By topic: Depreciation

IRS Audit Issue: SUV Built on Car Chassis

When is an SUV a car, and when is it a truck? How big is the difference in deductions? Does the SUV built on a car chassis get different treatment from the SUV built on a truck chassis?

IRS Arrives with Tax Assessor’s Allocation to Land and Building

On your rental properties, you need proof of your cost allocation to land and depreciable buildings. If you have no proof of that allocation, the IRS has started using the Internet to grab the tax assessor’s allocation and use that against your depreciation deductions.

IRS Defines Real Property for Section 1031 Like-Kind Exchanges

Section 1031 exchanges are a great way to acquire new property without paying tax on the gains from selling old property. But the rules have changed. The Tax Cuts and Jobs Act limits so-called exchanges (they are actually sales and purchases) to real property. Personal property is now boot. New IRS regulations define real property broadly for Section 1031 purposes and allow a certain amount of personal property to be included in an exchange. They also make it clear that the real property owners can use cost segregation and still benefit from Section 1031 exchanges.

Deducting Business Casualty Losses: You Don’t Need a Disaster

There’s much to know when it comes to business disaster losses. If business property such as an office building or rental property, a business vehicle, or business furniture or equipment is damaged or destroyed, you may qualify for a casualty loss deduction. And unlike personal casualty loss deductions, you don’t need a federally declared disaster for a business deduction. You may even be able to deduct the casualty loss on the prior year’s tax return and get a quick tax refund. But your deduction is limited to the property’s adjusted basis and is reduced by insurance recoveries

Lawmakers Extend the Tax Extenders with the COVID-19 Relief Law

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 deals with the annual tax extenders. Congress made some of them permanent, while others got short- or long-term extensions. We’ll go through each and tell you how it fared in the legislation.

2020 Last-Minute Year-End General Business Income Tax Deductions

Your year-end tax planning doesn’t have to be hard. This article takes your daily business activities and identifies easy year-end tax-planning moves you can make today. Our seven strategies will increase your tax deductions or reduce your taxable income so that Uncle Sam gets less of your 2020 cash.

2020 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2020 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can simultaneously solve or mitigate both the first problem (needing more deductions) and the second problem (needing a replacement vehicle), but you need to get your vehicle in service on or before December 31, 2020. This article helps you find the right vehicle for the deduction you desire.


The Insurmountable Sin in an IRS Audit: A True and Sad Story

Do you have a mileage log that will survive an IRS audit? If so, good for you! If not, get ready to give up all (not some, but all) of your vehicle tax deductions for not just one year but three years, as you will see in this true story.

TCJA: Don’t Lose Out When Corp. Vehicle Is in Your Personal Name

Do you operate your business as a corporation but use a vehicle that you own in your personal name for the corporate business? If so, be aware that the TCJA changed the rules of the road for tax years 2018-2025. To avoid losing your rightful deductions, you need to have the corporation reimburse you for business use, as we describe here.

Yes, the Antique Chair Is Deductible

Is a $10,000 antique chair deductible as an ordinary and necessary business expense? Would the tax law deem it a non-deductible lavish and extravagant asset? Good news: it qualifies as an ordinary and necessary depreciable asset, as explained in this article.

Don’t Let Section 179 Recapture Hurt You

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. If you violate your agreement, and depending on when you do that, the government can show up and recapture a big chunk of your Section 179 expensing.

Best Choice: De Minimis or 179 Expensing—or Bonus Depreciation?

The Tax Cuts and Jobs Act (TCJA) tax reform gives you bonus depreciation as a method for deducting 100 percent of the cost of certain business assets. You also have the de minimis safe harbor for certain assets costing $2,500 or less ($5,000 or less with the applicable financial statement). And finally, the TCJA tax reform enhanced the Section 179 deduction. Which is the best choice for you?

Case Study: Trade-In on a New SUV—Reimbursement by Corporation

Do you operate your business as a corporation but own your business vehicle personally? If yes, what happens when you trade your existing personal vehicle for a replacement personal vehicle and then have the corporation reimburse you for the newly purchased personal vehicle? There are nuances that you need to know, as we explain in this article.

Working at Home? Don’t Overlook These Deductions

Do you work from home? Whether or not you have a deductible office in the home, the assets such as desks and chairs that you use for business are deductible—and are often overlooked as business deductions. For example, what happens when you convert a personal asset to a business asset? Does the personal taint last forever? You will like the answers you find in this article.

Taking Advantage of Partnership Special Allocations

The partnership choice of entity allows special allocations of income and expenses to individual partners, which can give the partnership a leg up as your possible choice of business entity. In this article, we explore the allocation rules and give you the ins and outs.

CARES Act Fixes TCJA Glitch on QIP, Requires Action

Congress made an error in the Tax Cuts and Jobs Act that limited your ability to fully expense your qualified improvement property. The CARES Act fixed the issue retroactively to tax year 2018. If you have such property in your prior filed 2018 or 2019 tax returns, you likely have no choice but to correct those returns. But the bright side is that the corrected law gives you options that enable you to pick the best tax result.

COVID-19: Important Tax Breaks from the CARES Act

Congress just passed the CARES Act in response to the COVID-19 pandemic. In it, there are a lot of important tax benefits for you and your business. We’ll tell you about a collection of important ones you need to know.

If You Don’t Want 100 Percent Depreciation, Elect Out or Else

Most favorable tax elections require you to elect the beneficial treatment. But 100 percent bonus depreciation works in reverse. Here, you have to elect out of 100 percent bonus depreciation in the manner the IRS specifies; otherwise, you claimed it, whether or not it shows on your tax return. In this article, we give you not only the strategies for dealing with bonus depreciation but also the formal election you must make to elect out.

Congress Reinstates Expired Tax Provisions—Some Back to 2018

Every year, we wonder whether Congress will renew various expiring tax breaks, many of which are known as “extenders.” Many extenders died on December 31, 2017, and Congress let them remain dead for all of 2018. Now Congress has brought them back from the dead—and retroactively to January 1, 2018, meaning an amended return may be in your future.

2019 Last-Minute Year-End General Business Income Tax Deductions

Your year-end tax planning doesn’t have to be hard. This article takes your daily business activities and identifies easy year-end tax-planning moves you can make today. Our five strategies will increase your tax deductions or reduce your taxable income so that Uncle Sam gets less of your 2019 cash.

2019 Last-Minute Section 199A Strategies That Reduce Taxes, Too

Remember to consider your Section 199A deduction in your year-end tax planning. If you don’t, you could end up with a big fat $0 for your deduction amount. We’ll review three year-end moves that (a) reduce your income taxes and (b) boost your Section 199A deduction at the same time.

2019 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2019 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can simultaneously solve or mitigate both the first problem (needing more deductions) and the second problem (needing a replacement vehicle), but you need to get your vehicle in service on or before December 31, 2019. This article helps you find the right vehicle for the deduction you desire.

Converting Your Residence into a Rental Property: Tax Issues

The simple maneuver of converting your personal residence to a rental property brings with it myriad tax rules, mostly good when you know how they work. For example, your rental net income can create the Section 199A deduction if the rental rises to the level of a trade or business (most do).

Impact of Death, Retirement, and Disability on the 179 Deduction

Have you purchased vehicles for use in your business? Did you claim Section 179 deductions on them? What happens to your Section 179 deductions if you retire or become disabled before the end of the vehicle’s useful life? What if you die? This article tells you what you need to know.

TCJA Allows Bonus Depreciation on Purchase of Leased Vehicle

Good news, bad news! Bad news: as in prior years, buying the vehicle you lease destroys any opportunity to claim Section 179 expensing. Good news: the TCJA added two new provisions that now allow you to claim bonus depreciation on the purchase of a vehicle that you lease.

Caution: 199A Calculator Is Business-by-Business without Aggregation

Your 199A deduction requires W-2 wages and/or property when your taxable income is greater than $415,000 married, filing jointly, or $207,500, filing as single or head of household. When you are above these amounts and want to calculate your 20 percent deduction, make sure to enter separate businesses separately in the Section 199A calculator if you do not formally elect aggregation of your Section 199A businesses.

