Recent Feature Headlines


April 2019

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.


How to Reimburse Medicare When You Have Fewer Than 20 Employees

The Affordable Care Act’s $100-a-day penalty for improper medical reimbursements likely has your attention. It should. But you can find many reimbursements that are allowed without penalty, including the ability to reimburse Medicare when you have fewer than 20 employees.


Good News: Most Rentals Likely Qualify as Section 199A Businesses

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.


Q&A: No Business Income, No Home-Office Deduction: Wrong

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.


Life Insurance Policy Loan: A Tax Nightmare

Do you have an inside buildup of cash value in your life insurance policy? Are you taking loans from the policy or letting the policy ride with premiums being paid from the cash value? If yes, make sure you know the tax consequences of your actions.


Q&A: What Can I Do If My K-1 Omits 199A Information?

Tax reform’s Section 199A deduction often confuses small-business owners and tax professionals alike. It’s quite possible you’ll get a Schedule K-1 from a business that omits the information you need to calculate your deduction. What do you do?


TCJA Planning: Terminating Your S Corporation Election

Tax reform may have you thinking of changing your S corporation to a C corporation, partnership, or sole proprietorship. To do this, you’ll have to terminate your S corporation election and possibly make other tax elections. We’ll explain how you do this and the tax consequences of doing so.


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?




March 2019

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).


When the Second Office in the Home Is a Principal Place of Business

If you have an office downtown where you spend 40 hours a week, can you claim that you have an office in your home that qualifies as a principal office if you spend only 12 hours a week working in the home office? If you said no, you are not alone. But you would also be wrong, as we explain in this article.


Q&A: Deducting a Swimming Pool as a Medical Expense

You could qualify to use your swimming pool as a medical expense deduction just as Herbert Cherry did. Cherry deducted the cost of the pool to the extent it exceeded the increase in the value of his home. He also deducted the yearly cost of heating and insuring the pool, electricity for the pool room, and repairs for the pool room walls that suffered mildew damage.


How to Deduct Medicare as a Business Expense

When you are in business for yourself, you have options when it comes to creating tax deductions for your health insurance. The tax rules treat Medicare as health insurance, and that means you have options for how to create your tax deductions for Medicare.


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.


Q&A: Is a Triple Net Lease to a C Corporation QBI?

You operate your professional practice as a C corporation. Your spouse rents your office to your C corporation on a triple net lease. Does your spouse qualify for the Section 199A deduction on the rental income, and if not, what can be done about it?


Employee Recreation and Parties Survive TCJA Tax Reform

When you know the rules, you can party with your employees and deduct 100 percent of the cost. Interestingly, if you feed your employees during a training program, your deduction is only 50 percent. Make sure you know the rules that give you the 100 percent deduction for employee entertainment.


Q&A: How to Calculate and Improve Your QBI from a Partnership

It’s tough to calculate the Section 199A deduction. Under the final regulations, it’s even more difficult, with more adjustments than we expected. We’ll walk through an example of a partner in an LLC to show you how the calculation works. And then we’ll discuss some planning opportunities to increase the deduction.


TCJA Tax Reform Creates Big Hazard in Loans to Your Corporation

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




February 2019

IRS Issues Final Section 199A Regulations and Defines QBI

Your ownership of a pass-through trade or business can generate a tax deduction of up to 20 percent of your qualified business income (QBI). The C corporation does not generate this deduction, but the proprietorship, partnership, S corporation, and certain trusts, estates, and rental properties do. In this article, you learn how to find your QBI.


IRS Clarifies Net Capital Gains in Final 199A Regulations

New tax code Section 199A can give you a tax deduction of up to 20 percent of your taxable income reduced by net capital gains. Last August, the IRS issued Section 199A proposed regulations that gave you some guidance on what net capital gains are. And now the new final regulations give you clarifying guidance on what the IRS deems are net capital gains for purposes of Section 199A.


Q&A: Avoiding the $100 a Day per Employee Penalty for S Corporations

The answer in this article explains how the S corporation can pay the solo owner-employee’s individually purchased health insurance without worrying about the $100-a-day penalty.


