers get a choice, either take it now or wait until April. But waiting means two withdrawals hit in 2026, potentially pushing income into higher tax brackets. It’s worth doing the math.

The Charity Strategy Nobody Mentions

After age 70½, a powerful option opens up. You can send up to $108,000 directly from an IRA to charity. This qualified charitable distribution satisfies required withdrawals without adding to taxable income. Married couples can each do this, potentially moving $216,000 to charity while avoiding taxes entirely. For those already charitably inclined, missing this opportunity is literally giving money to the IRS instead of chosen causes.

Take Action Before Time Runs Out

Smart taxpayers are running projections comparing 2025 and 2026 tax scenarios right now. They’re scanning investment accounts for tax-loss harvesting opportunities. They’re accelerating charitable plans into 2025 before the rules tighten. They’re smoothing income across tax years where possible.

Nobody gets excited about tax planning, but a few hours of attention before year-end could save thousands of dollars. Good tax professionals pay for themselves many times over, especially in years with rule changes like this one.

How to Account for Accretion

3 min read

What is Accretion?Whether it’s an individual investor or a business owner looking to increase their earning power, understanding how accretion works is essential for individual and business investors to make the correct decisions going forward.

How Accretion Works for Bonds

Accretion is the gradual increase of a bond’s value over time. As a bond moves toward its maturity date, it increases in value until it reaches its face or par value – or what’s paid to the bondholder upon maturity.

If a bond has a face value of $2,000, yet it’s discounted at $1,900 when it’s offered for sale, the present value of the bond is $1,900, leaving the difference of $100 as the discount. Between the time of purchase and when it matures, the value of the bond will appreciate, up to its par value of $2,000. As the bond increases in value, this is referred to as an accretion discount. 

When it comes to accounting for bond accretion, there are two common methods.

Straight-Line Method

This approach documents the bond’s appreciated monetary gain and is laid out equally over the bond’s time frame until maturity. For a bond with a term of 10 years and a business that publishes its earnings once a quarter, there are 40 earnings releases.

If there’s a $100 discount, spread across 40 quarters, that is $2.50 every three months. The $2.50 is the quarterly accretion until the bond matures.

Constant Yield Method

This method is different from the straight-line method in that the bond’s value appreciation increases in value closer to the bond’s maturity date.

Acquisitions and Accretion

Companies can also benefit from accretion. Through the concept of synergy, where there’s more output from combining multiple entities than the sum of them if still separate, an acquiring company adds the earnings before interest, taxes, depreciation, and amortization (EBITDA), for example, to add to its existing shareholders’ value.

Illustrating How it Works

If Company X wants to increase its earnings per share for its shareholders, an acquisition is one way to do so. Assume Company X earned $1 million in net income the preceding year and has 3 million shares. And then there is Company Z, which had $500,000 in net income over the same time frame, with 1 million shares issued to raise cash. The following is a way to calculate the acquisition accretion value of the new combined company.

Earnings Per Share of Company X: 1,000,000 / 3,000,000 = 0.33

Earnings Per Share of the new company post-acquisition: ($1,000,000 + $500,000) / (3,000,000 + 1,000,000) = $1,500,000 / 4,000,000 = 0.375

Based on the calculation, the earnings per share of the post-acquisition company are $0.375. Compared to the EPS for the original, pre-acquisition Company X, the post-acquisition company is $0.045, resulting in a positive acquisition accretion.

Whether an individual investor is looking to see how bond accretion works or a company is looking at whether an acquisition makes business sense, understanding how accretion works is essential to ensure it’s accounted for properly.