June 2024
Q&A: Dutch-Treat Business Meals
You can deduct the cost of Dutch-treat business meals in the same manner you deduct other business meals. But all business meals you consume can suffer from the Sutter rule. Learn more here.
Cost Segregation: A Great Strategy When?
Residential rental property is depreciated over 27.5 years, and non-residential real property over 39 years, providing a relatively small deduction each year. But property owners can use cost segregation to speed up the deductions by separately identifying, valuing, and depreciating the personal property and land improvements contained in their property. This can provide a substantial deduction in the first year, especially if bonus depreciation and/or Section 179 is used to deduct the full cost of these assets in one year.
Shutting Down a Sole Proprietorship
When shutting down a sole proprietorship or a single-member LLC taxed as a sole proprietorship, there are myriad tax rules to consider because the tax code says you are not selling the business, but rather selling the assets of the business.
Q&A: Who Should Own the Business Car: Corporation or Individual?
Here’s a common question: Who should own the business vehicle? You? Your corporation? If you just formed your corporation, it’s likely that the vehicle is in your name. How does your corporation deal with it? This article gives you answers.
Q&A: Don’t Rent Home Office to S Corporation
One common mistake the corporate owner makes is renting the corporate office in the personal home to the corporation. Learn why this is a mistake.
Adding Clarity: Replace Roof, Write Off the Old Roof
Find additional clarity on how you benefit when you take advantage of the relatively new IRS tangible property regulations that allow you to write off replaced components. In this article, we expand on the benefits of the two types of tax savings that we covered in last month’s article.
Self-Employment Taxes for Active Limited Partners
The tax code says that limited partners “as such” don’t have to pay self-employment tax on their share of partnership income—a substantial tax savings. For the first time, the U.S. Tax Court has held that this exception applies only to limited partners who are passive investors, not active participants in the partnership business.
Tax Guide to Timeshare Tax Deductions When You Rent It to Others
Your timeshare can easily qualify as a second home for the mortgage interest deduction 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 (2) the dreaded vacation-home rental rules for the rental part.
Q&A: How the IRS Disappears Tax Refunds on Unfiled Tax Returns
The taxpayer in this article did not file tax returns for 10 years. During this time, he overpaid his taxes by at least $100,000. The good news is that he does not owe any interest or penalties. But there’s some really bad news, too.
May 2024
Do You Need to Amend Your 2020 Tax Return for the 2020 ERC?
The time for individuals, including single-member LLCs taxed as sole proprietors, to get the 2020 Employee Retention Credit correct is here. And this is true even if you have applied for but not yet received the credit. For corporations and partnerships, the time may be past, but this article sheds light on what you need to know.
CPA Steals the Payroll Taxes, Owner Has to Pay the IRS
Who does your payroll? Could they embezzle the payroll taxes? What does the IRS do to you if someone embezzles your payroll? To find out, make sure you read this article.
Rental Property, Often Missed: Add New Roof, Deduct the Old One
Get ready to thank the IRS. With the relatively new tangible property regulations, you can write off replaced components and achieve two types of tax savings.
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 the best tax benefits, that’s why. Further, you need to know the special tax rules that can make your timeshare a rental property, personal residence, or business lodging facility.
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.
Q&A: No Business Income, No Home-Office Deduction: Wrong
If you have no taxable income, should you file a tax return and 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.
Shutting Down a Partnership: Tax Implications
There is much you need to know when you shut down a partnership. In this article, we walk you through the tax consequences using the three most common partnership shutdown scenarios.
Did You Overfund a Section 529 Plan? Consider a Roth IRA Rollover
If you establish a Section 529 college savings plan for a child or other family member and he or she doesn’t use all the money or decides not to go to college at all, starting in 2024 you can roll over up to $35,000 of the money into a Roth IRA for the beneficiary. But such rollovers are subject to complex rules and require long-term planning, as we explain in this article.
April 2024
BOI Reporting Unconstitutional for 65,000, but Likely Not You
You are likely on the hook to file your BOI report. The Corporate Transparency Act has been declared unconstitutional by a federal district court in Alabama, but that only applies to 65,000 businesses. Meanwhile, New York State has adopted its own beneficial ownership information reporting law that applies to limited liability companies.
Updated Blueprint for Employee-Spouse 105-HRA (Health Reimbursement Arrangement)
The 105-HRA is the medical reimbursement plan you likely want to use if (a) you report your business income and expenses on Schedule C, E, or F of your Form 1040, and (b) you can make your spouse your one and only eligible employee. Also, if you are single and operate your business as a C corporation, and if you are the one and only eligible employee of your C corporation, the 105-HRA is the medical reimbursement plan for you.
