Tax Tips
When Cancellation of Debt (COD) Income Can Be Tax-Free
Sometimes debts can pile up beyond a borrower’s ability to repay, especially if we are heading into a recession. But lenders are sometimes willing to cancel (forgive) debts that are owed by financially challenged borrowers. While a debt cancellation can help a...
Is Airbnb Rental Income Subject to Self-Employment Tax?
Do you owe self-employment tax on Airbnb rental income? That’s a good question. In Chief Counsel Advice (CCA) 202151005, the IRS opined on this issue. But before we get to what the IRS said, understand that the CCA’s conclusions cannot be cited as precedent or...
How to Section 1031 Exchange into a Delaware Statutory Trust (DST)
As you likely know, the Section 1031 tax-deferred like-kind exchange is one of the greatest wealth-building mechanisms for real estate investors. With Section 1031, you can avoid taxes on all your property upgrades during your lifetime and then pass the property to...
$80 Billion to the IRS: What It Means for You
You may have noticed that the IRS is in a bad way. It has a backlog of millions of unprocessed paper tax returns, and taxpayers can’t get through to the agency on the phone. Congress noticed and took action by passing a massive funding of the IRS in the recently...
Section 1031 Exchanges vs. Qualified Opportunity Zone Funds
Have you sold, or are you planning to sell, commercial or rental property? To avoid immediately paying capital gains tax on your profit, you have options: • Defer the capital gains tax using a Section 1031 exchange• Defer the capital gains tax using a qualified...
Use In-Kind RMDs to Avoid Selling Retirement Account Assets
Are you 72 or older? If so, you must take a required minimum distribution (RMD) from your traditional IRA, SEP-IRA, or SIMPLE IRA by the end of the year. If you turn 72 this year, you can wait until April 1 of next year to take your first RMD—but you’ll also have to...
Say Goodbye to 100 Percent Bonus Depreciation
All good things must come to an end. On December 31, 2022, one of the best tax deductions ever for businesses will begin to phase out: 100 percent bonus depreciation. Since late 2017, businesses have used bonus depreciation to deduct 100 percent of the cost of most...
Avoid These Mistakes When Converting to an S Corporation
At first glance, the corporate tax rules for forming an S corporation appear simple. They are not. Avoid these mistakes when you convert to an S-corp. Basic Requirements Here is what your business must look like when it operates as an S corporation: 1. The S...
Buying an Electric Vehicle? Know These Tax Law Changes
There’s good and bad news if you’re in the market for an electric or plug-in hybrid electric vehicle. The good news is that the newly enacted Inflation Reduction Act includes a wholly revamped tax credit for electric vehicles that starts in 2023 and continues through...
New Business Tax Credits for Your Electric Vehicle Purchases
You may have heard that the newly enacted Inflation Reduction Act includes an expanded tax credit for electric vehicles. Although this personal credit has gotten most of the publicity, the new law launched a new commercial clean vehicle credit—specifically for...
New and Improved Energy Tax Credits for Homeowners
The president signed the Inflation Reduction Act into law on August 16, 2022. It contains some valuable tax credits for homeowners. When it comes to taxes, nothing is better than a tax credit since it is a dollar-for-dollar reduction in the taxes you must pay (unlike...
Self-Employment Taxes for Partners and LLC Members
Limited liability companies (LLCs) are a popular choice of entity for small businesses and investment activities. LLC owners are called members. Here’s a question: Does a member of a limited liability company (LLC) or a partner in a partnership have to pay...
Self-Employment Tax Basics
If you own an unincorporated business, you likely pay at least three different federal taxes. In addition to federal income taxes, you must pay Social Security and Medicare taxes, also called the self-employment tax. Self-employment taxes are not insubstantial....
New 62.5 Cents Mileage Rate
The IRS noticed that average gas prices across the United States exceeded $5.00 a gallon and took action. Small businesses that qualify to use and do use the standard mileage rate can deduct 62.5 cents per business mile from July 1 through December 31, 2022. That’s up...
Paying Your Child: W-2 or 1099?
Working at a tender age is an American tradition. Here’s what you need to know about paying your kids properly. Question Here’s a question I received from one of my clients: “I will hire my 15-year-old daughter to work in my single-member LLC business, and I expect to...
Donor-Advised Funds: A Tax Planning Tool for Church and Charity Donations
Do you give money to 501(c)(3) charities? Do you get a tax benefit from those donations? Recent changes in the tax code have done much to destroy your benefits from church and other tax-deductible 501(c)(3) donations. But there’s a way to donate the way you want, get...
Transferring Your Home to Your Adult Child
With today’s home prices and the crazy real estate market, it’s likely difficult for your children to buy a home. And it’s conceivable that you are ready to move on from your existing home. If this is true, consider the three options below. Option 1: Make an Outright...
Selling Your Appreciated Vacation Home? Consider the Taxes
The tax-code-defined vacation home rules come into play when you have both rental and personal use of a home. Thus, you can have tax-code-defined vacation homes in the city, in the suburbs, and in recreation areas. If you have no combined rental and personal use of...
Alert: A Massive New FinCEN Filing Requirement Is Coming
Do you own a corporation, limited liability company (LLC), limited partnership, limited liability partnership, limited liability limited partnership, or business trust? Or are you planning to form one of these entities? If so, be alert. There’s a new federal filing...
Deduct a Cruise to Mexico
You may not have thought of this, but taking a cruise ship to Mexico for a business meeting is acceptable as a deductible form of transportation. Because Mexico is in the tax law–defined North American area, the law says that you need no stronger business reason to...