Tax Deduction for Classic or Antique Cars Used in Business

How does the tax law treat the classic or antique car when you use it for business? Can you deduct it just as you would any car you use in business? Learn how some tax law changes enabled the classic or antique car as a business asset and why that can work to your advantage.

Q&A: Improvement Property Update

Congress wanted qualified improvement property to have tax-favored status under tax reform. But Congress made an error in writing the Tax Cuts and Jobs Act and made improvement property treatment worse than before. Did Congress fix its goof?

IRS Saves Many Vehicles from the TCJA Bonus Depreciation Debacle

Tax law limits depreciation deductions on what it considers luxury vehicles. The Tax Cuts and Jobs Act created 100 percent bonus depreciation, and that means you can totally deduct the cost of qualifying assets. One major exception is the $8,000 bonus depreciation cap that applies to a tax law-defined luxury automobile, crossover vehicle, pickup truck, or sport utility vehicle (SUV).

TCJA One Way to Deduct Personal Vehicle Used for Corporate Business

If you operate your business as a corporation but own the business car personally, you have no vehicle deduction possibility without corporate reimbursement, because the Tax Cuts and Jobs Act does not allow employee business expenses for years 2018 through 2025.

2018 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2018 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can simultaneously solve or mitigate both the first problem of needing more deductions and the second problem of needing a replacement vehicle, but you need to get your deduction in place on or before December 31, 2018. This article helps you find the right vehicle for the deduction you desire.

2018 Last-Minute Year-End Tax Deductions for Existing Vehicles

Yes, December 31 is just around the corner. That’s your last day to find tax deductions for your existing business vehicles that will cut your 2018 taxes. In this article, you will learn how to find and release tax deductions that the tax code trapped inside your existing business cars, SUVs, trucks, and vans.

2018 Last-Minute Year-End General Business Deductions

Your year-end tax planning doesn’t have to be hard. This article takes your daily activities and identifies easy year-end tax-planning moves you can make today. Our five strategies will increase your tax deductions or reduce your taxable income so that Uncle Sam gets less of your 2018 cash.

Defining “Real Estate Investor” and “Real Estate Dealer”

The first good news is that you can be both real estate investor and real estate dealer with respect to your real estate portfolio. The next good news is that you are in control, and by knowing just a few rules about dealer and investor classifications, you can do much to increase your net worth.

TCJA: Convert Personal Vehicle to Business and Deduct up to 100%

Tax reform under the Tax Cuts and Jobs Act gives you bonus depreciation and favorable rules for converting your personal vehicle and other assets to business use. On the conversion, you can immediately qualify to deduct up to 100 percent of today’s fair market value on your existing personal vehicle.

How Cost Segregation Can Turn Your Rental into a Cash Cow

Cost segregation has always been a valuable strategy in your tax strategy toolkit. And now, thanks to tax reform’s recent changes to bonus depreciation, cost segregation is even better. We’ll show you the value of a cost segregation study post–tax reform, strategies you can use that involve cost segregation, and potential problems to avoid.

Q&A: Qualified Improvement Property Snafu?

Congress created the qualified improvement property category in the Tax Cuts and Jobs Act with the idea that you could fully expense such qualified property with bonus depreciation. But Congress made an error in the law, and now you can’t use bonus depreciation for qualified improvement property. Don’t worry—we’ll explain how you might be able to fully expense it anyway.

Tax Reform (TCJA) Expands Your Section 179 Deduction Privilege

The new and improved Section 179 deduction gives you more ways to take advantage of immediate tax deductions. It’s somewhat like having a flexible tax shelter in your back pocket for when you need it (and also need the property, of course).

Four Ways to Deduct Your Legal Fees after Tax Reform

Tax reform made it more difficult for you to deduct your legal fees. But don’t worry: the tax law still allows for a full deduction of your legal fees in certain circumstances. We’ll review four ways you can continue to deduct your legal fees after tax reform.

Tax Reform Does Much to Help Your Rental Real Estate

The recent tax reform, known as the Tax Cuts and Jobs Act (TCJA), added some good benefits to your real estate rentals, both commercial rentals and residential rentals. Notably, your qualified business income from your real estate rentals creates a possible 20 percent tax deduction with no effort on your part. And if you want less taxable income, the TCJA gives you enhanced bonus depreciation and new avenues for Section 179 expensing.

Tax Reform Allows Bigger, Faster Business Car Deductions

Finally, lawmakers did the right thing by increasing the luxury auto depreciation limits on business cars. The old luxury limits were unrealistic, punitive, unfair, and discriminatory against any car that cost more than about $15,000. The new limits don’t create parity in all respects, but they are a big improvement.

Create Extra Cash by Using Depreciable Antiques in Your Business

You really should consider antiques when furnishing your offices or buying a unique second business vehicle. Unlike regular furnishings and vehicles, well-selected antiques increase in value. Also, you can depreciate or even Section 179 expense them. When you run the after-tax numbers, you can easily find that an antique will yield 36 times more after-tax cash than a non-antique.

Q&A: 33 Last-Minute Tips to Save on Your 2017 Taxes

If you are looking for some last-minute tips to save on your 2017 federal income taxes, this article has what you need.

Act Now! Get Your 2018 Expensing in Place

If you have not done so before, make sure to put your safe harbor de minimis expensing election in place now. The new de minimis rules make your tax record keeping easier. With this safe harbor expensing, unlike with Section 179 expensing, you don’t need to track the assets and keep them in a depreciation schedule.

Find New Deductions with Two-Car Tax Strategies

If you have two or more vehicles in your family, you might find added tax deductions by driving more than one vehicle for business. To know if you benefit or not, you need to put your numbers into our magic two-car formula. This is very easy to do, and the formula result tells you for sure whether you come out ahead or not.

Easily Fixing Depreciation Errors Can Save Thousands in Taxes

Depreciation is a valuable tax deduction but is often missed or mistakenly computed. If you missed depreciation or did it incorrectly, you can fix it in the current year and get some possible major tax benefits for doing so. In fact, the need for a correction can create planning opportunities for you.

Shedding Doubts about Selling Your Home to Your S Corporation

If you want to convert your home to a rental property, don’t. Instead, sell your home to your S corporation and then have the S corporation make the property a rental property. We have written about this previously, and we received some questions that we address in this article.

Heavy Vehicle + Deductible Home Office = Major Tax Savings

As a small-business taxpayer, you likely have control of your business. With control, you can do much to increase your tax benefits with a qualifying heavy vehicle and a certain type of office in your home. So, if you’re looking for some major tax savings this year, you will find a path to them in this article.

Passive Losses Don’t Destroy Your Tax-Favored Capital Gains

Suspended passive activity losses come about when the losses from all passive activities for the taxable year exceed the aggregate income from all passive activities for such year. These are losses above or beyond what you can deduct under the $25,000 offset for rental activities. When you sell your entire interest in a passive activity at a gain, you have a taxable gain and a jailbreak of those losses and maybe more.

Beat the Recapture Tax on Your Home Office

Learn how this IRS revenue procedure allows you to avoid taxes on the sale of a personal residence in which you had a home office or that you used as a rental property. The procedure lays out the methodology, which includes using the $250,000 ($500,000 if married) home-sale exclusion in unison with a 1031 tax-deferred exchange to avoid the taxes and enhance your deductions on the replacement home.

Q&A: Back Up Your Claim That You Can Reimburse Depreciation

One of our tax professional subscribers disagrees with the S corporation being able to reimburse the owner-employee for depreciation of the home office. She asked whether we can back up our claim that depreciation is reimbursable.

The TWO Times to Avoid the 1031 Exchange

The Section 1031 exchange is a great tax planning strategy when you are using it to your benefit. But there are two times when you need to avoid the 1031 exchange so as to come out money ahead. The first is pretty apparent, but it does catch many taxpayers by surprise. The second requires thought and knowledge, as you learn in this article.

