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Recent Feature Headlines


July 2016

Avoid the Big Triple-Tax Whammy When Renting to Relatives

Tax savings when renting to relatives depend on your compliance with the tax law’s fair-rent standards and your relatives’ use of the property. Violate these rules and you face the triple whammy of additional taxation. And it’s easy to violate the rules, especially if you don’t know what they are.


Tax Savings Tip: Increase Office Depreciation Rate by 42 Percent

What happens when you locate a commercial office (an office in the home or a regular office) in a duplex or apartment building? It’s possible that this location can produce tax-favored depreciation for the office. This seems a little strange at first, but once you see how the rules work, it’s pretty logical.

 


Q&A: Misguided Complaint about Selling Home to the S Corporation

 


Selling Your Business: Zero-Basis Receivables; Self-Created Goodwill

You have special tax-planning considerations when you sell a business that has zero-basis receivables and/or self-created goodwill. If you operate as a C corporation, you need additional planning because of double taxation. And the good news is that planning helps reduce the tax burden.


Tips for Best Tax Result on Vehicle Disposition

The sale or trade-in of a business vehicle has positive or negative tax ramifications. You have a choice in this matter. But first you need to know the dollar amount of your gain or loss. This article gives you the six steps to finding your gain or loss.


Q&A: Where Does the S Corporation Get the Money to Buy the House?

 


Tax-Saving Tip: Use Net Square Footage to Increase Home-Office Deductions

The IRS tax form for deducting the home office contains the gross-square-footage method and makes no mention of other permissible methods. But the instructions for that form and the IRS publication on the home-office deduction both mention other reasonable methods. This article shows you how one other reasonable method, the net-square-footage method, works—and why it is always superior to the gross-square-footage method found on the IRS form.


Two Paths to Deducting Certain Business Education Expenses

Business-related classes or seminars can put a serious dent in your wallet, so, of course, you’d like to write off those costs as business expenses. But there are some strict and somewhat tricky rules for deducting business education expenses. In some cases, the education can fail the tax deduction test but qualify for business deductions following an alternative path.


Tax Court Puts Personal Service Corporations on Notice for Bonuses

Personal service corporations pay taxes at a hefty flat tax rate of 35 percent. As a result, many personal service corporations pay their shareholder-employees year-end bonuses to zero out the taxable income. A recent court case put the kibosh on this for a law firm and should put you on notice.




June 2016

Tax Audit Tips for Entertainment and Vehicle Deductions

Special documentation rules apply to entertainment and vehicles. One rule requires you to document your vehicle mileage within one week. Another rule says you don’t need receipts if the vehicle or entertainment expenditure is less than $75. This no-receipt rule can be hazardous to your deductions. It also does not relieve you from using the right documentation to prove the expenses.


Can Your Emotional Support Animal Take a Bite Out of Your Taxes?

If you struggle with depression, anxiety, or other mental disabilities, you may rely on an animal for critical emotional support. But this support animal might do even more for you. It could qualify as an animal for which you can deduct its cost, training, and maintenance.


Tax Tips for 1031 Exchange of a Porsche Cayenne for a Car

Follow these three easy steps to an IRS audit-proof tax-deferred Section 1031 exchange of your SUV for a car.


Q&A: Two More Reasons to NOT Rent Equipment to Your Corporation

 


Tax Tips for Credit Card, Hotel, and Frequent Flyer Rewards

The IRS deemed that personal use of business-earned frequent flyer miles and hotel reward points are tax-free until further notice. Cash rewards are another matter. First, they are not gross income. Second, they reduce basis. Third, they produce a deduction when you donate them to charity.


Live Abroad: Make $100,000 and Pay Zero Federal Income Taxes

Self-employed individuals and employees who live and work abroad can potentially exclude most, if not all, of their earned income from United States taxation. But to make this happen, you need to get on top of a few tricky tax rules. And your best bet is to use the tax code safe-harbor 330-day rule not only for safety but also for some extra after-tax income.


Q&A: Yikes! Failed to Deduct Real Estate Taxes on Empty Land

 


Age 70 1/2 or Older? Make Your IRA Donate Directly to Charity

When you turn age 70 1/2, the IRS wants a piece of those IRA accounts that you built up all those years. You’re required to make mandatory withdrawals each year just so the IRS can tax you on those amounts. But what if you can limit, perhaps even eliminate, these required withdrawals? Not only that, what if you could benefit a local charity in the process as well? Find out how donating to charity directly from your IRA accounts can make a huge impact on your bottom line.


Selling Your Business and Including a Noncompete Agreement

When you sell a business, you will likely sign a noncompete agreement, also known as a covenant not to compete. As the seller, the purchase price allocated to the noncompete does not produce the tax result you want. But the noncompete does do for the buyer what the buyer wants. Thus, you need to know how the noncompete works so you can negotiate the sale with knowledge.




