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New tax reduction strategies carefully explained and exhaustively researched every two weeks. Receive breaking news updates on tax law changes. Members only monthly AMA with TOTTB.tax.
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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.
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CURRENT EDITION
Lessons Learned from the Tax Court: What’s at Stake?
Astute readers of this publication may recognize that I frequently write on Cryptocurrency and also on Tax Court cases. It feels like Christmas to me to be able to write about a tax court case about crypto. This is only the Third Tax court case to even mention crypto, and the first to look at the underlying principles of taxation. (The other two were about including crypto assets in a CDP hearing and a frivolous tax protester argument). Today’s case, Paschall v. Commissioner, is about the taxation of staking income.
What’s New With Hobby Loss: Recent Developments in Section 183
Recent developments in the Section 183 (Hobby loss) area have not led me to change my basic conclusions. Taxpayers who have a sincere objective of ultimately making a profit should not hesitate to claim losses from the underlying activities. That is so even if you believe that profits are improbable. It is critical that they meet the standard of behaving in a businesslike manner. The other regulatory factors should not be ignored, but often there is not that much you can do about them. Reilly’s 18th Law of Tax Planning – Honest objective trumps realistic expectation.
The Art of Income Shifting: Powerful Planning Strategies That Stand Up to Scrutiny
Income shifting strategies address taxation at its most fundamental level by directing income to taxpayers in lower brackets or with offsetting deductions. Unlike many tax strategies that merely time recognition or enhance deductions, effective income shifting can permanently reduce the tax burden on a given dollar of income—often creating tax savings that compound year after year. In this article, we’ll explore systematic approaches to income shifting that create extraordinary value for clients while maintaining impeccable compliance.
SIMPLIFIED TAX STRATEGIES &
PRACTICAL IMPLEMENTATION
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.