Avoid Lost Deductions When Corp. Vehicle Is in Your Personal Name

Do you operate your business as a corporation but own the vehicle you use for the corporate business in your personal name? If so, to avoid losing your rightful deductions, you need to have the corporation reimburse you for business use. The corporation can use one of two methods for the reimbursement.

Lock in the Home-Office Deduction for Your S Corporation

The home-office tax deduction provides tax savings to business owners. It turns otherwise nondeductible personal expenses into valuable business deductions. When tax law taxes your business as a proprietorship, you simply deduct home-office expenses on Schedule C. But when you operate your business as a corporation, you face special rules to achieve the same benefits.

How to Buy a Target’s Stock and Treat the Deal as an Asset Purchase

When you can buy the target’s stock and treat the deal as an asset purchase, you have a real possibility of bringing tax-benefit smiles to both you and the seller. So if you are buying a business, make sure you know when the tax rules allow you to buy the stock of the target and treat that stock purchase as the purchase of the target’s assets.

Secret Cash Inside the IRS Standard Mileage Rate

Mileage-rate addicts usually think that the mileage rate takes care of everything—then they cost themselves money by failing to deduct a loss on the sale of a business vehicle.

Tax Secrets of Buying a Business That Owns Intangible Assets

When you buy a business, you have much to consider. As you learned in prior articles, you need to consider the type of entity that owns the business and the type of entity you will use to operate the business. On top of that, every asset of the business you are going to buy impacts your tax results. In this article, you see how this all comes together and what you need to do to get the best results.

Q&A: Can You Still Depreciate Antiques as Business Assets?


Q&A: Switch from Mileage Rate to Actual Expense Method


Buying a Business: How to Make Tax-Smart Price Allocations

When you are buying a business, you want to buy not only at the right price, but also in a manner that keeps your taxes as low as possible. If you structure your deal as an asset purchase, you can use tax-smart price allocations that give the best tax result. And you likely want to include a stipulation in the purchase agreement that can reduce your chances of an IRS audit.

2016 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2016 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can solve or mitigate the first problem of needing more deductions and solve the second problem of needing a replacement vehicle at the same time, but you need to read this article now so you know what you have to do and when you have to do it.

Buying a Business: Should You Buy Ownership Interest or Assets?

When buying a business, you face many decisions. One such decision is whether you should buy the assets of the business or the ownership interest. Here, you have both legal and tax issues to consider. Also, depending on the entity you are looking at buying, the ownership purchase option may not be available.

2016 Last-Minute Business Motor Home Purchase

A business motor home could provide both big tax deductions and an ideal solution to your business lodging and transportation needs. You would know how clean your sleeping room is. You would know the room’s smoking history. You would know how many pets, if any, have graced the premises.

Tax Code’s Officially Designed “Rent-to-Own Your Home” Program for Investors and Renters

In this official tax code program, the landlord-investor benefits because he has no vacancies, few hassles, no management fees, and a known cash flow. The tenant-investor benefits because he gets into this home with little or no down payment, builds equity while paying rent, and gets detailed knowledge about the property while living there. At some agreed-upon future point in time, the landlord-investor sells his or her interest in the property to the tenant-investor or the two of them sell the property to a third party.

Q&A: IRS Allows Switch from IRS Mileage Rate to Actual Expenses


Two Special Tax Breaks for Retailers Who Improve Their Property

If you’re in retail, you know how useful a renovated, polished store can be in gaining the trust of your customers. Fortunately, restorations and upgrades to your property became far more financially achievable following a law Congress passed last December. Under the new rules, when you make qualifying improvements to your store, you can immediately or quickly write off much of the expense—even if the improvements cost hundreds of thousands of dollars.

Uncover New, Big 2016 Tax Breaks for Your Commercial Properties

The Protecting Americans from Tax Hikes (PATH) Act enacted last December created a new (somewhat hidden) tax break when you make improvements to your nonresidential property. Nonresidential property is any real property you don’t use for dwellings, such as offices, stores, warehouses, hotels, and motels. Don’t be one of the thousands who overlook this new tax break. It’s easy to qualify for, and it can put big, immediate dollars in your pockets.

Is the New 54-Cent IRS Mileage Rate a Rip-Off or Does It Help You?

To know if you are money ahead deducting your business vehicle using the IRS mileage rate or the actual-expense method, you need to use our magic calculator. Tax software used by tax professionals and consumers compares the first-year deductions only, and because of the wide variation in first-year deductions caused by the luxury vehicle limits, bonus depreciation, and Section 179 expensing, the first-year-only comparison is going to produce inaccurate results.

Beware When Gifting Business Property

You need to know, and avoid, tax-problem surprises when you gift business property to your parents, children, or others. With the wrong method, you can toss tax-deduction benefits into the trash. You can easily suffer recapture. Don’t let your gift of business property surprise you and take money out of your bank account.

Accelerated Tax Deductions for Qualified Leasehold Improvements

If you own tax code-defined nonresidential property (otherwise known as commercial property), you have to like The Protecting Americans from Tax Hikes (PATH) Act enacted last December. The PATH Act put three huge nonresidential property-qualifying leasehold improvement tax breaks in place through 2019.

Will Tax Law Destroy Your Business Vehicle Donation to Charity?

There are many reasons why you may want to donate your business vehicle to charity, not the least of which is that you’re helping a worthy cause. But if your goal is to couple that good deed with a nice tax deduction, make sure you do the math before you hand over the keys to avoid suffering an unpleasant tax surprise.

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.


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.

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.

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


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.

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.

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.

Golden Nugget: New Write-Offs in New Repair Regulations

Get ready to thank the IRS. With the new tangible property regulations you can write off replaced components and achieve two types of tax savings. Before the new regulations, if you replaced a roof, you likely continued to depreciate the old roof and also depreciated the new roof. The old roof—the ghost roof—usually triggered additional recapture taxes. You are going to like the new rules, especially the two new types of tax savings.

Home-Office Deduction: Should I Claim Depreciation?

Do you claim the home-office deduction? If so, did you claim zero depreciation on the office so you could avoid the recapture tax? If yes, you need to spend a few minutes with this article to see whether that zero depreciation on the home office was a good idea or not.

Have a Small Business? Own Real Property? Discover Repair Deductions

The tax rules for determining whether amounts you spend on your rental properties are for improvements (which you must capitalize) or repairs and maintenance (which you can expense) are complicated. But if you qualify as a small business, the IRS has a possible gift for you in the form of hassle-free and income-generating safe-harbor expensing.

Q&A: IRS Mileage Rate Kills Amending for Section 179 Deductions


Mind-Boggling Traps in Retroactively Passed Bonus Depreciation

If you want to claim retroactively enacted bonus depreciation on ALL the qualifying assets you purchased during the year, smile. But if you don’t want that extra 50 percent depreciation on some or all of the assets, you need to take action on your tax return to avoid phantom depreciation and its very ill effects.

Fix Your Missed Bonus Depreciation Deductions, or Suffer

Are you suffering from phantom depreciation? This is when the tax law is depreciating your vehicles and other assets without giving you any deductions. Pretty outrageous, right? You suffer this when you fail to elect out of bonus depreciation. In this article, we show you how to fix bonus depreciation problems and also recoup a missed Section 179 deduction.

Act Fast: Install New Audit-Proof $2,500 Expensing ($5,000 with AFS)

Tax Implications of a Deadbeat Tenant

Selling Your Business: How to Make Tax-Saving Price Allocations for an Asset Sale

2015 Last-Minute Year-End Tax Deductions for Existing Vehicles

Yes, December 31 is just around the corner. That’s likely your last day for finding tax deductions to cut your 2015 taxes. And with our existing high tax rates, 2015 is a good year to cut your taxes. In this article, you can find and release tax deductions that the tax code trapped inside your existing business and personal cars, SUVs, trucks, and vans.

