By topic: AMT

TCJA Tax Reform Creates Big Hazard in Loans to Your Corporation

Making loans to your corporation became more hazardous 33 years ago with the Tax Reform Act of 1986. That was pretty awful. But the new Tax Cuts and Jobs Act tax reform made things worse for tax years 2018 through 2025. If you operate your business as a corporation, you need to know how the rules apply when you loan money to your corporation.

Good News: Tax Reform Lands a Blow to AMT

You likely have to worry about alternative minimum tax (AMT) in addition to the regular federal income tax. Tax reform made changes to the tax law that significantly impact AMT. The changes could mean more money in your pocket and less going to the government.

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

 

Be Alert to Tax Rules That Destroy Mortgage Interest Deductions

How to Treat Your Coin, Stamp, and Baseball Card Activities

Tax law places your collectible activity in one of four tax categories: (1) hobby, (2) investment, (3) trader, or (4) dealer. This means your collectible activity can, depending on category, trigger the AMT, capital gains, and self-employment taxes. When you know the rules that place you in these categories, you can make adjustments. Sometimes the adjustments are easy; at other times, they require rethinking the collectibles activity.

Are You Really an Independent Contractor But Getting a W-2 as an Employee? Change Tax Forms to Cut Your Tax Bill

Tax Truth about Home Equity Loans

Your home may be your biggest investment and storehouse of cash. While interest rates remain low on home loans and home equity lines of credit, you may be tempted to pull money out of your home with a loan. Before you act, you need to know 1) how much interest you can deduct, 2) what the limitations are on those deductions, and 3) when you get slammed by the alternative minimum tax (AMT). Read this article and find out how to make sure that your home equity interest produces tax benefits for you.

Sneaky AMT Bites Surgeon

That ugly alternative minimum tax (AMT) can raise its snakelike attack when you least expect it. In this court case, by changing the medical practice from a solely owned corporation to practicing as an employee of an education institution, the surgeon looked squarely in the eyes of the AMT and lost almost $20,000.

How the Taxman Gets You with Backdoor Taxes

Have lawmakers inserted any sleight of hand into your Form 1040 tax calculations? Yes, they have! And it’s really terrible. For example, the alternative minimum tax (AMT) rules make you pay taxes on your tax deductions. How’s that for true sleight-of-hand terribleness? The AMT even makes you pay taxes on the personal exemptions the regular tax law grants for your children. It’s outrageous. But, because you own a business, there are some things you can do to get even.

How Mortgage Brokers Can Beat the AMT Caused by the FHA and IRS

The Federal Housing Authority (FHA) guarantees loans so that lenders can make mortgage loans with lower down payments, lower closing costs, and easier credit qualifications. When the mortgage crisis hit, the FHA changed the rules for mortgage companies that had independent contractors brokering FHA mortgages. The change allowed only W-2 employees to sell FHA loans, and thus many mortgage companies converted their brokers from independent contractors to W-2 employees. For many, this new W-2 status produces a totally unfair tax result that can be overcome with knowledge.

Pay More Taxes Now

The fiscal cliff is coming on December 31 unless lawmakers do something. What does that mean to you? Does it mean you should pay more taxes this year? Perhaps. For insights into what you need to consider, read this article.

W-2 Mortgage Loan Officer Avoids AMT with Employee Business Expense Deductions on Schedule C

The W-2 mortgage loan officer in this tax case beat the alternative minimum tax (AMT) by winning his claim that, in spite of his W-2, he was an independent contractor who should report his business expenses as a proprietorship on Schedule C of his Form 1040.

Commissioned W-2 Salesperson Beats AMT with Expenses on Schedule C

The courts have determined that the alternative minimum tax (AMT) cheats many commissioned W-2 employees out of their rightful deductions. To fix this problem, the courts have allowed certain commissioned W-2 employees to move their employee business expenses from the IRS Form 2106 itemized deduction category to the tax-advantaged sole proprietorship on Schedule C.

Horse Hobby Needs Tax Psychiatric Review

The hobby classification on a tax return is death to deductions. You have a number of choices, but the two most prominent are (1) quit the hobby, or (2) make the hobby a business.

New Law: Another Small-Business Economic Stimulus Package for You

The Small Business Jobs Act of 2010 spends $12 billion on small businesses, hoping to add a little stimulus to this economy. Make sure you are getting your fair share of this stimulation.

