Terminating Your S Corporation Election
Tax reform may have you thinking of changing your S corporation to a C corporation, partnership, or sole proprietorship.
With such a switch, you need to consider:
- How do I terminate the S corporation election correctly?
- What are the tax consequences to me?
If you want to turn your S corporation into a C corporation, you file an S corporation election revocation statement with the IRS. Your corporation is then a C corporation for federal tax purposes.
If you don’t want your business to be either an S or a C corporation, you liquidate the S corporation and contribute the assets to a new business entity.
If you choose S corporation taxation for your limited liability company (LLC), changing that election is a little more complicated.
First, you must file the S corporation election revocation statement with the IRS. The tax law then treats your LLC as a C corporation for federal tax purposes.
If that’s what you want, stop there.
If you want a disregarded entity (single-member LLC) or a partnership (multi-member LLC), you also need to file Form 8832, Entity Classification Election, to revoke the C corporation election.
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Tax Implications of Investing in Precious Metal Assets
These days, some IRA owners and investors may be worried about being overexposed to equities. That could be you.
But the safest fixed income investments (CDs, Treasuries, and money-market funds) are still paying microscopic interest rates.
For example, when this was written, the 10-year Treasury was yielding about 1.92 percent. Ugh!
Meanwhile, the pandemic might or might not be coming to an end, the economy might or might not be okay, and inflation might or might not be controlled. Who knows?
In this uncertain environment, investing some of your IRA money in gold or other precious metals such as silver and platinum may be worth considering. Ditto for holding some precious metal assets in taxable form. This article explains the federal income tax implications. Here goes.
2021 Last Min – Year End Retirement Deductions
2021 Last-Minute Year-End Retirement Deductions
The clock continues to tick. Your retirement is one year closer.
You have time before December 31 to take steps that will help you fund the retirement you desire.
Take a few minutes to review the four retirement plan tax-reduction strategies in this article.
You might find several thousand dollars (and maybe much more) in your pocket by taking the actions in this article. But you’ll need to act now to get the cash.
Last Minute Year End Deductions for Married or Divorced people – Tax Strategies – Kiddie Tax
Last Minute Year End Deductions for Married or Divorced people – Tax Strategies – Kiddie Tax –
If you are thinking of getting married or divorced, you need to consider December 31, 2020, in your tax planning.
Here’s another planning question: Do you give money to family or friends (other than your children, who are subject to the kiddie tax)? If so, you need to consider the zero-taxes planning strategy.
#taxplanning #CPA #businessaccountant
Last Minute 2020 Biz Deductions
The purpose of this post is to get the IRS to owe you money.
Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.
Here are seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.
Year End Medical Plan Strategies
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Business expenses are the cost of carrying on a trade or business.
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Use Your Business to Maximize Charitable Donations
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QBI Issue When Your S Corp Is a Partner in a Partnership
It’s common to consider making your S corporation (versus yourself) a partner in your partnership: it saves you self-employment taxes.
Does this affect your Section 199A deduction? It does.
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If you own more than 2 percent of an S corporation, you have to do three things to claim a deduction for your health insurance:
You Must…
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Want to know more? Have some tax questions of your own? Get in touch with us and we’ll guide you thru the tax and accounting process.
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Last Minute Year End Deductions for Married or Divorced people – Tax Strategies – Kiddie Tax
Last Minute Year End Deductions for Married or Divorced people – Tax Strategies – Kiddie Tax –
If you are thinking of getting married or divorced, you need to consider December 31, 2020, in your tax planning.
Here’s another planning question: Do you give money to family or friends (other than your children, who are subject to the kiddie tax)? If so, you need to consider the zero-taxes planning strategy.
#taxplanning #CPA #businessaccountant
Last Minute 2020 Biz Deductions
The purpose of this post is to get the IRS to owe you money.
Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.
Here are seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.
Year End Medical Plan Strategies
Here are the six opportunities for you to consider for your business’s Year End Medical Plan Strategies.
“Deduct 100 Percent of Your Business Meals under New Rules”
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Tax Code Offset Game
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Starting a New Business? Get Up to $100,000 in Tax-Free Money
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2020 Year-End Tax Strategies for Marriage, Kids, and Family
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Five things to know about employing your spouse.
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Avoid the Gift Tax—Use the Tuition and Medical Strategy
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Solo 401(k) Could Be Your Best Retirement Plan Option
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Kiddie Tax Changes
On December 19, 2019, Congress passed a bill that the president signed into law on December 20, 2019 (Pub. L. 116-94). The new law repeals the kiddie tax changes from the TCJA and takes you back to the old kiddie tax rules, even retroactively if you so desire.
