Feature Article

Being a shareholder owner of a C corporation comes with certain benefits, including the ability to take cash from your business. How to do so depends on your short- and long-term goals and consideration of the tax trade-offs. This article will discuss the options available to shareholder owners, other than borrowing, to realize cash from a corporation that is expected to continue.

The Employee Retention Credit (ERC) was probably the ugly step-child of the CARES Act. It received very little attention from tax practitioners, because participation in the Paycheck Protection Program (PPP) precluded ERC. The Taxpayer Certainty and Disaster Tax Relief Act changed all that. This good news to you as a business owner threatens to overwhelm smaller tax firms, some of which might leave a valuable service to be performed probably less than ideally by the sorts of firms that sell R&D studies and cost segregation. They are already advertising. To avoid missing out on this valuable service for your client or to capture this free cash for yourself as a small business owner, keep reading.

Management companies exist in a variety of fields for sound reasons. Real estate owners, for example, will hire a management company to collect the rent and deal with maintenance of their properties. Professional practices may use management companies to allow non-professional owners a stake in the practice. Sometimes, though, management companies are not for a real business purpose but rather as a device to shift income. It often does not end well as we will see.

On Wednesday, March 11, President Biden signed into law the American Rescue Plan Act (ARPA) of 2021, a $1.9 trillion COVID stimulus package. The ARPA contains a mix of retroactive and prospective tax breaks in the form of credits, exclusions from income, and even new tax-free grant programs. Let’s take a look at the most tax significant items in the bill.

The premium tax credit (PTC) is a refundable credit that is available to certain individuals “whose household income for the taxable year equals or exceeds 100%, but does not exceed 400% of an amount equal to the poverty line for a family of the size involved.” In other words, it’s a refundable tax credit that specifically subsidizes the cost of insurance purchased on a health care marketplace for individuals who are over the federal poverty level (FPL), but not by 400 percent or more. This credit is available as an advance paid directly to the marketplace for qualifying taxpayers who cannot afford (or do not wish) to pay their full monthly premium out of pocket. The amount of the credit is calculated based on estimated annual household income. When taxpayers receive more advance credit than they are entitled to, they must repay the excess. So, the consequences for an intentional or inadvertent underestimation of annual income can be severe. What follows is an overview of how the credit works and describes strategies for reducing the amount of advance premium tax credit (APTC) the taxpayer must repay both immediately and after the fact.

March 18, 2020, was a big day for tax bonuses. Congress passed the Families First Coronavirus Response Act (FFCRA). The bad news is this bill requires certain employers to provide two weeks of paid leave to employees impacted by COVID-19. The good news is that when you provide it to your employees, you get a juicy tax credit to reimburse you for these benefits. If you’re self-employed, you may have noticed you tend to miss out on certain tax benefits designed for companies with employees. But in the case of FFCRA, these credits are also available when you are your own boss. Continue reading to find out how to get this cash as soon as the end of the current quarter.

“Say dog.” My dad once told me that a friend paid for his lunch and said, “Say dog, then I can write this off.” She bred show dogs. File that under “nope.” That is not how the meals and entertainment (M&E) deduction works. Not even before the Tax Cuts and Jobs Act (TCJA) changed the rules. The deduction for M&E is a favorite of many of our clients and rightfully so. Nevertheless, it can be a fraught area if taxpayers and their advisors don’t have a comprehensive understanding of how the rules for deducting expenses apply across the many different scenarios in which our clients are likely to apply them. The IRS issued the final regulations for deducting M&E expenses under Internal Revenue Code (IRC) § 274 on October 9, 2020. It made some additional, short-term adjustments when the Consolidated Appropriations Act (CAA) became law on December 27, 2020. Here is an overview of the new regulations, how to use them to your clients’ benefit, and how to avoid the most common pitfalls.

You may be familiar with the concept of a 1031 exchange as a way to defer gain on the sale of rental or investment real estate. But what happens when you want to completely exit the real estate game? A 1031 Exchange may not be the best option for you. There are a few drawbacks associated with a 1031 exchange, including the limited time frame you must acquire the replacement property, and that you must continue to invest in real estate. If you’re looking to continue deferring current or previously exchanged gains, a Delaware Statutory Trust (DST) may provide a solution to these issues. But investing in a DST property or properties is like any investment. It comes with its own risks and rewards. Read on to find out more.