2015 Last-Minute Business Motor Home Purchase

A business motor home could provide both big tax deductions and an ideal solution to your business lodging and transportation needs. You would know how clean your sleeping room is. You would know the room’s smoking and no-smoking history. You would know how many pets, if any, have graced the premises.

2015 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2015 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can solve or mitigate the first problem and solve the second problem at the same time, but you need to read this article now so you know what you have to do, when to do it, and what you might want to wait for before doing it.

Make the Closing Statement Work for You When Buying Rental Property

One of your first tax steps in buying a rental property is to go through each line item in the closing statement and assign it to one of the following three categories: (1) basis, (2) loan acquisition, or (3) operations. With basis, you allocate costs to land, land improvements, buildings (including perhaps building components), and equipment. Loan acquisition falls into either costs of getting the loan or costs to reduce the interest rate. The assignments have a direct impact on how quickly you realize the deductions.

Don’t Make These Mistakes When You Convert Business Property to Personal Use

You need to know the tax rules before you convert business property to personal use. You don’t want the recapture surprise. You don’t want the tear-jerking missed tax deduction. With a little tax knowledge, you can avoid both the surprise and the tears.

How You Can Claim Zero Depreciation and Avoid the Double Tax

Have you been claiming zero depreciation for your home office so that you can avoid the depreciation recapture tax? Surprise! Tax law has allowed and allowable depreciation rules that can make you pay the recapture tax without giving you the actual depreciation deduction. If this happens to you, you are going to pay a double tax.

Use Seller Financing to Create Wealth

If you are selling a rental property or your home, you should consider seller financing as a possible method to achieving a rate of return better than you are receiving from your current investments. This article gives you six ways to improve the structure of your seller financing so you can pocket more cash.

Cash In When the Buyer Defaults on Your Seller Financing

You may want to consider seller financing when you sell a rental property. It can boost your rate of return. Now, you might say “Yeah, but what happens if the buyer doesn’t pay up?” There could be a big silver lining here that you haven’t considered, and that’s why you should read this article now.

Selling Your Business: Should You Sell Your Ownership Interest or the Business Assets?

If you are selling your business, you likely want minimum taxes and no exposure to business-related liabilities once the sale is completed. That’s what this article is about. In an asset sale, you see types of taxes and opportunities that make the asset sale work to your advantage. In a stock sale, you likely get tax-favored capital gains, but you may have to give up something to the buyer.

Want a Big Deduction for Your New Vehicle? Here’s Good News

Lawmakers have yet to decide if they will retroactively enact bonus depreciation and the higher Section 179 expensing limits for 2015 purchases. But if you’re looking to buy a large SUV or truck for your business, you may be surprised to learn how fast you can write off the full cost of the vehicle even if lawmakers fail to extend the tax breaks. Knowing the write-offs may entice you to pull the trigger on that purchase immediately instead of waiting for changes in the law.

Selling Your Business: It Might Be Worth More Than You Think, and the Tax Implications Are Probably Crucial

You need to know a number of tax rules when it comes to selling your business. For example, you likely want tax-favored capital gains, but your buyer may not like that idea, as it cuts into the buyer’s tax deductions. This article is the first in a series of articles on selling your business, and it will help you understand how this process is going to work.

Unlock the Deductions Trapped in Your Personal Assets When You Convert Them to Business Use

Tax law gives you several nice tax-saving strategies for your business assets but not many for your personal assets. So what happens when you convert a personal asset to a business asset? Does the personal taint last forever? No! This conversion opens the door to a world of new deductions.

Don’t Put Your S Corporation Vehicle Title in the Wrong Name! It Could Cost You Thousands in Tax Deductions

Why You Should Accept the New IRS Offer to Immediately Deduct Assets That Cost $500 or Less

The IRS recently created a rule to make your life simpler and better. How is that for a change? It’s true. Now when you buy almost any tangible asset for $500 or less, you can immediately deduct the purchase if you follow the two easy steps laid out by the IRS. That means tax savings for you and fewer headaches for you and your tax preparer.

Double-Benefit Tax Rule for Property Owners Delivers Bonus Deduction: But Act Now!

The IRS is making an unusually nice offer to you as a business or rental property owner—but it’s good for just a few months. You can take extra deductions right now if you performed certain major renovations on your business or rental property in prior years. If you think this applies to you, act fast so you do not miss the October (or September, if incorporated) 2015 deadline.

Don’t Overlook the New Law That Allows Section 179 and Bonus Depreciation Retroactively to 2014

Lawmakers did it again. They retroactively reinstated a number of so-called extender laws, including those tax-favored Section 179 expensing and bonus depreciation deductions. Did you buy vehicles and equipment last year? If so, this new law can make you smile, as this article shows it did for Harry Spencer.

Stop Taxes before They Happen by Shrewdly Planning the Trade-In or Sale of Your Business Vehicle

Before you sell or trade your business vehicle, take a minute to think. The actions you take now could come back to haunt you at tax time. You could be creating extra tax for yourself or missing out on tax losses that you could use to offset other income. We’ll tell you what you need to know to be sure you make the right decision.

7 Tax-Reducing Cars, Trucks, Vans, and SUVs to Buy Before Year-End

It’s November. It’s also the beginning of year-end tax planning time. And for many business owners, it’s car, truck, van, and SUV buying time. The combination of car, truck, van, and SUV buying time and year-end tax planning can help you make a sizable dent in your 2014 tax burden. And if lawmakers get their act together, they could further increase your tax benefits before December 31.

Should You Gamble on a Big Motor Home Deduction This Year?

You can use a motor home for your business. If you are thinking of buying a motor home at this time, your Section 179 expensing election is somewhat in limbo. It’s possible that lawmakers will reinstate last year’s limits on Section 179 expensing. This article examines the gamble you take if you buy before lawmakers take action or if they fail to reinstate last year’s limits.

S Corporation? Office in the Home? Learn How to Escape Taxes

Are you an S corporation owner who takes advantage of the office-in-the-home deduction? If so, here’s good news. With the right tax planning, you can sell your home containing the office and defer or eliminate 100 percent of your tax, including recapture for any depreciation that you claimed. That news should put a smile on your face. Read this article to find out how you can use this strategy to pocket some extra tax dollars.

How to Increase Vehicle Tax Deductions without Spending a Penny

When you own a business, you should look at all possible assets that you own personally and how you might use them to increase your business deductions. This is particularly true for vehicles. And the beauty of identifying assets such as personal vehicles that you can use for business is that you don’t spend money to create deductions. You simply use assets you already own.

Don’t Rely on the Government for a Tax-Free Home Sale

You may not expect to sell your current home or vacation property any time soon, but you should take these (easy) steps right now to prepare for—or better yet, avoid—the tax burden when that day ultimately comes. If you plan to rely on the home sale gain exclusion to shield all of your profit, don’t do that. We’ll tell you why not in this article. We’ll also show you how certain records can substantially reduce the taxes you owe on the sale of your home.

Depreciation and Section 179: The Good, Bad, and the Ugly

Tax law grants depreciation deductions. That’s good. It then recaptures or otherwise taxes the deductions you claimed. That’s bad. Don’t let depreciation and Section 179 deductions hoodwink you. Because of the back-end tax, the deductions amount to less than they appear on the surface. This means tax planning is in order if you are to pocket more tax money. This article helps you with that tax plan so that you get more out of your depreciation and Section 179 deductions.

Don’t Let Losses Disappear When You Liquidate Your S Corporation

You can create losses without selling assets when you liquidate your S corporation. But be warned: you first need to know exactly how the gains and losses are going to flow. In this article, you see the hurdles erected by lawmakers and the IRS. You learn what you need to know. With this knowledge, you can plan. That plan might include or exclude liquidation. It depends on where the liquidation chips fall.

Tax Deductions for Personal Car Used for S Corporation Business

Let’s say you operate your business as an S corporation but use a personal car for corporate business. To create the proper tax deductions, the right way to handle this situation is for the S corporation to reimburse you using one of two tax law-approved methods.