IRS Updates Defined Wages for New Section 199A Tax Deductions

Your Section 199A tax deduction disregards W-2 wages when your Form 1040 taxable income is equal to or less than $315,000 (married, filing jointly) or $157,500 (filing as single or head of household). Also, you don’t have to think about wages for your out-of-favor business if you have taxable income above $415,000 (married, filing jointly) or $207,500 (filing as single or head of household). But if you are in a group that needs to consider the wages your business paid you and your employees, you have to follow the rules set out by the IRS, as we explain in this article.


IRS Creates a New “Safe Harbor” for Section 199A Rental Properties

The Section 199A 20 percent tax deduction is a possible gift from lawmakers. Literally, you don’t earn this deduction; it’s simply there for you if you qualify. Under the trade or business rule, your rental property profits can create the deduction. And now, under an alternative rule, you can use the newly created IRS safe harbor to make your rentals qualify for the deduction.


IRS Section 199A Final Regs Shed New Light on Service Businesses

The IRS issued final Section 199A regulations that contain some new and very favorable provisions that are important to out-of-favor specified service trades and businesses. Of particular note are the de minimis rules discussed in this article that show you how to break your business into two or more businesses for purposes of the Section 199A tax deduction.


For 199A Tax Deductions, Must Landlords Give 1099s to Vendors?

Get ready. You may be about to experience another encounter with the law of unintended consequences. The Tax Cuts and Jobs Act gives you a possible 20 percent tax deduction on your rental property income. But that’s only if your rental property is a trade or business, and that comes with its own burdens.


New Downloadable Section 199A Tax Deduction Topic Guide

What do you need to know about the new 20 percent tax deduction that’s available to you if you have ownership in a pass-through business such as a proprietorship, a partnership, an S corporation, a trust, an estate, and certain rental properties? Find the information you are looking for with this downloadable PDF.


Section 179 Deduction: When Your Vehicle Lease Is Not 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 make 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.




January 2019

Avoid IRS Audits: Fix the 1099 Prepaid-Rent Mismatch

You don’t want a 1099 that reports an amount that differs from what you report on your tax return, because the IRS computers will pick that up and start an inquiry. When you prepay rent, your accounting method for preparing your 1099 likely creates a mismatch between you and your landlord. Here’s the technical correction when you have a mismatch and how to implement it, and a bigger tip on how to avoid mismatched reporting to begin with.


Tax Reform’s New Qualified Opportunity Funds: Helpful or Hype?

Qualified opportunity funds are a new tax-planning strategy created by the Tax Cuts and Jobs Act tax reform. The new funds have the ability to defer current-year capital gains, eliminate some of them later, and then on the new investment make capital gains tax-free. To put the benefits in place, you need to navigate some new rules and time frames.


Q&A: New 2019 Desktop Tax Rates for You

Your new 2019 desktop reference containing the 2019 capital gains and federal income tax rates for individuals, corporations, and estates and trusts, plus other desirable quick references you want at your fingertips, is now available with the download link in this article.


Entertainment Facilities after the TCJA Tax Reform

The Tax Cuts and Jobs Act (TCJA) tax reform crushed a big chunk of business entertainment tax deductions. Fortunately, your business entertainment facility escaped the mayhem and continues as a 100 percent tax-deductible facility. If you want such a business facility, make sure to review the rules in this article.


Q&A: 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. Learn how to identify which of the three is the best choice for you.


For You: New Downloadable Home-Office Deduction Topic Guide

For most business owners, the home office not only produces business deductions for a percentage of personal home expenses but also can create a substantial increase in business vehicle deductions.


TCJA Tax Reform Sticks It to Business Start-Ups That Lose Money

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.


Seven Answers to Your Section 199A Questions

The Tax Cuts and Jobs Act tax reform added new tax code Section 199A that gives owners of pass-through businesses a possible 20 percent tax deduction on business income. Inside the rules for qualification, you find some complications that give rise to many questions. In this article, we answer seven of those questions.


Defeating the Kiddie Tax after the TCJA Tax Reform

If your family has trouble with the kiddie tax, you face some new wrinkles for tax years 2018 through 2025 thanks to the Tax Cuts and Jobs Act tax reform. This is one of the many areas where tax planning can pay off, as you will see in this article.