Tax shelters offered high income taxpayers an easy way to reduce and even eliminate federal income taxes at the individual level. The growing tax avoidance schemes, many questionable in nature, threatened to collapse the U.S. tax system. Hence the need for tax reform and the Economic Recovery Tax Act of 1981 (ERTA). New rules cannot keep a tax professional down. Real estate was once again the favorite tool for reducing taxes. Enter cost segregation. Couple that with bonus depreciation and the automatic change of accounting method using Form 3115 , and you have a recipe for serious tax reduction. The tax shelters of the 1970s were often questionable. Cost segregation is still a valid way to accelerate deductions for income property owners. But none of that compares to the tax benefits available under the Inflation Reduction Act of 2022 (the IRA).
September 1, 2022
Charitable Deduction Rules – No Excuses – Acknowledgements
There is a story I heard even before I started doing tax work when I was a hotel night auditor. It was about a guy named Joe who ran a luncheonette where he also sold newspapers and candy bars and the like. Joe’s Place was across the street from Our Lady of Perpetual Responsibility, a Catholic parish. Joe would see Father Mulcahey carrying a heavy bag every Monday morning. The good father was heading to the bank with the Sunday collection. One day Joe invited him in for a cup of coffee and proposed a win/win. Joe was always running out of change on Sundays. So how about if Father Mulcahey has the ushers count the coins and bring them over, Joe would write a check for the coins, and the father will just have Joe’s check to bring to the bank on Monday? Then, Joe would deduct the check written to the church as a charitable deduction. It was a great plan and it worked well for several years until the IRS audited Joe and a skeptical IRS agent called on Father Mulcahey about Joe apparently being Our Lady’s biggest donor. After all, he had the canceled checks. So if a canceled check to church on Sunday won’t work to document your charitable deduction, what will? Keep reading to find out!Read More
Who You Gonna Call? Not the IRS – A Guide to IRS Online Tools
You don’t have to be a tax geek to know the IRS has trouble picking up the phone. Old habits die hard. If you have a tax question, what do you do? You call the IRS. Good luck with that. You’ll be on hold for a long time if you can get through at all. The IRS initiated a call-back feature, but it’s not always available. The hold music is uninspiring; sometimes, after holding for hours, you get the dreaded “courtesy disconnect.” Yikes! Let’s face it. The IRS has a full plate; years of doing more with less have crippled the agency. Congress is quick to excoriate the IRS for poor service but keeps piling on more tasks (without necessary funding). Luckily, the IRS is working hard to provide more and better online applications and resources. There’s a lot out there, some well-known, some not so well-known, click here to take a tour and discover which shortcuts will help you most.Read More
Self Rental Tax Dilemma: Are Your Deductions at Risk?
It’s challenging at times to understand the passive activity loss guidelines. Many taxpayers are not fully aware of the rules or how they could affect investments and transactions. There are some details that, if not taken care of in advance, could have serious detrimental tax effects. The way to handle self-rentals in relation to the passive activity loss rules is one of these subtleties. Although many professionals know the self-rental regulations, there are some circumstances that can result in a loss of desired tax benefits. To continue learning about a general overview of the self-rental provision and the passive activity requirements and how to maximize your deductions from them, keep reading. You will also learn the effects of selling an operating company with a self-rental property still on the books.Read More
Just Good Business – Review Your Office Security
Office security. It’s for you and your small business clients. Sometimes small business clients who have relatively low-tech operations don’t think they need to think much about office security. That’s just not true. Almost every small business has some level of liability exposure for theft of client information or their own information (banking, credit cards, account passwords, etc.)—even businesses that don’t consider themselves “web based” or “high tech” may have client or company proprietary information they want to keep secure and private. Often business owners focus on cyber security (and with good reason). But a good, comprehensive security plan creates a safety triangle around important information and the property that holds it. The three sides of this triangle are cyber security, physical security, and (at the base of it all) operations security. Keep reading to secure your future!Read More