By topic: Losses
How would you like a capital loss storage box that you could call on when you have capital gains that you want eliminated? Your cryptocurrency holdings can create that capital loss storage box without changing the nature of your holdings, as we explain in this article.
The Tax Cuts and Jobs Act (TCJA) limited your ability to get immediate value from your net operating loss (NOL). While Congress gave you a break in the CARES Act—the
ugly TCJA NOL rules are back in tax year 2021. We’ll tell you the limits and how you can maneuver other tax positions to gain immediate value for your NOL.
Disasters can happen at any time. As far as your business records go, you’ll be most equipped for a disaster if you’ve backed up and stored your most critical data online. To the extent you fail to do this, you’ll have to get copies of vital records from the IRS and other government agencies, your bank, clients, customers, and others. You’ll have to re-create other data as best you can.
If personal non-business property such as your home, personal belongings, or personal car is damaged or destroyed in a disaster, you may qualify for a tax deduction for casualty losses. But during 2018-2025, you may deduct only personal casualty losses caused by federal disasters. And your deduction is whittled down by insurance recoveries and particular casualty loss limitations.
The CARES Act made many temporary changes in the tax law. The new Consolidated Appropriations Act adjusted some of these and left others to die on December 31, 2020. With all the changes that took place in 2020, you need to know what’s left, enhanced, and over with, as we explain in this article.
When you operate a business, you have a variety of tax breaks available. The recently enacted Consolidated Appropriations Act extends and expands some of the breaks. We bring them to your attention as a tax-strategy buffet. You will find tax breaks you can use right away and others that can be used perhaps retroactively.
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
As you likely know, the Section 199A 20 percent QBI deduction is a delightful tax benefit. But it is not without its nuances. For example, if you have multiple business and/or rental properties, you need to consider the aggregation issues—both forced by the law and optionally incurred by you.
If you are the victim of a Ponzi scheme, you absolutely, positively must read this article to learn how the law gives you favored victim status. This includes a safe harbor election that gives you an upfront deduction of up to 95 percent, possible net operating loss treatment, and more.
Yes, December 31 is just around the corner. That’s your last day to find tax deductions available from your existing business and personal (yes, personal) vehicles that you can use to cut your 2020 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. And you will learn how the Tax Cuts and Jobs Act makes it possible for you to find a big deduction from your existing personal vehicle.
When you take advantage of the tax code’s offset game, your stock market portfolio can represent a little gold mine of opportunities to reduce your 2020 income taxes. The tax code contains the basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.
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.
The Tax Cuts and Jobs Act took away your ability to get an immediate cash benefit from your net operating loss (NOL). Now, due to the COVID-19 pandemic, Congress temporarily brought back the favorable tax treatment for 2018, 2019, and 2020 NOLs. We’ll tell you how you can cash in on this change right now.
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.
With incentive stock options (ISOs), you could be on your way to a very nice payout. But you must consider both the regular federal income tax results and the alternative minimum tax results. In addition, you must pay attention to special rules that apply to so-called disqualifying dispositions of shares acquired by exercising ISOs. This sounds complicated, and it is a little, but we help you find clarity in this article.
You or your spouse may have the opportunity to obtain non-qualified stock options. Or you may have your corporation issue non-qualified stock options to its employees. In all cases, you will want to know both how these options work and what happened to Sheedy.
Home-office deductions aren’t just for Schedule C businesses. You can have a rental property home office and deduct those expenses on a Schedule E. Besides the usual tax benefits of a home-office deduction, you will gain time that can qualify you as having tax code–defined real estate professional status, and thus unlock 100 percent of your current-year rental losses for immediate deduction against all income.
Millions of people are buying and selling cryptocurrencies such as bitcoin. The IRS just issued new guidance for the first time in over five years on how you’ll treat cryptocurrency for tax purposes. We’ll tell you what the IRS had to say, what you need to do, and what we still don’t know.
When your taxable income is in the phaseout range, your Section 199A deduction calculation is more complicated. With an out-of-favor specified service trade or business, you add more complications. Now, let’s add to the equation a business that shows a business loss. In this article, you will see how to do the calculations when you have all three issues.
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.
Yes, December 31 is just around the corner. That’s your last day to find tax deductions available from your existing business and personal (yes, personal) vehicles that you can use to cut your 2019 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. And you will learn how the Tax Cuts and Jobs Act makes it possible for you to find a big deduction from your existing personal vehicle.
