Individual Strategies

Question: How can my rental real estate property qualify for the 199A QBI deduction? Answer: The age-old CPA answer of “it depends” certainly applies here. To qualify for the 20 percent deduction, your enterprise has to, as a threshold, be a trade or a business. So whether a real estate rental is a trade or a business is a thing that matters like… Can analysis be worthwhile? Real estate management companies that want to distinguish themselves should be looking at IRS Notice 2019-07. That is the main lesson of today’s post, but it also applies to tax preparers and self-sufficient owners. There is something new to keep track of, and it is a lot easier if you do it as you go rather than after the fact. I’ve got something here for preparers and property managers, when acting sooner rather than later will be helpful. It’s theory is it is easier to collect information actively when it is fresh, rather than a year or more later as often happens in tax work. Click here to continue reading.

Tax Court Docket 26425-21 can serve as a wake-up call to your clients who have been dabbling in cryptocurrency. TaxNotes has published the petition if you want to know the name and profession of the taxpayer involved, but I am just going to call him Joe. Joe is doing pretty well in his profession. Just for the heck of it he decided to dabble in crypto. He never had more than ten to fifteen thousand dollars invested in crypto. What could possibly go wrong?

Pedants will argue that you shouldn't refer to Code Section 183 - Activities not Engaged in For Profit as the "hobby loss rule", because the word hobby appears nowhere in the statute. The pedants scored a point in 2021, but I will still be sticking with the term. It looked like a slow year for hobby loss developments, but we finished with two major cases including a big taxpayer win. Let’s take a look.

It is the best of times, it is the worst of times – and charity cannot only help those in need; it can provide some hefty tax deductions to the donor, as well.

It seems like the left and the right have entered into a competition as to which side can make the silliest tax observation. The New York Times came out strong for the left as its team of reporters was handed fragments of Trump’s 1995 tax filings. They proceeded to “explain” flow-through entities and net operating losses, fairly mundane tax concepts, as if they were tools of Satan. It did not take long for the right to strike back at least as imprudently.

At least once a week in the cryptocurrency community, there is a new post or article encouraging crypto investors to relocate to Puerto Rico to avoid tax. Relocating to the Caribbean is certainly an attractive proposition, but is it too good to be true? In the words of every good tax professional everywhere, “It depends.” Becoming a resident of Puerto Rico does have some potential tax benefits that come with it, but it is no slam dunk decision. Let’s take a trip together to the Island of Enchantment, grab a cocktail on the beach, and lower our tax bill!

Cecile Barker has bad news from the Eleventh Circuit. They have upheld the Tax Court’s disallowance of his multi-million dollar net operating loss deduction (NOL) largely generated by SoBe Entertainment LLC. SoBe Entertainment is a record label that has represented numerous artists included Brooke Hogan, daughter of Hulk Hogan. The indirect Hulk Hogan connection makes Mr. Barker a tangential figure in a fascinating story you can read about in Conspiracy – Peter Thiel, Hulk Hogan, Gawker and the Anatomy of Intrigue by Ryan Holiday. For purposes of this article, we will stick to the tax story which began with a Tax Court opinion in 2018, which I covered previously.

COVID-19 has affected every aspect of our lives, and tax filing status is no exception. Couples who have filed jointly for their entire marriage may find that for 2021 it is more beneficial to file separately. This is in large part thanks to the many stimulus bills the Congress passed in 2020 and 2021. The addition of Economic Impact Payments (EIP) and the associated Recovery Rebate Credits (RRC) have complicated what was once a simple tax calculation to now include these additional factors. In some scenarios, a couple would pay more tax filing separately than if they filed jointly, but because of pandemic-related credits, end up with more money in their pockets. Filing separately is not without its own potential headaches, though. Keep reading to find out when to switch your filing status.