By month: August 2007

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.

Marriage Qualifies for Part of $250,000 Home-Sale Exclusion

The $250,000 home-sale exclusion is a major tax break. To qualify for the exclusion, you must have owned and lived in your home for two of the past five years. You can get out of the “two out of five year” rule by unforeseen circumstances, like, say, marriage.

Receipt of Check Destroys Tax-Deferred Exchange

Tax-deferred exchanges apply to insurance as well as real estate. There are very specific rules about the transfer of funds, so make sure you do it right.

Lack of a Time Log Destroys Real Estate Loss Deductions

Andrew D’Avanzo had one very bad day in court. He did not group his rental properties, and had an insufficient time log that did not satisfy the court. He lost a lot of money. Learn from his mistakes: know the details about tax law!

1031 Exchange of Vacation Homes Fails

You can use the 1031 exchange to defer taxes when you exchange one rental property for another. Specific rules apply when determining whether a vacation home is a personal residence or a rental property, though, so make sure you know the rules. A slip up here could mean a lot of money in taxes.

105 Medical Plan Fails

Darwin Albers employed his wife and claimed an $8,216 section 105 medical reimbursement plan deduction. He lost every penny of his claimed 105 medical reimbursements because of a few easily avoided errors.

Spreadsheets and Credit Card Receipts Not Close to Correct Evidence

The IRS has very specific rules regarding record-keeping for deductions. One husband-and-wife team lost over $31,000 because of bad records. Know the law!

Tax Law Shows No Mercy to Victim of Payroll Embezzlement

The IRS is not a forgiving entity. Even if a fraudulent payroll service is charged criminally, as in this case, you are still responsible for the taxes you owe. We give you a sound strategy to avoid payroll fraud.

Deductions When Home Office Fails

If you do not have a home office, you may not deduct things related to the home, like gas bills or homeowners’ insurance. However, the law allows you to deduct office assets that could produce tax benefits because they would not be considered part of a dwelling.

Home Office with More Than One Business

To deduct things in a home office, they must be used exclusively for business use. Not one minute can be personal use. Should you have a use that fails the exclusive business-use requirement, that one failed use disqualifies your home-office deduction.

Proof That Wins

You can deduct items in your house, like a desk in the den. The tax rules are specific, though, and you must log the usage meticulously. The IRS does not like approximations.

IRA Donation to 501(c)(3)

If you want to donate money from your IRA to charity, there are two ways to do it: you can have the IRA send the money directly to the charity, or you can do it an alternate way. We recommend sending the money directly to save money on taxes. There are important details, however, so read closely.


[ View / Print full text of all articles in this issue ]