Tax Challenges for Law Firms: Advanced Client Costs, IOLTA Accounts, Partner Allocations, Retirement Plans

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, May 3, 2023

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Course Materials

This webinar will review accounting and tax issues specific to law offices. Our panel of tax reporting professionals will discuss identifying and recording advanced client costs, Interest on Lawyer Trust Accounts (IOLTA), income recognition, retirement contributions, and other specific tax requirements of legal professionals. They will offer advice to minimize overall taxes paid while adhering to numerous guidelines specific to these service providers.

Description

Law firms and attorneys are confronted with unique tax issues. Attorneys often pay litigation expenses up-front on behalf of a client. These could include various court fees, mediation fees, postage, costs of medical examinations, etc. Of course, they are paid with the intention of being reimbursed by the client. These payments, known as advanced client costs, are rarely deductible as incurred.

IOLTA accounts are unique to attorneys too. Counsel often require retainers or receive large settlement checks on behalf of clients. The Supreme Court and state laws require attorneys to deposit these receipts in interest bearing accounts that are remitted to the applicable state fund. States often use these monies to provide charitable legal services.

In addition to IOLTA accounts and advanced client costs, complying with the constructive receipt doctrine, reporting retirement contributions, and applying unique income allocations by partner can all be problematic. Tax practitioners working with legal firms and attorneys need to grasp the unique accounting and tax concerns of these service providers.

Listen as our panel of federal tax experts explains the unusual accounting and tax issues faced by law firms along with how to properly record and report these while limiting the practice's overall tax burden.

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Outline

  1. Taxation of legal practices
  2. IOLTA accounts
  3. Advanced client costs
  4. Retirement plans
  5. Income recognition
  6. Multistate tax issues
  7. Attorney expenses
  8. Tax reporting issues
  9. Other considerations

Benefits

The panel will cover these and other key issues:

  • Recognizing and deducting advanced client costs
  • Complying with the constructive receipt doctrine for income recognition
  • Minimizing overall taxes paid by the firm and its partners
  • Reporting retirement plan contributions by partner
  • Administering IOLTA funds

Faculty

Laufman, Jeff
Jeff Laufman, CPA
Director
Armanino

Mr. Laufman is a manager in the Armanino Law Firm Services Group, where he is dedicated exclusively to working with law...  |  Read More

Peters, Katina
Katina Peters, CPA, CGMA
Owner
Peters, Johnson, Staley & Co.

Ms. Peters is a business growth and profitability advisor with a passion for helping clients achieve their dreams. She...  |  Read More

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