When you take advantage of the tax code’s offset game, your stock market portfolio can represent a little gold mine of opportunities to reduce your 2019 income taxes. The tax code contains the basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.
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).
The IRS safe harbor that you find in Notice 2019-7 may well represent a red herring for you because your rental properties likely already qualify as a business for the Section 199A deduction. If so, you can avoid the complexities of the safe harbor.
If you have no taxable income, should you claim the office-in-the-home tax deduction? Answer: yes. Even with no taxable income, you have two for-sure tax benefits from the home office, and you likely have a third benefit, as we explain.
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.
The Tax Cuts and Jobs Act tax reform added an amazing limit on larger business losses that can attack you where it hurts—right in your cash flow. And it works in some unusual ways that can tax you even when you have no real income for the year. When you know how this ugly new rule works, you have some planning opportunities to dodge the problem.
Your stock market portfolio can represent a little gold mine of opportunities to reduce your 2018 income taxes when you take advantage of the tax code’s offset game. The tax code contains the basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.
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.
You closed your S corporation and then paid expenses for it afterward. Can either you or the corporation deduct those expenses? We’ll explain what the law says, along with that one thing you need to consider for taking deductions for your leftover expenses.
The Tax Cuts and Jobs Act makes claiming a tax deduction for a personal casualty loss more difficult. And when you do qualify to deduct a personal casualty loss, you face a number of rules that add to your misery by making the loss deduction difficult. In select circumstances, you can use a safe harbor, which makes things a little easier.
Your rental properties provide tax shelter when you can deduct your losses against your other income. One step to deducting the losses is to pass the tax code’s 750-hour test. One step to finding the hours you need may be your drive time.
Tax reform eliminated your ability to get immediate cash in your pocket from a net operating loss. Don’t sit back and let the IRS keep that cash! Examine five strategies you can use right now to get an immediate tax benefit from your business loss.
The Tax Cuts and Jobs Act made several beneficial changes that affect partnerships and their partners and LLCs and their members that are treated as partnerships for tax purposes.
The tax law has always treated your hobby activities unfairly. Tax reform under the Tax Cuts and Jobs Act made that unfair treatment even worse by preventing you from deducting any business expenses against hobby income. In this article, you see a strategy that can save your bacon on your hobby activity.
If you’re a professional gambler, tax law did you no tax favors before tax reform. But now, because of tax reform, tax law has you between a rock and a hard place for tax years 2018 through 2025. The recent tax reform gives you one choice only for those years.
If you own rental properties, you don’t want the tax law to call the rentals an investment. Instead, you want the rental properties to qualify as a trade or business so that you achieve tax-favored Section 1231 treatment and many other tax breaks.
If you win big at the casino, the government is going to ask for its share of the proceeds. Gambling income is taxable, and casinos must, by law, report big wins to the IRS. But the law provides you a way to offset your gambling income and thereby reduce your taxes. You just have to know the rules, including whether you are a professional or amateur gambler, and keep the right records.
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.
Business owners continue to get caught in the complex rules of the self-rental trap. A recent case taken from the Tax Court to the Fifth Circuit shows how business owners can get into tax trouble with self-rentals. But with proper tax planning and possible use of special rules called “grouping,” you can minimize and even eliminate the tax cost of the self-rental trap.
Tax law requires your S corporation to pay you, the owner-employee, reasonable compensation for the work you do. But what about in a year when your corporation has a loss? Does a lack of net profits absolve you from the obligation to pay yourself a salary?
If you own rental properties, you want to qualify as a real estate professional. It’s a big deal. In this status, you can deduct your tax shelter losses from your real estate rental properties against your business and portfolio income. We hear that the IRS and some tax professionals are misapplying the law and wrongly denying real estate professional status. That’s an ouch! How does it happen? By mistakenly requiring an election to count multiple rental properties toward the number of hours needed to be a real estate professional.
Yes, December 31 is just around the corner. That’s your last day to find tax deductions for your vehicles that will cut your 2016 taxes. And with our existing high tax rates, 2016 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.
When your business loses money, don’t miss out on valuable tax savings by not filing a tax return that would qualify for a net operating loss deduction. This is one of four traps in the tax law that can cost you tax refunds from prior years and tax shelter for future years.
Your stock market portfolio can represent a little gold mine of opportunities to reduce your 2016 income taxes when you take advantage of the tax code’s offset game. The tax code contains basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.