Congress Reinstates Expired Tax Provisions
The big five tax breaks that most likely impact your
Form 1040
Tax Issues of Converting Your Residence into a Rental Property
Tax Issues of Converting Your Residence into a Rental Property The simple maneuver of converting your personal residence to a rental property brings with it many tax rules, mostly good when you know how they work. The first question that arises when you convert a...
How to Deduct Assisted Living and Nursing Home Bills
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Know Whether Your Trip Is a Deductible Business Expense
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New Individual Coverage HRA Allows You to Reimburse Employees for Health Insurance
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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…
QBI Issue When Your S Corp Is a Partner in a Partnership
It’s common to consider making your S corporation (versus yourself) a partner in your partnership: it saves you self-employment taxes.
Does this affect your Section 199A deduction? It does.
Avoid This S Corporation Health Insurance Deduction Mistake
If you own more than 2 percent of an S corporation, you have to do three things to claim a deduction for your health insurance:
You Must…
Know These Tax Rules If Your Average Rental Is Seven Days or Less
If you own a condominium, cottage, cabin, lake or beach home, ski lodge, or similar property that you rent for an “average” rental period of seven days or less for the year, you have a property with unique tax attributes.
Combine Home Sale with the 1031 Exchange
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Backdoor Roth IRA Opportunities Still Available After TCJA
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Improvement Property Update
Improvement Property Update Qualified improvement property is any improvement to the interior portion of a building that is nonresidential real property (think office buildings and shopping centers) if you place the improvement in service after the date you place the...
What Can I Do If My K-1 Omits 199A Information?
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...
How to Reimburse Medicare When You Have Fewer Than 20 Employees
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Good News: Most Rentals Likely Qualify as Section 199A Businesses
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IRS Updates Defined Wages for New Section 199A Tax Deductions
IRS Clarifies Net Capital Gains in Final 199A Regulations Your Section 199A tax deduction will benefit from your business’s W-2 wages paid to you and your employees if you are married and filing jointly and your taxable income is over $315,000 and less than...
IRS Section 199A Final Regs Shed New Light on Service Businesses
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IRS Creates a New “Safe Harbor” for Section 199A Rental Properties
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IRS Clarifies Net Capital Gains in Final 199A Regulations
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. In new final regulations, the IRS has provided clarity on the capital gains...
IRS Issues Final Section 199A Regulations and Defines QBI
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Tax Reform’s New Qualified Opportunity Funds
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Avoiding the Kiddie Tax after Tax Reform
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Answers to Common Section 199A Questions
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Avoid the 1099 Prepaid-Rent Mismatch
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TCJA Tax Reform Sticks It to Business Start-Ups That Lose Money
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Defining “Real Estate Investor” and “Real Estate Dealer”
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Tax Reform and the Cannabis Industry
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IRS Says TCJA Allows Client and Prospect Business Meal Deductions
IRS Says TCJA Allows Client and Prospect Business Meal Deductions In Notice 2018-76, the IRS states that client and prospect business meals continue as tax deductions under the Tax Cuts and Jobs Act. This is very good news indeed. Under this new IRS guidance, you may...
Changes to Net Operating Losses After Tax Reform
Changes to Net Operating Losses After Tax Reform Tax reform made many good changes in the tax law for the small-business owner. But the changes to the net operating loss (NOL) deduction rules are not in the good-changes category. They are designed to hurt you and put...
Drive Time Increases Odds of Deducting Rental Property Losses
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Take Money Out of Your IRA at Any Age Penalty-Free
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New IRS 199A Regulations Benefit Out-of-Favor Service Businesses
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Does Your Rental Qualify for a 199A Deduction?
Does Your Rental Qualify for a 199A Deduction? The IRS, in its new proposed Section 199A regulations, defines when a rental property qualifies for the 20 percent tax deduction under new tax code Section 199A. One part of the good news on this clarification is that it...
Help Employees Cover Medical Expenses with a QSEHRA
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How to Find Your Section 199A Deduction with Multiple Businesses
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Tax Time Bomb: Passive Foreign Investment Companies
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Retirement Plan and IRA Rollover Advice
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How Cost Segregation Can Turn Your Rental into a Cash Cow
How Cost Segregation Can Turn Your Rental into a Cash Cow Cost segregation breaks your real property into its components, some of which you can depreciate much faster than the typical 27.5 years for a residential rental or 39 years for nonresidential real estate....
