Business Strategies

Finally – SALT Cap Workarounds to Bypass Schedule A Limits

Ever since TCJA passed, taxpayers in high income tax states have been wincing each time they see the $10,000 limitation appearing on Schedule A. But while the law included this $10,000 state tax deduction limit for individuals , it did not include a limit for partnerships, S, or C corporations.

To clarify the deduction’s limitation, the IRS issued a notice blessing an entity-level tax and accordingly, many states have implemented such a tax. This allows you the ability to bypass the $10,000 limit on Schedule A and deduct the state taxes paid as a business expense.

As of this writing, 19 states have passed what are known as “pass-through entity taxes,” but there are pros and cons to using this loophole. If you are the owner of a pass-through entity and pay more than $10,000 each year in state taxes, this workaround may increase the state tax deduction beyond the limit. Keep reading to learn how.

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Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

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CURRENT EDITION

The Wild West of Employee Retention Credits (ERC): Outlaws, Deputies, and Cowboys

Dominique Molina, CPA MST CTS

Gather ’round, pardners! The Employee Retention Credit (ERC) has been the latest gold rush in the tax frontier, drawing business owners, tax deputies, and even a few sly outlaws. But as the dust settles, the IRS—our law keeping sheriff—is on the hunt for any who might’ve bent the rules. In this frontier of finance, knowing who’s who can keep you out of trouble as the IRS rounds up dubious claims.

Selected Techniques to Monetize Tax Attributes

Ted Stotzer

In the prior article “Tax Trends in M&A and What It Means for Your Clients,” we had discussed certain techniques to, e.g., maximize net operating loss (“NOL”) and interest expense deduction utilization in the context of M&A transactions. This article examines certain additional strategies to monetize expiring, latent, or otherwise disallowed tax attributes.

Do Those Tricks Really Work?

Peter J Reilly CPA

On the website for Axium Wealth, Charles Dombek tells us that: “Most CPAs are historians that tell their clients how much they make, how much they owe, when and where to file their taxes, and oftentimes how to write large checks at the last minute when you least expect.” When it comes to Axium, though: “We help clients recover dollars they unnecessarily pay in State and Federal income taxes.” Axium also helps clients diversify capital into off-market passive real estate and alternative investments. Before Axium, there was The Optimal-Financial Group LLC. Of course many of the readers of Think Outside The Tax Box are CPAs, or EAs or others who both help their clients be compliant and advise on ways to minimize their liability. When I was practicing I would call the things I might suggest my “bag of tricks.”