When you have a side business that produces a net loss, you automatically get to use that loss to lower your taxable income, right? Not so fast! The IRS could destroy those losses (and more) with one of the nastiest tax laws out there—the hobby loss rule. With an activity that’s showing losses, you need strategies to ensure your loss deductions.
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.
You may have heard that options are the perfect way to increase profits on real estate investments and rentals. Well, perfect is probably an overstatement, but good profits are available when you know what you are doing. You also need to know the tax rules to avoid clauses, charges, and events that can turn options into sales and trigger taxes when you least expect them.
When you expand to a second or third business, you increase your chances of running afoul of the passive loss rules. That’s not a problem if all the businesses are producing a profit. But if one of the businesses is incurring losses, you won’t get an immediate tax deduction if you don’t materially participate. And if you try to hide that business inside another proprietorship so your loss offsets your other income, you and your tax preparer face even more trouble.
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.
Did you get big tax deductions using Section 179 expensing and/or bonus depreciation on your vehicle purchases in 2012, 2013, 2014, and/or 2015? If so, you now have a vehicle with a low adjusted basis. That gives you a tax problem when you sell the vehicle. To lessen and possibly eliminate the problem, use a Section 1031 tax-deferred exchange.
You need to thank your lawmakers for the ability to claim your net operating loss (NOL) against income from other years. Think of it: tax deductions you incurred this year that exceeded your current-year taxable income turn into tax benefits, either immediately by carrying the NOL back or in the future by carrying the NOL forward. This article explains how this works, what you need to do, and how to see where you get the most dollars for your effort.
When you sell your business, you face two types of federal income taxes: (a) regular and (b) capital gains. Capital gains are better—much better. If you sell the assets rather than the business interest, your sale of self-created intangibles likely produces capital gains. Of course, the best bet is to sell the business interests rather than the assets, assuming you operate as other than a proprietorship, which can sell assets only.
Do you ever worry that people or businesses that owe you money might not pay up? Do you take some comfort from the idea that if you end up on the short end of the stick, at least you can salvage a tax write-off out of it? Don’t count on it if you haven’t read this article.
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.
Do you rent property to your business? Under the self-rental rule, you could forfeit your expected tax breaks and end up on the hook for unexpected taxes. This is true even if you create a separate entity to rent the property to your business.
If you want to rent one, two, or twenty bedrooms in your home, you need to avoid one big trap and navigate two sets of rules to obtain the tax benefits you likely were hoping for when you thought of this rental activity. This is an area where tax knowledge is power. Without the knowledge, you could create a very unsatisfactory tax result.
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.
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.
If you want to convert your C corporation to an S corporation, you need a plan. No plan, BIG tax. The BIG tax means the tax on built-in gains at 35 percent. But it’s worse than that, and bigger than that, because after the 35 percent tax payment, you continue to pay at your regular tax rates on the remaining 65 percent that flows from your S corporation to you. This is torturous double taxation. So make a plan to avoid as much torture as possible, perhaps all of it. This article helps you with that plan by showing you four strategies that you can use.
Your rental properties provide tax shelter when you can deduct your losses against your other income. For you to deduct your losses, you need to pass the tax code’s 750-hour test. The good news in this article is that the home-office deduction can help you pass this test in some delightful ways that you would not usually think of.
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.
Silver Lining for a Loss on the Sale of Your Home? Deduct Your Home-Office Loss—and Slash Your Taxes
Don’t Put Your S Corporation Vehicle Title in the Wrong Name! It Could Cost You Thousands in Tax Deductions
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.
There are special rules that you need to know regarding the deduction of your net losses if you co-own or co-manage a business or investment with your spouse. Tax law gives you some nice advantages, but they’re not what we would call logical. If you don’t know how the rules work, you might be missing out on money-saving benefits.
Your stock market portfolio is a great place to look for year-end tax planning opportunities. First, it’s a place where you can avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children. Second, it’s a place where you can play a simple game of offset where you cancel out high taxes. This article gives you seven strategies that reduce your taxes and make you smile.
You normally would not expect to have more money in your pocket after you pay your tax bill. However, with this new ruling from the IRS, you could end up with just that—a negative tax on the sale of your home! Read this article to find out how a taxpayer sold her home for a $100,000 before-tax profit and turned that into a $110,000 after-tax value.
When you operate a side business at a loss, the IRS might think your money-losing business is simply your private tax shelter and, if so, attack it as a hobby (i.e., activity not engaged in for profit). In the regulations, the IRS looks at nine factors to decide whether you can deduct your business losses. This article shows you how the rules worked against Dr. Mikhail and how you can avoid a similar fate.
