If you’re running a second business and making a genuine effort to be profitable, the IRS is pulling for you. (They want you to pay taxes.) But if your second business was really created for the purpose of deducting personal expenses, you could be walking into a dangerous trap… the hobby-activity trap. You see, the IRS will define your pseudo-business as a hobby and attack … [Read more...]
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S corporations! Save money using income shifting
What’s the perfect gift for family and friends? Stock in your S corporation! That’s right. If you handle things correctly you can save over $6,000 in taxes (versus giving the same dollar-amount in cash.) Until recently, this income-splitting strategy only worked when you gave stock to adults. But because of provisions of the new Obamacare tax law, you now get a benefit … [Read more...]
How to deduct a business trip (when it’s also personal!)
Here’s a question for you… If you drove a long distance to your parents’ home, but spent time doing business research in the library around the corner from their house, would the IRS consider the miles you drove to be “business miles” or “personal miles”? The answer can mean the difference between claiming a fat business deduction or having to pay all your expenses out of … [Read more...]
The right way to handle a Section 1031 rental exchange
Do you own rental properties? Do you want to grow your rental-property business? Then you need to know the ins and outs of the Section 1031 exchange. Mr. Adams did. That’s why he was able to overcome an IRS objection that his Section 1031 exchange failed because his replacement rental-property fit his son’s family’s needs. We’ll explain the Adams case and show you how to … [Read more...]
How to protect insurance death-benefits from estate taxes
Careful life insurance planning has always been important. But come December 31, 2012, smart planning will be more important than ever! That’s because the current $5.12 million exemption from estate taxes expires on that date, and lawmakers have pegged the 2013 exemption at just $1 million and increased the tax rate from 35 to 55 percent! But don’t despair. With tax-smart … [Read more...]