Are You a Regular Investor or a Tax-Favored Securities Trader? As we navigate the recent volatility in the stock market, you may want to think about the possible favorable federal income tax treatment the tax code gives to a securities trader. Suppose you can qualify as a securities trader for federal income tax purposes. In…
Helicopter View of 2023 Meals and Entertainment As you may already know, there have been some major changes to the business meal deduction for 2023 and beyond. The deduction for business meals has been reduced to 50 percent, a significant change from the previous 100 percent deduction for business meals in and from restaurants, which…
Plan Your Passive Activity Losses for Tax-Deduction Relevance In 1986, lawmakers drove a stake through the heart of your rental property tax deductions. That stake, called the passive-loss rules, causes myriad complications that now, 37 years later, are still commonly misunderstood. The Trap In 1986, lawmakers made you shovel your taxable activities into three basic…
SECURE 2.0 Act Creates New Tax Strategies for RMDs As you are likely aware, if you have an IRA or other tax-deferred retirement account, you must start taking required minimum distributions (RMDs) once you reach a certain age. The SECURE 2.0 Act raises the age at which RMDs must first be taken, from age 72…
2023 Health Insurance for S Corporation Owners: An Update Here’s an update on the latest developments in 2023 health insurance for S corporation owners. As a more-than-2-percent S corporation owner, you are entitled to some good news when it comes to your health insurance. To ensure that your health insurance deductions are in order, and…
How to Section 1031 Exchange into a Delaware Statutory Trust 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 your heirs when…
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 authority by…
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 beleaguered borrower survive, it…
Paying Your Child: W-2 or 1099? 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 pay her about $12,000 this year. Do I pay her through payroll checks and file a W-2?” My Answer Yes. And W-2…
Self-Employment Taxes for Partners and LLC 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 taxes on the member’s or partner’s share of the entity’s income? Incredibly, the answer is not always clear. If you are a general partner in a…
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