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.
When you sell your rental property activity, you get a gift of sorts in that you now get to deduct the losses denied in earlier years. Tax law calls the denied losses suspended. To ensure realization of your rightful tax deductions, you need to avoid the hidden traps in this process that delay or prevent you from using your suspended losses. Make sure you know the right way to sell your rental property or activity in order to free up your losses for immediate tax deduction.
If you have to show that your rental property activity rises to the level of your being in a tax-law-defined real property business, be sure to involve yourself in the day-to-day management in order to avoid the investor time trap that can cost you your current-year tax deductions for your rental property losses.
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.
See how this musician could lose money for seven years in a row and prove that he was in the music business to make a profit. This was important. By winning his case, he cut his taxes by more than $17,000 for the two years at issue before the court. If you have an activity that you hope is a business activity, but that might be a hobby, you need to read this article.
You might simply file a form to convert your business from a corporation to a sole proprietorship, but this simplicity can trigger unexpected taxes galore. Don’t let the taxes surprise you. Evaluate the tax costs. See if the conversion works to your best financial advantage. Also, make sure to examine tax law’s three special tax-benefit techniques available to small-business owners.
The rental property tax-shelter game is for those who know how the rules work. Your rental property acts as a tax shelter when you can claim tax deductions for your rental property losses against your other sources of income. To qualify your rental properties for tax shelter benefits, you need proof of hours worked on your rentals. You win the tax shelter test when you (1) pass a 750-hour test, (2) pass a second, more-hours-in-real-estate test, and (3) pass an hours-worked material participation test for each shelter property or group of properties, if elected.
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.
What happens if you buy a timeshare and then sell it at a loss? Is the loss deductible or not? Your answer depends on how you used the timeshare. Did you allow it to be rented to others? Did you use it for business stays? What about personal use?
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.
As a subscriber, you likely remember that the trade of a business car for another business car is a Section 1031 exchange. Most businesspeople and real estate investors use the 1031 exchange to avoid paying taxes on the profits that would exist if the asset had been sold outright. In this article, you see how poor Mr. Bird made a $47,000 tax loss not deductible because he used Section 1031 when he traded in his old car on a new car.
Are you looking for more business tax deductions this year? It’s not too late. Learn five last-minute tax-planning strategies that you can implement now so you lower your taxes this year.
If you, or another entity you own, rent buildings or equipment to your business activity, you likely face the self-rental rules. If you are unsure of what the self-rental rules mean and you have these types of rentals, you absolutely need to read this article.
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.
Your timeshare can qualify as a second home for the mortgage interest deduction easily if you don’t rent or attempt to rent it. Once you introduce rent into your timeshare equation, you trigger two tough rules: (1) a special mortgage-interest-deduction rule for the personal part of the timeshare and then (2) the dreaded vacation-home rental rules for the rental part.
If you own rental properties, you need to know how to qualify for real estate professional status, and then you need to create proof of time spent on your rentals. No time-spent proof, no passive-loss deductions. Next, you have to decide to group or not to group your properties. Don’t leave this grouping decision to the IRS or to the courts.
The government subsidizes your rental property profits when you realize all your tax deductions. If tax law’s passive-loss rules deny your current rental losses, your profits will go down. Therefore, you need to know how the passive-loss rules work so you can maximize your rental profits and avoid unpleasant visits with the IRS.
If you are looking to buy a business individually, this article explains the tax deductions you achieve when you begin to think about the business you want to buy. If your corporation is going to buy the business, this article explains how to apply the process of thinking about it to the corporation. The rules for buying an existing business are different from those explained last month for creating a business from scratch.
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.
If you own rental property, you need to pay attention to the passive-loss rules. This court case helps clarify two rules that can enable deductions for rental property losses.
The real estate professional exception that can create rental property loss deductions does not apply to properties rented for an average of seven days or less.
Hallelujah, gamblers in the business of gambling may now deduct business expenses in excess of gambling losses. The Tax Court, in a new, precedent-setting case, establishes new rules for gamblers in the business of gambling.
Revenue Procedure 2010-13 requires disclosure of the business and rental groups you form to avoid the disallowance of losses under the passive-loss rules. At first glance, you might think, “Oh, no, not more disclosures.” But further examination shows an audit-proofing aspect to this disclosure that is most appealing.
The IRS often visits a business that loses money year after year when the owner has another substantial source of income. But that combination of facts—income and losses—does not automatically make the loss activity a nondeductible hobby. There are nine factors that need consideration, and one of those factors carries huge weight.