May 2016

Two-Person Seminar

A precedent-setting court case establishes that one-on-one training can count as a business seminar for tax purposes. Where do you want your one-on-one seminar to take place? Disney World? St. Thomas?


Tax Tips for Vacant Lot and Unproductive Land

You have tax decisions to make every year when you own a vacant lot and/or unproductive land. It starts with the interest and property taxes and what you can or cannot deduct as itemized deductions. If you can’t deduct some or all of the interest and property taxes, then you can capitalize them by making a formal election in your tax return. But if you incur other costs, you likely sit in a Catch-22 where you simply suffer the 2 percent floor on miscellaneous itemized deductions and the alternative minimum tax (AMT).


Sell Home to S Corporation and Then Make It Rental Property

Take advantage of the government’s tax-free $250,000 home-sale-profit exclusion ($500,000 if married) by selling your home to an S corporation that you establish. This gives you two things: (1) tax-free income and (2) a step-up in basis for the rental house.


Q&A: Country Club Dues or Season Golf Pass?

 


Tax Tips for Tax-Free Disability Income and Deductible Premiums

Tax law grants tax-free income status to the proceeds you receive from income replacement disability insurance policies. You pay a price for this tax-free income: You may not deduct the premiums. Special treatment applies to overhead disability, and there’s also special treatment for S corporation payments on behalf of “more than 2 percent” shareholders.


Q&A: Dutch-Treat Business Meals

 


Rent Equipment to Your Corporation; Qualify for Section 179 Expensing

Renting equipment to your corporation requires knowledge of the tax laws. If you as a non-corporate lessor want Section 179 expensing, you need to comply with three special rules. If you can’t comply, you may obtain the benefits of Section 179 in other ways as we explain or simply stay with the rental without using Section 179.


How to Deduct Your Business Motor Home

Your business motor home is either a lodging facility, like a hotel, or a transportation vehicle. As a vehicle, it can qualify for Section 179 expensing, but you likely want to avoid that and take the easy road with MACRS depreciation.


Selling Your Business Using a Contingent Price (Earn-Out) Deal

When you sell a business, you and the buyer may structure a contingency that can vary the selling price. The tax code gives you three basic reporting possibilities for contingent prices, and, of course, the three possibilities give you planning opportunities.




April 2016

Tax Tips for Avoiding Section 179 Recapture

Your claim to Section 179 expensing comes with strings. You make a deal with the government to keep your business use above 50 percent during the depreciation periods for the assets that you expensed. Should you violate your agreement, and depending on when you did that, the government can show up and recapture a big chunk of your Section 179 expensing.


1031 Tax Program for Vehicles

Did you get big tax deductions using Section 179 expensing and/or bonus depreciation on your vehicle purchases in 2012, 2013, 2014, and/or 2015? If so, you now have a vehicle with a low adjusted basis. That gives you a tax problem when you sell the vehicle. To lessen and possibly eliminate the problem, use a Section 1031 tax-deferred exchange.


Q&A: Proof for the IRS That No W-2 Is Needed for the 105 Plan

 


Four Tax Strategies That Make Buildings Produce More Cash

The tax implications for your office building and rentals have changed. Now when you fix up and improve those buildings, you need to be alert to additional savings that were not available in some prior years. Further, if you are buying a new building, you absolutely need to examine how you can create deductions where none existed before.


Beyond the FBAR: Discover Little-Known Traps in Foreign Reporting

The IRS is pursuing taxpayers with foreign accounts and activities. You are likely aware of the FBAR and Form 8939 filing requirements, but the tax code has many other lesser-known required filings that carry large penalties for non-filing. Get onboard now. Learn the tax code’s requirements and how you might fix noncompliance and avoid huge penalties.


Q&A: Professional Association (P.A.)

 


Don’t Get Crushed by Assigning Income to Your S Corporation

Using an S corporation to avoid self-employment taxes is a terrific strategy. But things can go very wrong if you use it the wrong way. When you earn income as an individual and then assign that income to your corporation, the IRS will make you regret the day you implemented that strategy.


Foreign Travel: Combining Business and Pleasure

Tax laws and regulations are not known for their clarity. That’s why it’s so surprising how clear the IRS made its regulations on foreign business travel. Even more surprising, the regulations actually work in your favor! If you know what you’re doing, you can deduct most, if not all, of your costs associated with foreign business travel. And the best part: you need not work very hard.


2016 Tax Guide to Foreclosure on a Rental Property

You likely feel some pain when you lose a rental property to foreclosure. And if you have the mortgage structured wrong, tax law adds to whatever pain you experienced with the lender. But in the right circumstances, you can lose your rental property to foreclosure and save money, too.