As you probably know by now, the Section 199A 20-percent tax deduction is a nice gift from Uncle Sam. Under the trade or business rule, your rental property profits can create the much-welcome deduction. And now, under an alternative rule, you can use the newly created IRS safe harbor to make your rentals qualify for the deduction. But be careful! You may not want to … [Read more...]
IRS Section 199A Final Regs Shed New Light on Service Businesses
Here’s more good news from Uncle Sam… The IRS issued final Section 199A regulations that contain some hew and very favorable provisions for out-of-favor specified service trades and businesses. A nice feature of the new regulations are the de minimis rules that allow you to break your out-of-favor business into two or more businesses for the purpose of successfully … [Read more...]
For 199A Tax Deductions, Must Landlords Give 1099s to Vendors?
It’s a fact… The Tax Cuts and Jobs Act gives you a possible 20-percent tax deduction on your rental property. But that’s only if your rental property is a trade or business, and that comes with its own burdens! For example, Section 199A final regulations stipulate that under tax code Section 6041, a trade or business must issue 1099s to certain vendors. So in … [Read more...]
Section 179 Deduction: When Your Vehicle Lease Is Not a Lease
Meet taxpayer Arthur E. Boyce. On a day not too long ago he bought a new truck from Dan Wiebold Ford Inc. Then he claimed a $28,749 Section 179 deduction for the cost of the vehicle. “Deduction denied!” ruled the IRS. It claimed that Boyce leased the truck from the dealer. Boyce took the case to court and lost. “Sorry” said the court, “but no $28,749 deduction for … [Read more...]
Avoid an audit: Fix the 1099 prepaid-rent mismatch
Did you prepay your 2019 rent so you could claim a big 2018 tax deduction? That could be a very smart more. Or it could open the door to huge problems for you and your landlord. You see, if you prepare your 1099-MISC based on your checkbook or payment ledgers, it’s very possible you’ll create an incorrect 1099 for your landlord. And an incorrect 1099 that overstates the … [Read more...]