If you are personally liable for a debt and that debt is canceled or forgiven, you include the canceled debt as taxable income on your income tax return. Your situation dictates whether you will pay taxes on this taxable income. You might qualify to exclude the canceled-debt income from taxation altogether or to pay little or no taxes on it this year and then pay taxes in later years.
You want to deduct your business, rental, and non-rental losses when possible, because those deductions put cash in your pocket. The sooner you get the cash, the faster you can put that cash to work for you building your net worth. This article helps you realize those losses sooner.
Learn how you treat monies spent when your attempted purchase of a rental property fails. Tax law provides you with a path of special, mostly favorable tax rules.
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.
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.
The U.S. tax system is kind to proprietors and corporations that lose money in their businesses. The losses can be carried back and forward, but you must pay strict attention to the elections and due dates to ensure your benefits.
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 classification, you can do much to increase your net worth.
If the passive loss rules are taking away your tax deductions on your real estate rentals, examine the real estate professional rules for an escape. You can be a lawyer, medical doctor, etc., and also qualify as a real estate professional.
You can be a lawyer, CPA, MD, or business owner and qualify as a real estate professional if you or your spouse materially participate in the rentals or in the rental group.
Learn how to qualify for the rental real estate active investor category for deducting rental property losses of up to $25,000. You can plan deductions to lower the $100,000 and $150,000 ceilings.
To deduct your passive losses as a real estate professional, you must prove time spent. Since you need this proof, use these tactics to keep track of your time and also increase your overall profits on the rentals.
If you own rental properties, you don’t want the tax law to call the rentals an investment. Instead, you want the rental properties to qualify as a trade or business so that you achieve tax favored Section 1231 treatment and other tax breaks.
IRS mileage rates contain a depreciation surprise for many taxpayers. The depreciation might be hiding cash that can be yours with a simple strategy.
The business bad debt generates the best bad debt tax breaks, except when the debt is incurred to protect, enhance, or continue your employee relationship (i.e, keep the corporation in business so you have a place to work).
Do you own a business that withholds taxes from employees? If so, you need 100 percent certainty that the withheld payroll tax monies are going to the IRS. You can achieve 100 percent certainty with the IRS EFTPS registration..
To deduct a loss on a charter fishing activity, you must materially participate in the activity. When the activity is organized as an LLC, you have more choices for material participation than a limited partner.
Distributing the assets of an estate needs a tax plan to ensure the favorable results embedded in the tax law.
The U.S. government taxes your profits and subsidizes your losses. That’s nice. Not all governments share in the losses.
You can be a dealer with respect to some properties and an investor with respect to others. You can also subdivide lots and obtain tax-favored capital gain treatment, but you need the right numbers and a good plan.
Learn how to calculate the tax deduction when you sell your business car at a loss—the most likely result.
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.
If you are the victim of a Ponzi scheme, you absolutely, positively must read this article to learn how the law gives you favored victim status. This includes a safe harbor election, possible carryback of the losses to one of five years, net operating loss treatment, and more.
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).
Ownership and involvement in your business may not be sufficient if your business suffers an operating loss. To deduct a business loss, you must materially participate in the business.
If you draw Social Security retirement benefits before full retirement age, you face the loss of $1 in benefits for each $2 of earnings over $14,160. Further, when the provisional income on your tax return exceeds $25,000 (single) or $32,000 (married), you must include at least 50 and not more than 85 percent of your Social Security benefits in taxable income. Thus, your receipt of Social Security benefits triggers the need for planning.
There are two types of bad debts: business and nonbusiness. Nonbusiness bad debts are deductible in the year the loan is worthless. A business bad debt is deductible either in the year it becomes worthless or to the extent you can prove its decline in value. This is far easier. But, you need to prove your writeoff to get the deduction. We’ll show you how.
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.
One taxpayer fixed up a house to sell it for a net loss. To save money on taxes, he can file as a real estate dealer, and not as an investor. Precedents and technical definitions help his case.
Gambling requires good strategies not only in your gambling activity, but also for tax purposes. You need to report your gambling income and losses in your tax returns and keep tax records whether you win or lose, whether the gambling is legal or illegal, and whether the gambling is a tax defined business or hobby.
One spouse’s business losses can be written off against the other spouse’s income. Think like this: In a loss year, the business spouse provides tax shelter.
If you sell stock to your relatives at a loss, don’t lose possible deductions – know the related party rules!
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.