Incorporating Your Proprietorship

When you incorporate your business, you have to decide which assets you want to contribute to your new corporation and which you want to keep in your own name. For some assets, you get better tax benefits and better liability protection when you don’t transfer them to your corporation.

Buying a Business? Protect Your Investment and Deduct It, Too

When you buy a business, buy the assets—not the stock. The assets will significantly increase your tax savings in the early years of your new business. This article gives you the nuts and bolts of buying a business. It even explains how you can buy the stock of the target corporation and treat the stock purchase as an asset purchase.

10 Last-Minute Tax Deductions for Business Vehicles

Your tax-benefit time for your business and personal vehicles is running out on December 31. If you are going to do something, do it now. This article gives you 10 year-end tax-benefit strategies for replacing or adding a business vehicle.

Test Your Tax IQ: Gain on Sale—Create Tax Benefits

You likely have a handle on how the acquisition of a new asset is going to give you tax benefits. But have you considered the asset you are replacing? Your first step with the asset that’s going good-bye is to see whether you have a gain or loss. If you have a loss, see last month’s article. If you have a gain, take this short test to make sure you are getting maximum tax benefits.

Surprise Tax Deductions for Built-In Desk

Tax law treats the built-in desk as either personal or real property depending on where you locate the desk. The personal location, such as your home, can make the built-in desk real property whereas the commercial location, such as your home office, makes the built-in desk personal property. In business, you want the personal property classification so that you can get the vastly quicker write-offs.

Tax Deductions for Entertainment Facilities (Part 2), W-2 and 1099

You have many ways to make your entertainment facility tax deductible. For example, you can treat use of the facility as compensation to the users. Tax law tags two types of people in your business for purposes of entertainment facility W-2 and 1099 compensation: “specified individuals” and others. For specified individuals whose use of the business beach home, ski lodge, or other entertainment facility creates taxable compensation, tax law limits the business’s deduction for its entertainment facilities. For compensated taxable use by nonspecified individuals, the business faces no special limits on deductions for entertainment facilities.

Test Your Tax IQ: Realizing Tax Benefits of a Loss Deduction

Let’s say that you calculate a tax loss on the sale of your business vehicle. Tax law gives you tax benefits from a valid tax-loss deduction. But you need to make the right move to realize those tax benefits. And when it’s time to dispose of your old business vehicle, you have a number of choices, only one of which will produce immediate tax benefits for you.

Impact of Death, Retirement, and Disability on the 179 Deduction

Have you purchased vehicles for use in your business? Did you take a 179 deduction for them? What happens to your deduction if you retire or become disabled before the end of the vehicle’s useful life? What if you die? This article gives you what you need to know.

Tenant Improvements Bonanza to Landlord

Do your tenants improve your property? Should they? Under Section 109 of the Internal Revenue Code, landlords receive the tenant improvements at termination of the lease free of income taxes. “Tax free” is what you have to call a nice package of tax benefits.

Ouch! Vehicle Totaled! Tax Benefits to Know

If you wreck your business vehicle, you will like the involuntary conversion rules that allow you to defer any taxable gain, providing you replace the vehicle within two years. This is true regardless of how you operate your business, corporation, or proprietorship.

Rats! Related Parties Destroy Qualified Leasehold Improvements

As the landlord or the lessee, you get big tax breaks when you can take advantage of a qualified leasehold improvement. We gave you those details last month. But if the landlord and the lessee are tax law-defined related parties, you can kiss those tax-favored benefits good-bye. In this article, you learn who those related parties are so you can avoid the kiss good-bye.

Test Your Tax IQ: Can You Depreciate Antiques Used in Business?

Antique desks, clocks, cabinets, bookcases, rugs, conference tables, paperweights, and even cars can add character and beauty to an office. Antiques also make a great investment because they appreciate in value. And here’s one more neat thing about antiques: you can expense them under Section 179 of the tax code if you (1) actually use them to conduct business; and (2) such use causes wear and tear to the antique.

Huge Tax Deductions for Landlords and Tenants, Last Call

Do you own an office building or commercial retail building that you lease? Are you a tenant in an office building or retail space? Are you considering some leasehold improvements to the space? If so, you need to get your act together lickety-split, as time is running out on IRS-approved huge tax deductions for “qualified leasehold improvement property.”

Maximum First-Year Tax Deduction on a Business Vehicle

How much of a vehicle deduction do you want from your business-vehicle purchase? A lot? A little? Could lawmakers trip you up in your desires? Absolutely. There are big differences in what you can deduct, depending on whether you buy a pickup truck, SUV, or car. Further, the differences among the categories depend on the weight of the vehicles. You need to know what the differences are if you are going to get the vehicle deduction you want.

Test Your Tax IQ: Deducting More than One Business Vehicle

This article contains a short quiz that will help you understand when you can gain tax deductions by using more than one vehicle for business. You will see what the IRS has to say about driving more than one vehicle, how the mileage log works when you drive more than one vehicle, and what it takes to make this pay off for you.

Buy or Lease a Business Vehicle: Which Costs Less?

Although personal considerations come into play, the choice between buying and leasing a vehicle for your business ultimately boils down to cost. So it’s essential to understand how to compute and compare the costs and to have the right tools to make those computations easy. This article gives you what you need.

Creating Tax Deductions for an Entertainment Facility

Tax law picks on “entertainment facilities” and makes them difficult to deduct. This is where tax planning comes in. With good tax planning, you can create deductions for your entertainment facility.

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.

Avoid the Section 179 Gotcha When Renting Equipment to Your Corporation

If possible, you want to take money from your corporation in some form other than salaries and wages, on which you pay payroll taxes. One such tactic, the lease of Section 179 personal property to your corporation, can accomplish this, but it rubs against one big gotcha and two steep hurdles. This article shows you how to avoid the gotcha, avoid the hurdles, and get the result you want.

IRS Retreats on Repair Regulations

To repair or improve your property? That’s the question. But should you have to wade through 256 pages of regulations to get the answer to whether your fix-up is a repair or an improvement? Perhaps not. The IRS is giving you an out on those 256 pages, at least until 2014

How to Claim No Depreciation on Your Home-Office Deduction

You might have asked yourself this question: Can I claim the home-office deduction and not claim depreciation as part of that deduction? The answer: Yes, but you need to have records that prove your zero amount. And then there’s the sad fact that you likely cheat yourself out of some after-tax cash by not claiming your depreciation deductions. This article explains how this works and more.

New 2013 IRS Standard Mileage Rates

The IRS just released the new 2013 standard mileage rates. For business purposes, you can use the standard mileage rates in lieu of actual expenses for depreciation and operating expenses of the vehicle. It’s different for charity, medical, and moving mileage. Here, the rate is in lieu of “out of pocket” operating expenses only.

9 Year-End Business Vehicle Tax Tips

If you want to do something with your business vehicles this year, you don’t have much time left. This article gives you the year-end strategies you need to ensure maximum tax benefits should you decide to replace or add a business vehicle.

You Can Switch from the IRS Mileage Rate to the Actual-Expense Method

Are you currently using IRS mileage rates to deduct your business vehicle? Is that the right choice for you? If not, you will be happy to know that you can switch to the actual expense method. The IRS gives you two different ways to do the switch, depending on when you want to make the switch.

Learn What Happens When You Convert an Asset from Business to Personal Use

Although you might have thought you converted an asset from business to personal use, you did not. You now simply use the asset for personal use and that changes your business/personal mix. The business asset retains its business attributes and that means gain, loss, and recapture at the time of ultimate disposal.

New Rules Reveal Six Ways to Lower Taxes on Your Personal Use of Your Corporation’s Airplane

Do you own an airplane? If not you, how about your corporation? This month, we are writing about the new IRS regulations that govern your use of your C or S corporation’s aircraft. In this article, you will find more than a half dozen strategies that you can use to minimize the tax bite caused by personal use of your corporation’s aircraft.

