The laws of tax planning that I developed over my writing career that will be expounded in the upcoming Reilly’s Laws of Tax Planning, published by Think Outside the Tax Box, lean a little on the conservative side, as tax planners use the term – conservative versus aggressive, not conservative versus liberal. This results, in large part, from their primary source being court decisions.
The 18th law stands out from the others in this regard. “Honest objective trumps realistic expectation” encourages practitioners to be somewhat more aggressive in claiming losses from activities that seem a little dubious . I still hold that view, even though there have been no encouraging developments in 2023. Here is a roundup on the action last year through December 2, 2023.
The Ultimate Business Upgrade: Turning Your Partnership into an S Corp Without the Tax Bite
Looking to cut down on self-employment taxes on your partnership income? Converting your partnership into an S corporation might be the answer. If you currently run your business as a partnership or an LLC taxed as a partnership, you’re probably familiar with the sting of self-employment taxes. Unlike shareholder-employees of an S corporation, who only pay Social Security and Medicare taxes on their salaries, partners typically get hit with self-employment taxes on their entire share of the business’s net income. That can add up fast. By transitioning to an S corporation, you can restructure how you take your income—splitting it between salary and profit distributions. The big advantage? Those profit distributions are not subject to self-employment tax, potentially saving you thousands each year. So, if reducing your tax burden sounds appealing, let’s break down how a tax-free Section 351 incorporation works and what you need to know before making the move.
