Guest Article

It seems so simple, right? You open an account and as you complete the paperwork, you enter something on the line labeled “Beneficiary,” and that’s that. But how many accounts are there? What about other assets? What about, well, life? Because life happens, it can have odd effects on the distribution of assets. This is a cautionary tale of unintended consequences and a reminder to review your beneficiary designations, if not annually, at least every time you experience a major life event. Consider a retired couple one of whom has a large 401(k) (or similar) account. Both have Social Security and true pensions, as well. Typically, the Social Security and pension benefits will end with the death of the individual. The 401(k), however, remains and the listed beneficiary is the spouse. The beneficiary spouse dies before the spouse with the 401(k). Upon the death of her spouse, the account holder creates a will using a popular online tool, which does not advise her to review beneficiary designations on her bank, brokerage, and retirement accounts. Keep reading to learn what to check, when, and how to avoid what goes wrong.

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.

The Employee Retention Credit is worth big bucks. Qualifying companies can get significant relief money – sometimes millions of dollars. So, it was no surprise to me when I heard some outlandish eligibility statements such as “the national emergency declaration counts” or even some “every business gets it” claims. There is a lot of desire to qualify out there and plenty of credit consultants looking to make money. But recently I have heard a different argument from multiple sources which has intrigued me. The argument is dressed up much better and almost looks legitimate. Here is a summary of how the line of thinking goes: OSHA rules mandate compliance with CDC guidelines creating partial suspension eligibility for ERC. I call it the “OSHA argument.” That thinking has not set well with some – particularly as the argument results in qualification for every business for all of 2020 and 2021. Red states have had little or no restrictions in 2021 and even deep blue states generally lifted their restrictions in the spring of 2021. But conveniently, the OSHA argument would mean state and local orders do not need to be reviewed at all as a national order is in place. For a consultant charging a percentage of the ERC, they can sell this service now to everyone and avoid the headache of eligibility discussions. Let’s take a closer look at this argument and reasons why it does not work.

You’re tax professionals. You don’t need me to tell you that the money you are going to win in the virtual office pool on “the big game” is taxable income. You also don’t need me to tell you can’t net your winnings with the cost of the wager. You don’t, right? Most of the rules for reporting gambling income and deducting gambling losses for individuals are well understood with the possible exception of the session rules for slot machine play. I’m not going there—well, not in this article. This article is going to explore the nuances of tax optimization for people who have decided to go all in and turn their leisure time activities into a job.

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.

2021 had been shaping up to be a pretty slow year in the hobby loss arena until September. Then not long after Labor Day we got a revision of the audit technique guide Activities Not Engaged in for Profit Audit Technique Guide Internal Revenue Code Section. The previous update was issued in June 2009. The two documents are nor radically different, but there are some things worth noting. I will start off with some background on Section 183, but first I will introduce you to a likely target of the revenue agents boning up on the new guide.

Practically overnight, cryptocurrency has gone mainstream, with more and more investors funneling money into Bitcoin, Dogecoin, and other cryptocurrencies. The IRS has responded with increased interest and scrutiny, demonstrated by the addition of the cryptocurrency question on the front page of 1040. Whether you have invested in cryptocurrency or not, you are required to answer this tax return question. Many investors choose to take the most conservative position to avoid future correspondence from the IRS but trying to avoid a letter is no reason to pay more tax than necessary. Keep reading to learn more!

Companies that specialize in the Credit for Increasing Research Activities (also known as the R&D tax credit) sell hard to our clients. During tax season they are online looking for businesses who may qualify for this credit—especially startups. They cast an extremely wide net that has the potential for a lot of bycatch. While it’s true that the R&D credit is often overlooked by small businesses and their return preparers, it’s not as easy to qualify for the credit as some of these companies want small business owners to believe. Savvy tax professionals can help to ensure that their qualifying business clients receive the benefit of this credit while avoiding situations that would make them ineligible for it.