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On the Road Again – Tax Savings for the Recreational Vehicle

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There is no better time than a multi-year worldwide pandemic to reevaluate the 9 to 5 office grind. Many people are realizing it was never actually necessary to work from a fixed location as long as they have a laptop and an internet connection. So why not take the show on the road? Hop in an RV and head out to see the country and work from wherever you like that day. It’s a great plan, but what does it mean for your taxes? Is your RV a business vehicle or is it a lodging that happens to be on wheels? Buckle up and let’s find out which is best to save you the most money.

On the Road Again – Tax Savings for the Recreational Vehicle Read More »

5 Ways to Avoid Biden’s Capital Gain Increase

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The headlines have said it all. “Biden Wants up to 43 percent of Your Retirement Gains!” or “Americans Can’t Afford Biden Inflation Tax!” Also recently seen, “Biden Doubles Capital Gains Rate,” and “Biden Tax Rule Would Rip Billions From Big Fortunes at Death!” The hysteria presented in the media as we anxiously await proposed changes in tax law through the pending budget proposal has many investors debating whether or not to lock in low capital gains before anticipated tax hikes.

Wealthy investors like Jeff Bezos and Warren Buffet have reportedly been selling large numbers of stock market shares rumored as a response to news of an impending capital gains tax increase, many people are left wondering what moves, if any, should they take now to avoid higher taxes. Given that we know to anticipate higher taxes, here’s what you should do now to lock in taxes while they are on sale.

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Monetized Installment Sale – IRS Finally Says It Does Not Work

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The promoters of Monetized Installment Sales got some bad news from the IRS earlier this month. The IRS released an analysis the Office of Chief Counsel did outlining six, count them six, ways in which the transaction does not work as the promoters claim. The release will not stop the industry in its tracks, but it will probably be a relief to practitioners who have been advising that the technique is flawed.

Monetized Installment Sale – IRS Finally Says It Does Not Work Read More »

Cryptocurrency Staking and the U.S. Tax Code

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Cryptocurrency is currently one of the hottest topics in taxation. The use cases of crypto are continually evolving, and official IRS guidance is perpetually several years behind the types of transactions investors engage in. We are left trying to force a crypto transaction to fit into the existing code that was not written with crypto in mind. Additionally, with the lack of official guidance, we are forced to attempt to anticipate how the IRS will interpret novel transactions or worry about potential penalties and interest down the road. Staking is a transaction that has become extremely common among crypto users, yet the IRS is silent on how to report and tax it.

Read on to learn more about cryptocurrency “mining”, staking, and how the current IRS interpretations of the tax code (or lack thereof) may affect your income reporting.

Cryptocurrency Staking and the U.S. Tax Code Read More »

All About the Augusta Rule – One of the Tax Code’s Best and Easiest Income “Loopholes”

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Do you have homes in destination spots? Places where people flock during specific times of the year? Mardi Gras? Spring break? Sports championships or events? Maybe you own a home in places commonly used as film locations? For example, Albuquerque, New Mexico, is often the site for movie and television productions, and it hosts the Albuquerque International Balloon Fiesta every year (excluding global pandemics, obviously). The 10-day long event hosts well over 100,000 visitors to the city each year. But this article isn’t about Albuquerque tourism, it’s about the easiest tax-free money you will ever make.

All About the Augusta Rule – One of the Tax Code’s Best and Easiest Income “Loopholes” Read More »

How to Claim the Emergency Relief Credit Fast

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Question: How are you pricing Employee Retention Credit claims?

Answer: The Employee Retention Credit (ERC) has seemed more confusing than some of the other tax credits simply because it was mostly ignored by the tax community early in the pandemic. While small businesses happily pocketed PPP funds rather than claim the credit, the choice between the two benefits was clear.

As we now know, business owners can have both PPP loan forgiveness as well as access to the ERC tax credits. But many smaller firms and payroll processors felt overwhelmed by the demand, and with refunds taking months to process, some businesses are often looking for help on their own.

So many new players have entered the game selling access to these credits, up to $33,000 in cash per employee. Firms selling R&D studies and cost segregation are advertising – hard. Most are charging a percentage of the total credit amount.

You don’t want to miss out on this valuable service for your client to capture this free cash, yet many advisors are passing on this work due to the time, research, and education requirements for something that has such a short shelf life. Is it worth losing income to meet everyone’s needs?

Continue reading to check out the results of a short survey asking tax pros how they are charging for this type of work.

How to Claim the Emergency Relief Credit Fast Read More »

How Are You Determining Reasonable Compensation – Legal Fact or Convenient Fiction?

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Accountants are facts and figures folk. Accountants rely on data and analysis, not myths and tales.

Well, not always. In 2020, we asked 4,671 tax advisors whether the IRS recognized rules of thumb such as a 50/50 split between distributions and reasonable compensation. Thirty-three percent said yes.

The IRS “rule of thumb” is a myth. But it’s a fact that we found 1,555 professional accountants who relied on this myth.

It’s not that they didn’t have the facts. All of those surveyed had just attended a continuing education class on reasonable compensation that walked them through, step by step, recent court cases, the IRS’s definition, rules, guidelines, and criteria for determining reasonable compensation. Nowhere in the class were they taught that the IRS accepts “rule of thumb” or “safe harbor” calculations based on percentage of distributions, sales, or revenue.

So, what gives? Why do so many accountants believe these rules of thumb are actually “rules”? And more importantly, does the IRS follow the same?

How Are You Determining Reasonable Compensation – Legal Fact or Convenient Fiction? Read More »

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