Tax Tips

Can the IRS Require Odometer Readings with the Mileage Rate?

Do you claim your business miles at the IRS optional rate? If so, imagine you are now being audited by the IRS for your business mileage. The IRS has requested odometer readings for your vehicle. You might wonder if the IRS can do this.   The Law The answer is...

Tax Reform Puts Screws to Hobbies

The tax law has mistreated hobbies for a long time. But the most recent tax reform brings the grim reaper to the party, and it’s not pleasant. This means you need to focus on making your activity a business and not a hobby.   The Law Under both prior law and the...

How to Handle Multiple Rental Activities and the 20% Deduction

When you have multiple rental activities, here’s what you need to consider: • Are your rental activities multiple trades or businesses, or one trade or business?• Can you aggregate the rentals for Section 199A purposes? Do you want to?• How does the Section 199A...

QBI Issue When Your S Corp Is a Partner in a Partnership

The tax-saving strategy of S-corporation as a partner does affect your Section 199A deduction. Guaranteed payments are not qualified business income (QBI) for the Section 199A deduction. The non-QBI guaranteed payment rule applies whether the partner receives the...

Combine Home Sale with the 1031 Exchange

The tax-saving strategy is to combine the tax-avoidance advantage of the principal residence gain exclusion break with the tax-deferral advantage of a Section 1031 like-kind exchange. With proper planning, you can accomplish this tax-saving double play with full IRS...

Tax Reform Allows Depreciation on Purchase of Leased Vehicle

The TCJA made two changes that mean 100 percent bonus depreciation is available on the vehicle you lease and then purchase, regardless of whether you purchase it during the lease term or at the end of the lease. The two technical reasons you can do this are as...

Deduct Your Costs of Sponsoring Sports Teams

The IRS Says . . .Revenue Ruling 70-393 states that the monies spent to outfit and support a sports team are similar to monies spent on other methods of advertising; accordingly, you may deduct them as business expenses for federal income tax purposes.   Here's...

Backdoor Roth IRA Still Available After The Tax Reform

Good news. The Tax Reform (TCJA) did not harm the backdoor Roth strategy. Do not miss tax free growth - over 40 year period 94% of your account balance is due to growth and only 6% is due to contributions. First, as you likely know, the Roth IRA is a terrific way to...

IRS Issues Final Section 199A Regulations and Defines QBI

Qualified business income (QBI) deduction is available for a sole proprietorship, partnership, S corporation, and certain trusts, estates, and rental properties. The tax code says QBI includes the net dollar amount of qualified items of income, gain, deduction, and...

Home-office Tax Benefits Require No Cash Outlay

Why is the home-office deduction so important? Is it really that different from other business deductions? The answer is YES!   Two Reasons There are two reasons why this deduction is important for every single business owner and is in a class of its own:1. It’s...

Audit-Proof Your Time Spent on Rental Properties

Today’s tax law puts your income and deductions into three separate buckets for tax purposes. Each bucket has its own rules and regulations. These are the three buckets: active, passive and portfolio. A real estate rental is automatically in the passive bucket if you...

Defeat the Kiddie Tax after Tax Reform

For 2018–2025, the TCJA tax reform changes the kiddie tax rules to tax a portion of an affected child’s or young adult’s unearned income at the federal income tax rates paid by trusts and estates. Trust tax rates can be as high as 37 percent or, for long-term capital...

Avoid the 1099 Prepaid Rent Mismatch

Business rent payments to your landlord are reported on IRS Form 1099-MISC, which is due January 31. For the 1099-MISC, do you simply look at your checkbook or payment ledgers to identify the amounts you are going to report? If so, you will create an incorrect 1099...

Answers to Common Section 199A Questions

The Section 199A tax deduction is complicated, and many questions remain unanswered even after the IRS issued its proposed regulations on the provision. And to further complicate matters, there’s also a lot of misinformation out there about Section 199A. Below are...