In August, the IRS released its proposed regulations governing Section 199A of the tax code. That’s the section that created the 20-percent deduction that applies to S corporations and other pass-through entities. I’m glad to report that the new regulations contain some very good news… The reasonable compensation the S corporation pays its shareholder-employees are … [Read more...]
Tax Policy
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TCJA: Convert Personal Vehicle to Business and Deduct up to 100%
Now is the time to convert! Not your religion. Your vehicle. You see, thanks to the Tax Cuts and Jobs Act, when you convert your personal vehicle to a business vehicle, you could save a lot of money. In fact, upon conversion, you can instantly qualify for a 100-percent deduction on the fair market value of your personal vehicle. Want to find out more about how to use … [Read more...]
Tax Time Bomb: Passive Foreign Investment Companies
Thinking about owning a passive foreign investment company (PFIC)? Perhaps through a (non-U.S.-owned) mutual fund? Our advice, in just one word, is… “don’t!” Why? Because the IRS punishes owners of PFICs with high tax-rates and extremely burdensome reporting requirements. You might think that all this doesn’t apply to you, but you may be in for a big, nasty surprise. You … [Read more...]
What tax reform did to your tax-free “supper money”
It’s a sad fact… The Tax Cuts and Job Act took a big bite out of a bunch of valuable business-meal and entertainment deductions. One really nice one that that took a 50-percent hit was the “supper money” deduction. What is that? It’s the fringe benefit that lets you provide your employees (and yourself!) with tax-free meal money when you’re working late. That’s right. … [Read more...]
Tax reform attacks IRA “recharacterization”
Thinking about moving your retirement money to a Roth IRA? Be careful before you do! You see, when you convert a traditional IRA to a Roth IRA, and then reverse the transaction (by switching the account back to traditional IRA status), the reversal is characterized by the IRS as a “recharacterization.” If you have a sizable accumulation in your traditional IRA, the … [Read more...]