Does Section 179 Allow a Tax Deduction for a Paperweight Made of Gold?

Changes in the tax law cause tax-law casualties. If you are the casualty, that’s bad. But if the IRS is the casualty and you are the beneficiary, that’s good. That’s what happened with antiques, and it could happen with a paperweight made of gold.

Tax Guide to Deducting Your Timeshare Stays as Business Lodging Costs

Could you use your timeshare for business lodging and other business purposes? If so, why should you consider it? Business deductions usually produce better tax benefits than personal deductions do, that’s why. Further, you need to know those special tax rules that can make your timeshare a rental property, personal residence, or business lodging facility.

Section 179 Deduction Lost When Truck Purchase Was a Lease

Is your lease a lease? Are you sure? There are lots of funny rules that make what looks like a lease, a purchase—and what looks like a conditional sales agreement, a lease. This article shows you what happened to Arthur Boyce and gives you a number of tips to help you avoid his plight.

Create a Business Tax Deduction for Your Timeshare When You Allow Use by Employees

This subscriber owns a timeshare that he is not going to use this year. He wants to know how he can obtain business tax deductions if he lets his employees use it, assuming the employees do some good work. He learns that he has two possible ways to let an employee use the timeshare, one of which is tax-free to the employee. The second method is to call use of the timeshare “compensation” to the employee, which produces the unusual result of taxable income to the employee in an amount often different from the tax deduction for the business.

Avoid Taxes on the Sale of Your Principal Residence That Contained a Home Office

Learn how this IRS Revenue Procedure allows you to avoid taxes on the sale of a personal residence in which you had a home office or that you used as a rental property. The procedure lays out the methodology, which includes using the $250,000 ($500,000 if married) home-sale exclusion in unison with a 1031 tax-deferred exchange to avoid the taxes and enhance your deductions on the replacement home.

New IRS Regulations Hammer Tax Deductions for Repairs, But Also Allow a New Deduction

If you own rental property or your business’s building, you need to know what the IRS has in its new set of regulations that define when you have a tax-deductible repair and when you have an improvement that you must capitalize and depreciate. Repair deductions are best, but these are likely a little more difficult to achieve under the new regulations. Also, the new regulations contain a big new break that allows a write-off of the old component’s adjusted basis.

Corporations Beat Proprietorships in Tax Deductions for Cell Phones

Do you operate your business as a corporation, an LLC, or a proprietorship? Your choice of entity impacts a variety of tax deductions, and now the cell phone creates a win for the corporate owner and a loss for the proprietorship and the single-member LLC.

16 Tax Deduction Targets to Increase Your Business Car, SUV, Truck, and Van Deductions

This article has 16 tax-deduction targets that you can use to increase your business car, SUV, truck, and van deductions. You don’t need to buy any new vehicles to get the benefits. You simply need the knowledge as laid out here.

IRS Arrives at the Audit with Tax Assessor’s Allocation to Land and Building

On your rental properties, you need proof of your cost allocation to land and depreciable buildings. If you have no proof of that allocation, the IRS has started using the Web to grab the tax assessor’s allocation and use that against your depreciation deductions.

Last-Minute Tax Planning for Business Vehicles

Okay, it’s December and you have some last-minute tax planning to take care of. This article helps you identify big last-minute tax deductions for bonus depreciation and Section 179 expensing on business cars, trucks, vans, and motor homes, including those you already own and may or may not use for business.

Last-Minute Year-End Tax Planning for Your Business Tax Deductions

Are you looking for more tax deductions this year? It’s not too late. Learn 12 last-minute tax-planning ideas that you can implement to create or push more deductions into this year so you can pay less in taxes this year.

IRS Agrees That You Should Ignore Truck Chassis for Section 179 Expensing Deductions

The chassis of an SUV, truck, or van does not define its status for tax purposes. In other words, the truck chassis does not make that SUV a truck. Similarly, the car chassis does not make that SUV a car. If you want to use Section 179 expensing on your SUV, you need to know what makes the SUV a truck or a car.

Tax Guide to Best 2011 Business Vehicle Tax Deductions

Tax law requires your attention to enable tax deductions on your business vehicles. Your tax write-off results differ with certain aspects: vehicle type (car, van, pickup truck, crossover vehicle), new or used, use of Section 179 expensing, and bonus depreciation. This article guides you through the deductions so you can select what gives you the best write-offs.

The One Best Way to Claim a Home-Office Tax Deduction for the Owner of a Corporation

How does the owner of a corporation claim a tax deduction for an office in the home? Rental is not the best method. Deducting employee business expenses as miscellaneous itemized deductions is not the best method. The best method is to use an accountable plan, as you will learn in this article.

Find New Tax Deductions with Two-Car Tax Strategies

Learn the basics of the two-car tax-deduction strategy and then, best of all, use the magic formula calculator to see if you increase or decrease your tax deductions with this strategy.

How the IRS and Courts Have Approved the Two-Car Tax-Deduction Strategy

When the two-car tax-deduction strategy works for you, you find new deductions without spending a penny or driving a mile farther. In this article, you find that both the IRS and the courts approve of your two-car tax deductions.

Tax Benefits for Thinking About and/or Starting a New Business

If you are thinking about a new business, you need to know the rules on how to deduct start-up costs right now. Why? Your deductible costs could start accumulating simultaneously with your thinking about this new business.

New: Big Bonus Depreciation Break Applies to Trade-Ins

The new 100 percent bonus depreciation enables new tax planning strategies, as it applies to both the carryover and boot basis on a trade-in or other Section 1031 exchange.

Can Home Office Tax Deductions Include Garage Space?

Do you claim a home-office deduction? Do you have a garage (attached or detached) at your home? If so, you need to spend a few minutes with this article. You will learn when to include and exclude the garage when calculating your home-office space.

New Law Inadvertently Kills Business Car Depreciation; IRS Rescues Deductions with a Safe-Harbor Escape

How often do you say, “Thank goodness for the IRS?” Well, you are going to say that when you see how the IRS saves the bacon when you claim the recently enacted 100 percent bonus depreciation on your business car.

Tax Tips for Divorce (Part 1)

You have at least three parties in your divorce: you, your soon-to-be ex, and your Uncle Sam. Yes, as with almost everything, there are tax consequences to a divorce. This article puts you on a path that will help you protect your money and your assets.

IRS Releases 2011 Luxury Auto Limits

Tax law limits depreciation deductions on cars, trucks, and vans that don’t qualify for Section 179 expensing. The IRS updates the limits each year for inflation. This article explains how the limits work and gives you a link to the 2011 revenue procedure that contains all limits for both purchased and leased cars, trucks, and vans.

Tax Tips for Lawns and Landscaping

You want repairs and maintenance deductions on your business and rental properties. Here are tax tips on finding tax deductions in your lawn, landscaping, and other land improvements.

Tax Tips for the New Estate and Gift Tax Rules

The newly enacted tax cut creates a new 2011 and 2012 estate tax. The new rules are taxpayer friendly in two respects. First, they are easy to understand. Second, they contain a $5 million exclusion (portable, if properly elected, for husband and wife, giving a married couple an exclusion of $10 million).

Tax Tip: With the New Tax Law, What’s Best—IRS Mileage Rates or Actual Expenses?

The new tax law contains some real surprises when it comes to deducting vehicles. In some cases, you can deduct the full cost in the year you place the vehicle in service. In other cases, the luxury auto limits might stretch your depreciation deductions over 30 or more years.

Tax Saving Tips: How Repairs Put Extra Cash in Your Pocket

The repair deduction can substantially outperform the capitalized improvement. The added cash comes from two sources.

Better Tax Deductions for Repairs to Business and Rental Buildings

Tax law penalizes depreciation deductions, whereas it rewards repair deductions. The impact on your net worth can be huge. This article helps you qualify for the repair deductions that increase your net worth.

