The IRS has released guidance specific to the cannabis industry in the form of an FAQ and a dedicated Marijuana Industry page.
Much of the guidance confirms the tax obligations and ineligibility of cannabis companies for federal tax deductions under Section 280E. It also reminds taxpayers of an effective tax mitigation strategy that maximizes the deduction of cost of goods sold (COGS).
Other highlights of the guidance include:
- Payment plans and other options available to marijuana companies to pay outstanding taxes over time.
- Penalties and additions on adjustments made during an income tax audit.
- Best practices for documenting and reporting cash payments over $10,000 in a single or related transaction(s).
Grassi’s Cannabis Advisory Group will continue to keep you updated on the latest IRS guidance and related pronouncements from state taxing authorities. Contact your Grassi advisor or John Pellitteri, Cannabis Practice Leader, to learn more about how this guidance affects your cannabis business.
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