Convert Your Personal Vehicle to Business and Deduct up to 100 Percent
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Tax Implications of Goodwill
Tax Implications of Goodwill Here’s a primer to help you avoid confusion about goodwill: As the seller, you have self-created goodwill when the total sales price of your business exceeds the fair market value of its assets, both tangible and intangible. You have...
Changes to Your Tax-Free Supper Money
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Tax Reform Changes Affecting Partnerships and LLCs and Their Owners
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Be Alert to the TCJA Tax Reform Attack on IRA Recharacterizations
Be Alert to the TCJA Tax Reform Attack on IRA Recharacterizations When you convert your existing traditional IRA into a Roth IRA and then reverse the transaction by switching the account back to traditional IRA status, the reversal is called a recharacterization in...
Will Renting Your Home Destroy Your $250,000 Exclusion?
Will Renting Your Home Destroy Your $250,000 Exclusion? The days when you could convert your rental property or vacation home to a principal residence and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes are gone. Here’s how the $250,000/$500,000...
How the 90-Day Mileage Log Rule Works for You
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Tax Reform Expands Your Section 179 Deduction Privilege
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Reduce Your Taxes by Making Your Spouse a Business Partner
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IRS Rules for Deducting Your Business Gym
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Tax Reform Destroyed State and Local Tax Deductions—Fight Back
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Tax Planning for Snowbirds
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Hiring Your Children to Work on Your Rental Properties
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Reduce Self-Employment Taxes by Renting from Your Spouse
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Your Personal Home Is Not Your Tax Home
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How to Deduct Your Legal Fees after Tax Reform
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Avoid Being an IRS Target When Your Business Loses Money
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Tax Reform: Planning for Your New 20 Percent Deduction
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Divorce? Alimony? Tax Reform Says Get Divorced Now—Don’t Wait!
Divorce? Alimony? Tax Reform Says Get Divorced Now—Don’t Wait Tax reform changes the alimony game. This may or may not have any relevance to you, but if it does, you will want to move quickly. The Tax Cuts and Jobs Act (TCJA) eliminates tax deductions for alimony...
Tax Reform Update on Business Meals with Clients and Prospects
Tax Reform Update on Business Meals with Clients and Prospects Here’s the updated strategy: Deduct your client and business meals as if tax reform never took place. Wow. Is this aggressive? Not if the IRS comes out with regulations that follow a model set by the...
Does Tax Reform Dislike Your Reputation or Skill?
Does Tax Reform Dislike Your Reputation or Skill? Here’s a troubling thought. Did lawmakers put you in the out-of-favor tax group that denies you the 20 percent Section 199A deduction because: your business makes too much money, and it does so thanks to the reputation...
Tax Reform Allows Bigger Vehicle Deductions
Tax Reform Allows Bigger Vehicle Deductions Finally, lawmakers did the right thing by increasing the luxury auto depreciation limits on business cars. The old luxury limits were unrealistic, punitive, unfair, and discriminatory against any car that cost more than...
Tax Reform Allows 100 Percent Deductions for Presentation Expenses
Tax Reform Allows 100 Percent Deductions for Presentation Expenses Tax reform did much damage to tax deductions for business entertainment and meal expenses. But meals served at business presentations survived the entertainment and prospect and client meal...
Tax Reform Destroys Entertainment Deductions for Businesses
Tax Reform Destroys Entertainment Deductions for Businesses First, lawmakers reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. Later, in 1993, they reduced that 80 percent to 50 percent. And now, with...
Tax Reform Cuts Deductions for Employee Meals to 50 Percent
Tax Reform Cuts Deductions for Employee Meals to 50 Percent Tax reform (Public Law 115-97) includes winners and losers. Employers who for their convenience provided business meals for their employees are losers—50% losers to start and then total losers later. Meal...
Preserve the Deduction with an S Corporation
Will your business operation create the 20 percent tax deduction for you? If not, and if that is due to too much income and a lack of (a) wages and/or (b) depreciable property, a switch to the S corporation as your choice of the business entity may produce the tax savings you are looking for.
Phaseout for New 20% Deduction
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How the 20% Deduction Works for a Specified Service Provider
How the 20% Deduction Works for a Specified Service Provider As previously discussed, the 20 percent tax deduction under new 2018 tax code Section 199A is a very nice tax break for business owners, except for owners with high income who also fall into the out-of-favor...
Tax Reform Creates Taxes on Employee Fringe Benefit for Bicycles
Tax Reform Creates Taxes on Employee Fringe Benefit for Bicycles Tax reform created taxes on the employee fringe benefit for bicycles. You could (and can) deduct your costs for reimbursing employees for their qualified bicycle transportation costs. But tax reform now...
Using Children’s IRAs to Pay for College
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