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Be More Aggressive in Claiming “Hobby Losses”
Imagine your clients, a couple, tell you they are going to start a business. They will breed horses, start a band, get into car racing, or write a book about beekeeping. Of course, there will be losses starting out, but they have plenty of income to shelter and in the long run, they figure they can make money. If you are as I used to be, you may discourage them from deducting the losses, particularly if there are other complications on their return. You figure the Schedule C or Schedule F will be a red flag, and they will likely lose on audit. I’d like to suggest that you rethink that attitude. It is fine if you want to talk your physician client out of going into horse breeding or raising cattle, but if they are going to do it anyway, you should not try to talk them out of claiming the losses. Rather, you should talk to them about what they need to do to beef up their chances of winning an audit of their cattle ranch. And the great thing is that you are the one who can help them more than anybody. Read on to find out how.
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CURRENT EDITION
2025 Tax Surprises You Shouldn’t Overlook
There are a few tax rules new for 2025 that may catch some individuals and their tax advisers by surprise. These changes have not received lots of attention either because they are overshadowed by related changes that are more significant, or they were enacted a few years back with a future effective date that arrives in 2025. This article covers changes for 2025 that you will want to be sure to share with clients to avoid surprises at a later date.
Leaving the United States, Part I: Expats
When Americans speak of leaving America, they generally are expressing a desire to live elsewhere in the world for cultural reasons or due to cost of living. These people are called expatriates, aka expats. For clarity, a mere visit to another country does not make you an expat. To be an expat, the move needs to be long-term and often includes working or retiring in the new country. Expats live somewhere outside the U.S., but still have a tax obligation to the U.S. and possibly the country they move to. That will be the focus of this article.
Tax Preparer Hit with Stiff Sentence
John Anthony Castro is a colorful character. He entered several Republican primaries seeking the Presidential slot after failing to win the primary for a Senate seat representing Texas. He sued to have our once and future President Donald Trump be removed from the ballot on Fourteenth Amendment Section 3 grounds. As we can easily infer, those suits went nowhere. But more than anything, John Anthony Castro was a tax guy with a virtual practice with locations in four cities. Not anymore. Now he is resident in a Bureau of Prisons facility – the Federal Medical Center Fort Worth. On October 30, 2024, Judge Terry Means sentenced Castro to 188 months in prison, followed by one year of supervised release and restitution of $277,243, following his conviction on 33 counts of “Aiding and Assisting in the Preparation and Presentation of a False and Fraudulent Return.” Does the sad story of John Anthony Castro hold any lessons for us? Perhaps.
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