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Recent Feature Headlines
September 2010
Tax law grants tax-free income status to the proceeds from income replacement disability insurance policies. You pay a price for this tax-free income: You may not deduct the premiums. Special treatment applies to overhead disability and also S corporation payments on behalf of “more than 2 percent” shareholders.
When you are up against the two-out-of-five-year rule for enabling the $250,000 home-sale exclusion ($500,000 if you are married), your strategy might include creating an S corporation to which you would sell your home.
The cabin at the ski hill could be a hotel, a residential rental property, or a personal residence. It depends on your personal use of the property; the length of rental periods; and documentation of your time, others’ time, expenses, and activities.
Learn how you treat monies spent when your attempted purchase of a rental property fails. Tax law provides you with a path of special, mostly favorable tax rules.
The IRS is in the midst of its largest hiring initiative in years. Therefore, the increase in IRS audits seen during the last few years is expected to continue at an even greater rate.
Special documentation rules apply to entertainment and vehicles. One rule requires you to document your entertainment and vehicle use within one week of the activity. Another rule says you don’t need receipts if the expenditure is less than $75—but you still carry the burden of proof.
Should you buy or rent your home? What gives you the best quality of life and monetary value? Here is what you need to consider.
The IRS deemed that frequent flyer miles and hotel reward points are tax-free until further notice. However, cash rewards are another matter. First, cash rewards are not gross income. Second, they reduce basis. Third, they produce a deduction when you donate them to charity.
Follow these three easy steps to an IRS audit-proof exchange of your SUV for a car.
August 2010
Many one-owner and husband-and-wife-owned businesses opt for discriminatory health insurance plans for their businesses. The new health care law eliminates that discrimination for new plans but allows grandfathered plans to continue as before.
This article gives you tax-saving tips on raw land and vacant lots held for investment. Tax law favors raw land and vacant lot investments, allowing choices to expense or capitalize.
Your claim to Section 179 expensing comes with strings. You make a deal with the government to keep your business use above 50 percent during the depreciation periods for the assets that you expensed. Should you violate your agreement, the government shows up to recapture Section 179 expensing.
The sale or trade-in of a business vehicle has positive or negative tax ramifications. You have a choice in this matter. But first you need to know your gain or loss. This article gives you the six steps to finding your gain or loss.
The Section 1031 tax-deferred exchange is perfect for many of today’s business vehicles that have big gains embedded in them from prior use of Section 179 expensing and/or bonus depreciation.
To operate successfully as a corporation, you need to be good at paperwork. Also, you may not treat the advance account on the corporate books as your personal slush fund.
July 2010
The critical point for making payments to charities and churches deductible business expenses is your reasonable expectation of financial return.
Here are your only two tax-saving choices when you operate your business as a corporation but personally own the car you use for business.
This subscriber is going to buy a motor home and use it during the first year for travel to and from conventions. In the second year, he is going to convert that motor home to a transient rental property. His plan meets the qualifications for Section 179 expensing and avoids recapture.
The CPA in this court case operated as an S corporation with a low salary. The low salary got the IRS’s attention. To salvage bigger things, the CPA had to take the IRS to court
If you operate your business as a corporation but own the business car personally, your best result comes about when you have your corporation use an accountable plan to reimburse you for actual expenses, including depreciation and Section 179 expensing.
When the IRS invites you for a tax audit, the examiner does not know that you hired your children. This fact surfaces during the initial interview or survey process, and the IRS instructs its examiners to examine this hire closely. You avoid all the problems when you have the right records.
When your S corporation employs a relative, you need to be aware of the stock attribution rules that can wreak havoc on the health insurance fringe benefit.
When you fail to seek reimbursement for an expense, you often have no write-off. However, there are exceptions to this general rule, as examined in this tax audit tip
Tax law allows an individual to be a real estate dealer with respect to his dealer properties and a real estate investor with respect to his investor properties.
Your lodging property may qualify for one or more of four exceptions that allow Section 179 expensing. The four exceptions override the basic rule that you may not claim Section 179 expensing on property used primarily for lodging or in connection with the furnishing of lodging
If you are married, you need to consider your spouse’s W-2 and other income sources in your Section 179 expensing eligibility. The inclusion of your spouse often enhances the amount you can deduct using Section 179 expensing.
June 2010
The IRS tax form for deducting the home office contains the gross-square-footage method and makes no mention of other permissible methods. This article shows you how the net-square-footage method works and why it is always superior to the gross method found on the IRS form.
Tax savings when renting to relatives depend on your compliance with the tax law’s fair-rent standards and your relatives’ use of the property. Violate these rules and you face the triple whammy of additional taxation.
The trade-in of your old business car on a replacement car creates additional basis. The subsequent trade-in can also increase basis. This process can create a big tax deduction if you know what to do.
One question that is often answered incorrectly, thus reducing tax benefits is the question: What is considered business income for the Section 179 expensing limit? Actually, the real problem is the assumption (and you know what they say about assuming) that I know what business income is. That assumption often limits Section 179 expensing to far less than what is allowed.
Renting equipment to your corporation requires knowledge of the tax laws. Three special rules apply to the individual taxpayer who rents equipment to others.
Doing business in two different locations requires tax knowledge. The purchase of a town house in the second location brings up many tax planning opportunities and a few hazards to avoid.
What happens when you locate an office (home office or other office) in a duplex or apartment building? It’s possible that this location can produce tax-favored depreciation for the home office.
To deduct business clothing, you must pass the condition-of-employment and not suitable standards.
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