Tax Tip for Business Car When Incorporated

Here are your only two tax-saving choices when you operate your business as a corporation but personally own the car you use for business.

Home Equity Loans Pros and Cons—Learn How to Avoid Tax Pitfalls

Your home equity loan can give you a full, partial, or no deduction for your interest. If you will get zero or a reduced benefit, make the necessary changes to protect your tax benefits.

 

How Does a Home Equity Loan Work with a Rental Property LLC?

If you are using home equity loan proceeds for your rental property LLC, you need to pay attention to both the legal and tax aspects of that transaction. The legal part is needed for liability protection. The tax part is needed to ensure your tax deductions.

Beware of AMT Mortgage Interest Rules

Beware! Learn how the Alternative Minimum Tax (AMT) taxes the mortgage interest deduction that lawmakers granted you under the regular income tax. Ouch!

New Ruling on Investment Interest Above the Line

A new IRS rule says that you may deduct investment interest above the line when you pay interest on debt incurred in the conduct of certain trade or business activities. Above the line interest reduces your gross income. This is good news.

Many Mortgage Brokers About to Suffer the AMT

Believe it or not, but the AMT could tax mortgage brokers more than their annual income. That’s right: they could make less than $0 this year. We show you why, and how they can avoid this tax disaster.

AMT Crushes Bad Debt Deduction

The AMT taxes the deductions you claim on your regular tax return. No, you are not in the Twilight Zone, you are right here in the good ol’ U.S.A. Learn the details of this outrageous act.

AMT More Likely to Hurt You in 2008

In upcoming years, taxpayers with cash income greater than $50,000 are more likely to pay the AMT than taxpayers with cash income of $1 million or more. Fixing this will require a large tax package.

 

AMT Patched, Mortgaged

In what is becoming an every year outrageous event, lawmakers patched the alternative minimum tax (AMT), adding $50 billion to the federal deficit.

 

Commissioned Employees Beat AMT by Claiming Independent Contractor Status

The dreaded alternative minimum tax (AMT) taxes the regular tax deductions claimed for employee business expenses. These taxpayers said, “enough” and took their cases to court where they won their deductions by claiming employee business expenses on Schedule C.

Capital Gain Triggers AMT

When planning your taxes, always consider the AMT. This creepy tax seems to come out of the woodwork and attack when you least expect it. For example, in 2002, Kevin Moore sold his farm, and, because of a tax law error, he owed AMT. Had he sold in 2004, after tax writers fixed the glitch, he would have had no AMT.

Tail Insurance

As a surgeon, you might get malpractice tail insurance (insurance that covers malpractice claims should you quit and go to another hospital). We suggest having the hospital pay the insurance costs, even if they deduct your pay, to protect yourself from the AMT.

The AMT Attack Creates Two Surprise Casualties

The AMT taxes the deductions you claim on your regular tax return. For example, the AMT taxes the deductions you claim for state income and sales taxes. Further, the AMT taxes the personal exemptions you claim for yourself, your spouse, and your dependent children. This is not a typo. It’s true. The AMT is the most unfair tax since direct confiscation of assets.

Court Rules Horse Activity a Hobby

You do not want a hobby for tax purposes. The fact that hobby losses are not deductible is minor compared to the other problems caused by the hobby. For example, you report hobby income above-the-line and hobby expenses below-the-line as miscellaneous itemized deductions where they suffer the 2 percent of adjusted gross income floor, or, worse yet, the AMT.

Long-Term Capital Gains Trigger AMT

The AMT can trigger additional taxes on your capital gains despite the fact that the capital gains tax rate for both regular and AMT purposes is identical. Your status as single or married and the amount and nature of your income determine the extra AMT hit. In general, the middle income can suffer the worst AMT impact.

Jack Up Your Profits with Tax Credits

Historic rehab tax credits can put you in Donald Trump’s self-proclaimed favorite spot. Tax credits often exceed the cash you invest in the project making the historic rental or office building a “nothing down” deal for you. Add nonrecourse financing to the package and you have no personal risk. None of your cash in the deal and no personal risk—this is Mr. Trump’s favorite spot. You might do as many Congressional leaders do: Donate your personal home’s historic facade to charity so can realize big tax credits.