Tax Tips for Repairs—A Short Litany

Spend a few minutes looking at the list in this article to see what qualifies as a repair. Then spend another minute on the list of improvements. This will help you decide what you need to do to your property.

Tax Tip: The Classic Repair—the Farmer’s Creamery Case

Repairs to property produce more after-tax cash than improvements do. If you invest in property, you should pay close attention to the rules on what is a repair versus what is an improvement.

1040X, 1120X Amended Tax Return for Section 179 Expensing

It used to be that when you claimed a Section 179 expensing deduction, you locked that deduction in stone for the year you claimed it. Because of the economic downturn caused by 9/11, lawmakers wanted to stimulate the economy. Accordingly they increased Section 179 expensing and, fearing that some business people would miss this opportunity, they inserted a window of opportunity during which you may amend your tax return for Section 179 expensing.

IRS Mileage Rate Kills Section 179 1040X

You can amend your Section 179 deduction. However, when you chose IRS mileage rates, tax law grants you no Section 179 deduction and no ability to amend your tax return to claim it. You can recover many of those missed deductions by switching to the actual expense method as described in this article.

Tax Tips for Landlord’s Snowblower Deduction

The properties owned and the activities of the landlord determine whether the landlord can Section 179 expense a snowblower in whole or in part.

Nine 2010 Last-Minute Tax Tips for Vehicles

This issue contains 21 last-minute tax tips that you can use for 2010. We’ve broken the tips into two articles: one for vehicles and one not related to vehicles. This article contains the tips that apply to vehicles.

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 Tips to Find a Profitable Rental Property

This article contains our Rental Property Analyzer software to help you analyze your possible real estate investments in an absolutely understandable and meaningful way. If you are thinking of buying a rental property, you absolutely, positively must read this article and use this software, which is included in your subscription.

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 your gain or loss. This article gives you the six steps to finding your gain or loss.

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.

Tax Tips for Section 179 Expensing of a Motor Home

This subscriber is going to buy a motor home and use it during the first year for travel to and from conventions. In the second year, he is going to convert that motor home to a transient rental property. His plan meets the qualifications for Section 179 expensing and avoids recapture.

Trade-Ins of Business Cars Can Create Big Tax Deductions

The trade-in of your old business car on a replacement car creates additional basis. The subsequent trade-in can also increase basis. This process can create a big tax deduction if you know what to do.

Tax Deductions for the Business Town House

Doing business in two different locations requires tax knowledge. The purchase of a town house in the second location brings up many tax planning opportunities and a few hazards to avoid.

Tax Savings Tip: Increase Office Depreciation Rate by 42 Percent

What happens when you locate an office (home office or other office) in a duplex or apartment building? It’s possible that this location can produce tax-favored depreciation for the home office.

Tax Tips Needed on Land and Self-Rental Passive Loss Traps

The tax strategy of renting property you own personally to your businesses needs your attention if you want tax benefits. Similarly, special recharacterization rules apply to rentals of land and also when land is a big part of the rental.

Don’t Let the New 2010 Luxury Vehicle Depreciation Limits Hurt Your Deductions

Luxury limits on passenger automobiles and light trucks and vans produce planning benefits at the back end. If you want to beat the luxury limits, you have to buy a vehicle that’s exempt from the luxury limits.

IRS Mileage Rate for 2010—Good or Bad Deal?

Would Section 179 expensing make the IRS rates a bad deal for you? How about leasing or the luxury limits? Know for sure when you use the analyzer that comes with this article.

Secret Cash Found in IRS Mileage Rates

IRS mileage rates contain a depreciation surprise for many taxpayers. The depreciation might be hiding cash that can be yours with a simple strategy.

Transient Rule Applied to Business Motor Home

This article shows you how to apply the transient rule to use of a motor home for business purposes. By passing the transient test, your motor home can qualify for Section 179 expensing to the extent of business use.

IRS Audits Expanded to Six Years for Overstatement of Basis

If you understate your gross income by more than 25 percent, the IRS can adjust that return for six years, rather than the traditional three-year statutory period for audits. In this clarifying regulation, the IRS explains that an overstatement of basis counts as an understatement of gross income for the 25 percent test.

Tax Deduction on Sale of Business Car

Learn how to calculate the tax deduction when you sell your business car at a loss—the most likely result.

Baseball Cards and Memorabilia as Office Decorations

The proper tax deduction treatment for decorating a business office with a baseball card and memorabilia collection comes from the courts in their decisions on depreciating antiques.

Tax Deduction Checklist Should Include Repairs

Learn when to tax deduct flood damage as a casualty loss or repair deduction and avoid capitalization. The law gives business owners an advantage when they fix up their business property after a floor or other casualty.

Rental Property Tax Rule Surprise—How to Avoid

Whenever possible, you want your rental property to avoid the Uniform Capitalization Rules. If you don’t meet the de minimis rule on your improvements to a rental property, you may have to (1) capitalize the interest and (2) capitalize the direct and indirect costs.

IRS Releases the New Luxury Vehicle Depreciation Limits for 2009

Tax law’s luxury vehicle depreciation limits can apply to business cars, pickups, SUVs, crossover vehicles, and vans costing less than $15,500. That’s bad news. The good news: You often find a hidden tax deduction in the back end of the luxury limits (and mileage rates).

Business Furniture in the Home

You do not need a tax deductible office in your home to deduct the cost of business furniture and equipment in your home

How the 2009 Stimulus Package Can Stimulate Your Business Deductions

The official name of the new stimulus is the American Recovery and Reinvestment Act of 2009 (Public Law 111-5). Like last year’s version, the 2009 stimulus contains three big deals for business: (1) fifty percent bonus depreciation; (2) Section 179 expensing of up to $250,000; and (3) an increase in first-year luxury car depreciation on new (not used) cars.

Make Your 2009 Stimulus Tax Savings Permanent with a Section 1031 Exchange

The tax-favored like-kind rules for personal property such as cars contain a number of twists. For example, trading a car for an SUV, a crossover vehicle, or another car qualifies as a like-kind trade. But the trade of a car for a pickup truck is not like-kind.

The One Time to Avoid the 1031 Exchange

The very first thing you need to do once you make the decision to buy the new asset and replace the old asset is to calculate your taxable gain or deductible loss on the old asset (as if you were going to sell it right now). The result—gain or loss—determines the strategy you should follow.

Section 179: Avoid These Three Things

When you claim a Section 179 expensing deduction, you make a deal with the government. You agree to give back your early tax benefits if, during the recapture period, your business use drops to 50 percent or less.

Applying the Luxury Vehicle Limits

Your maximum write off on a new $14,000 car purchased in 2008 is $10,960. To get to this number, you need to use Section 179 expensing. Should you have personal use of the car, then you reduce your $10,960 limit by your personal use.

20 Last-Minute Tax-Planning Tips for 2008

As the end of the year arrives, you still have time to pocket some tax money. The 20 strategies in this article have a wide range, from getting married to selling your old vehicle. Spend a few minutes and pick up some last minute tips.

Your Business Stimulus Expires Soon

Take advantage of the government stimulus package in 2008. You need to buy and place in service a business vehicle, business equipment, or a business-related building before the end of the year. Generate fifty percent bonus depreciation, up to $250,000 Section 179 expensing, or an $8,000 increase in first-year luxury car depreciation.

Court Recaptures Section 179 Deductions

Learn from Michael Birdsill’s mistakes: keep good records of your business vehicle use, and report it on your taxes. Birdsill’s court case proves that you must do this to receive deductions for mileage. Follow our four rules for claiming Section 179 expensing to make sure you do it right.

Vacant Rental Property

Rental property treatment starts on the day you place the property in service for rental use, not when you install a tenant. We answer one taxpayer’s questions about reporting a rental house for which he found no tenant.

How the New Law Stimulates Your Business

This could be the perfect year to buy that rental property or building for your office. The new 50 percent bonus depreciation, new $250,000 expensing limit, and new higher luxury limit make 2008 the year to seriously consider making business purchases.