Tax Quiz—Sell Stock at a Loss to Your Daughter
What happens when you sell stock or other assets at a loss to a related party, such as your daughter? This is a tax law you need to know about.
Create Tax-Free Fringe Benefit Deductions for Your Smartphone
Do you operate your business as a corporation, a partnership, or a proprietorship, or as an LLC taxed as one of these three entities? Your choice of entity impacts whether you can create a no-hassle, tax-free fringe benefit for you and/or your employees’ smartphones. In this article, you learn the rules that apply and which ones give you the best benefits.
Five Rules for Turning Your Vacation—Even a Luxurious One—into Tax-Deductible Business Travel
The next time you plan a vacation, stop and think about how you could make it deductible. If you find a good business reason to visit that destination and you throw in enough business hours on the trip, you suddenly convert a non-deductible personal trip into a deductible business expense.
Despite Its High Cost, This Education Is Deductible
If you attend an expensive educational program, do you have to amortize the cost, or can you expense it? Further, would such a program trigger an IRS audit?
Tax Reform Doubles Down on S Corporation Reasonable Compensation
The Tax Cuts and Jobs Act tax reform gave you a new 20 percent deduction on pass-through income. For S corporation owners, your reasonable compensation plays a key role in determining your Section 199A deduction. Here, we’ll explain what the law says on reasonable compensation and how you can come out ahead.
Tax Rules for Providing Free Meals and/or Lodging to Employees
The tax rules on free meals for employees have changed to create more revenue for the government and fewer fringe benefits for employees. The big change for meals is the drop in the employer deduction, from 100 percent before 2018 to 50 percent for years 2018-2025 to zero in 2026 and beyond.
March 2024
Q&A: S Corporation Reimburses Personal Vehicle
If your S corporation reimburses you for your personal vehicle, you need to report the gain or loss on the sale of that vehicle. This article gives you two clear examples of how this works and what forms to use.
No Mercy for You When Your CPA Does Not File Your Tax Return
What happens if your certified public accountant (CPA) or other tax preparer fails to electronically file your return? You’re out of luck. The IRS and courts say you, the taxpayer, are responsible for filing your return. If your CPA fails to do so, the tax code treats you as the culprit and levies penalties against you.
Self-employed? Amend Tax Returns for up to $32,220 in Tax Credits
If you are self-employed or operate your business as a small corporation, it’s possible that you have not yet claimed your COVID-19 family and sick leave tax credits. If that’s true, take a moment or two and answer the 12 easy questions in this article to see whether you could qualify for some or all of the possible tax credits.
Your Co-owned Business Probably Needs a Buy-Sell Agreement
Do you co-own your business with one person or multiple people? If so, you should have a properly funded buy-sell agreement in place, as explained in this article.
How Long Does the IRS Have to Audit Your Returns?
The IRS can’t take forever to audit you. Once the statute of limitations expires, the IRS can’t audit your return or assess any additional tax. Most returns must be audited within three years after they were due or filed, whichever is later. But the IRS has much longer to audit returns where taxpayers severely underpay their taxes, commit fraud, or file no return at all. Moreover, there is a longer statute of limitations for certain Employee Retention Credit audits.
Q&A: Deducting a Loss from an Airbnb Bedroom Rental
When you rent a bedroom in your home and that rental unit creates a tax loss, can you deduct the loss?
Know Your 2024 Tax Deadlines with This Useful PDF Tax Calendar
Don’t let tax deadlines catch you off guard! Stay organized and save more with our 2024 Federal Tax Calendar for small businesses and self-employed taxpayers. Download your calendar now!
Young Adults Should Take Advantage of IRAs
Generally, young adults who contribute to traditional or Roth IRAs enhance their retirement years with more retirement income. It doesn’t take much to make this work to your advantage.
New Crypto Tax Reporting Rules Are Coming Soon
Proposed IRS regulations scheduled to go into effect for the 2025 tax year will require people and companies that help customers transfer digital assets such as Bitcoin to file a new Form 1099-DA with the IRS. This form reports information similar to that reported for stock sales, such as sales proceeds, as well as (starting in 2026) tax basis and gains and losses. The new reporting rules will apply to digital asset trading platforms, payment processors, many wallet providers, and other “digital asset brokers.”
