I always enjoy hearing from subscribers to my Tax Reduction Letter.
I particularly appreciate it when readers challenge the advice I provide.
Why? Because I’m always prepared to back up my money-saving strategies with IRS tax-code citations, tax-court decisions, and more.
My readers deserve to get advice they can rely on and that’s exactly what I provide month in, month out.
For this reason, let me tell you about an email I recently received from an enrolled agent who questioned the advice I gave in last month’s issue of the Tax Reduction Letter. The article was titled Tax-Free Income from Rental of Home to C or S Corporation.
In the article I explained how rental of your home for fourteen days or less to your C or S corporation creates tax-free income for you and a deduction for the corporation.
The gentleman who contacted me said he didn’t think that this was a viable tax strategy for six reasons. And here they are…
- IRS Technical Assistance Memorandum 200121070 grants no rent deductions to the employee who rents to his or her employer. This negates your strategy.
- This is a related-party transaction and therefore disallowed.
- This cannot be used with a vacation home.
- This is super aggressive and cannot be put on a tax return.
- The $1,500 rent for a day cannot represent fair-market-value rent.
- The rules of attribution will negate this transaction.
In my new article I address each and every concern in great detail.
If you are wondering if the strategy I suggested is viable, or would like to see how carefully I back up the information I provide in every issue of Tax Reduction Letter, I warmly invite you to read my new article…