IRS Releases Luxury Vehicle Depreciation Limits for 2008

The IRS posted its new luxury limit tables for autos. Also, new vehicles bought in 2008 qualify for the 50% bonus depreciation from the stimulus package.

Tool Allowance Fails

New tax rules have pretty much killed the once-common tool and car allowances as expense reimbursement methods.


Quitting Business

When you claim Section 179 expensing or MACRS depreciation, you make a contract with the government. When you quit your business, you probably violate the terms of your tax-law contract and, thereby, trigger recaptures taxes.


Depreciation on Home Office

The IRS applies a recapture tax, even when no depreciation is claimed.


Standard Mileage Rate 50.5 Cents for 2008: Gift or Rip-Off?

Compare IRS rates with actual expenses to find what’s best for you. Should you choose IRS mileage rates, keep this one key point in mind: when you sell, you have gain or loss to consider. You might save thousands and thousands by knowing this one simple rule.

Antiques Can Make Smart Assets for Your Business

Furnishing your office with antiques can actually make you money. Instead of buying new, depreciable furniture, furnish your office with antiques. Though they have a higher price tag, they can yield 36 times more money than new furniture.

Add to Your Net Worth with Cost Segregation

Good tax planning tells you to accelerate your deductions and defer your income. Cost segregation can add tremendous acceleration to the depreciation deductions you claim on a building. That puts money in your pocket.

Equipment Found in a Real Property Building

Cost segregation can save you a lot of money. You can separate the building and the equipment inside to increase your deductions. We include a list of items that count as equipment.

Make Sure the New 2007 Business Vehicle Luxury Limits Don’t Stick It to You

The government penalizes you if you drive a luxury vehicle. Further, the government’s idea of luxury and the reality do not match.

Guide to Aircraft Deductions for the One-Owner Business

Many people, through keen knowledge of the tax law, have been able to use the law to their advantage and buy personal aircraft. Unfortunately, lawmakers changed the rules for deducting personal aircraft. We summarized the new rules for you.

Car Deduction

To calculate the deductions for a business vehicle when you sell it, you must divide the car into business and personal parts, find your adjusted basis for business purposes, and find your loss deduction.

IRS Issues New Rules for Fixing Depreciation

Revenue procedure 2007-16 allows you to make a change in depreciation after you sell, trade, or abandon property. The new procedures make some prior procedures obsolete and make revisions easier.

Repairs to Make the Home a Rental

If you make repairs to your home for the purpose of making the home a rental property, you may deduct them, if you do it right. You cannot, for example, deduct repairs made to your home (not rental property). You might also consider filing the improvements as capital expenditures.

IRS Sets 2007 Mileage Rate at 48.5 Cents

As an individual (not as a corporation), you may use IRS mileage rates in lieu of actual expenses to deduct vehicles you own or lease. The IRS rate has two components: one for operating expenses and the other for depreciation.

Depreciation of Home Office

Claim the proper amount of depreciation on your home office to take advantage of the time value of money and avoid problems.

Does the SUV Built on a Unibody Frame Qualify for $25,000 Expensing?

You may Section 179 expense up to $25,000 of your business cost when you buy a more than 6,000 pound gross vehicle weight rated (GVWR) new or used crossover vehicle or SUV built not on a truck chassis, but on a unibody frame in a manner that qualifies the vehicle as a truck for purposes of the gas guzzler tax.

The Back-End Vehicle Deduction Tax Reduction Plan

You need a tax plan for the sale or trade-in of the business vehicle you are driving today. You also need a tax plan for the business vehicle that will replace your current business vehicle. You need this tax plan if you use IRS mileage rates, actual expenses, Section 179 expensing, MACRS depreciation, or bonus depreciation.

New Rules for Writing Off Leasehold Improvements

New rules increase the tenant’s ability to first use shorter depreciation periods during the life of the lease and then write off the undepreciated balance of leasehold improvements at the end of the lease. The proper application and intertwining of the new rules enable both landlords and tenants to put cash in their pockets.

1031 Exchange of SUV for Hybrid Car

The SUV is like-kind property to the hybrid car. Thus, you can trade or use an intermediary to complete a Section 1031 tax-deferred exchange of an SUV for a hybrid car.

Upside Down Trade of SUV

You apply the new trade-in adjustment rule to find your new depreciable basis. When you have the combination of an expensed asset and an upside down loan balance, you can generally ignore your personal use and follow the cash outlay to your new basis.

Taxable Parts of Rental Property Sale

Taxpayer sells this rental property for $199,000 with $6,000 in closing costs. He paid $118,500 for the property over 10 years ago and has claimed $50,000 in depreciation deductions. As part of this sale, the taxpayer takes back a second mortgage in the amount of $19,400 payable in five years with interest paid annually at 10 percent a year. There are five easy steps to this installment sales tax calculation.

How Depreciation on Your Business or Rental Property Works

How you depreciate property has significant effects on your after-tax cash realization. Further, the punitive effects of depreciation recapture taxes make the Section 1031 exchange possibilities more and more appealing. That’s why it is important to remember the eight financial planning principles about depreciation.

Making Mold Removal a Repair and Not a Capital Expenditure

The difference between a deductible repair and a capital expenditure in today’s tax law is huge. The time value of money is one part of the added benefit for the repair. But the biggest deal is that you have no recapture tax with a repair. Thus, when removing mold from a building, you want the tax law to treat that removal as a repair. There are specific steps you can follow that help ensure mold removal classification as a tax-favored repair.

Heavy SUVs Still Tax Favored

Tax law continues to favor the heavy SUV over the typical passenger automobile. The heavy SUV qualifies for additional first-year expensing of up to $25,000 and it’s exempt from the gas guzzler tax.

Tax Breaks When You Total Your Vehicle

Tax law calls the wreckage and totaling of your vehicle both an involuntary conversion and a casualty. Special rules allow you to treat the involuntary conversion as either a sale or a trade-in. Thus, your first step in this process is to find your gain or loss and then decide how you want to claim your tax benefits.

Business Airplane

Tax law classifies the business airplane in the listed property category. This means the law requires a log of business and personal use. You deduct your business percentage. To obtain and then retain maximum benefits, you need your business use at greater than 50 percent. Further, the airplane is personal property and that makes it eligible for Section 179 expensing.

Best Strategy for SUV Saves Self-Employment Taxes

Say you are going to buy a replacement SUV that qualifies for Section 179 expensing. Should you trade your old vehicle or sell it outright? The selling outright strategy can save self-employment taxes. Many Schedule C taxpayers pocket thousands with this little-known strategy.

Personal Car Used for Corporate Business

When you operate your business as a corporation, you need to reimburse the business use of the personal car as a reimbursed employee expense. The corporation may use either the IRS mileage method or the actual expense method for the corporate reimbursement to the employee-owner.

Corporate Reimbursement of Depreciation on an Office in the Home

The corporate reimbursement to you, the employee, for the business use of your home office requires that you recognize the depreciation component of the reimbursement as if you had claimed the office in the home on your personal tax return.

Trade-In of Car on Lease

The trade of a car on a lease is not a like-kind exchange. This is a sale of the old car and a lease of the new car. The sale part gives you a gain or a loss. In addition, the sale part generates a prepayment on the lease where you benefit with an amortization deduction.

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.

New 2006 Standard Mileage Rates

You probably should hate the IRS for the mileage rate. First, the mileage rate creates the illusion that you don’t need a mileage log (wrong!). Second, individuals who start in business think that the mileage rate makes their tax life easy and that it doesn’t make much difference financially (generally, wrong). Third, mileage-rate addicts think that the mileage rate takes care of everything—then they cost themselves money by failing to deduct a loss on the sale of a business vehicle and overlook the business person’s tax deduction for interest on a car loan.

Who Owns This Property?

When you receive property in which you had an interest as a result of a family member’s death, make sure you clarify your income-tax basis in this property right away.