This session will help participants understand both how to advise clients to select a proper entity and how to structure the formation to reduce or totally eliminate immediate taxation. The session will answer questions as well as provide guidance that accounting professionals need to know to offer services specifically in the cannabis industry.
DESIGNED FOR
Accounting or financial professionals that work directly or indirectly in the cannabis industry or is interested in learning more about how this recent state legislation is impacting the accounting profession.
BENEFITS
- Explain the advantages and disadvantages of various business structures
- Recognize new businesses that could be formed to allow a tax-free exit via Section 1202
- Properly report the transactions related to business formations on tax returns
- Understand the risks of taking on a client in the cannabis industry
- Recognize state reporting rules
- Recognize federal reporting rules
- Differentiate between the federal and state filing requirements
- Understand IRC Section 280E and what deductions are and not allowed to a cannabis business
- Apply various state sales and excise taxes that apply to the sale of cannabis
- Recognize why banks won’t allow cannabis-based businesses to open a bank account
- Understand the treatment of revenue and inventory
- Understand audit considerations
- Understand sustainability reporting issues
HIGHLIGHTS
- The types of business entities that the Internal Revenue Code knows about
- The special case of the limited liability company (LLC) and applying the check-the-box regulations
- Advantages and disadvantages of the various entity types
- Tax free incorporation under IRC Section 351 and what can turn the formation in to a taxable event
- Tax free formation of a partnership under Section 721 and the special related problems found in Section 740(c) with regard to any unrecognized gain/loss
- Business types qualified for Section 1202 treatment as a C corporation and the benefits conferred on such entities
- Types of cannabis related businesses
- Risk considerations for services offered in the cannabis industry
- Recognizing what costs are and not considered costs of sales under IRC Section 280E
- Recognize if the entity conducts a business separate from the cannabis sales that may allow some deductions aside from cost of sales
- State and federal tax differences
- Cash based business audit considerations
- Financial reporting considerations
COURSE LEVEL
Intermediate
PREREQUISITES
Experience advising clients on tax matters. Basic auditing, accounting, and tax experience.
ADVANCE PREPARATION
None
ADDITIONAL NOTES
Course materials are distributed electronically. To access the materials visit
My Events. Download to your laptop or tablet prior to the seminar, handouts are added as received.