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The partnership salary rule is already a head-scratcher. Once partners feel the full impact of the 2017 Tax Cut and Jobs Act in the spring of 2019, the rule will be confusing as well. The planning is quite complex, but the end payoff – a 20 percent deduction – is very had to pass up.

This provision is a new one, so there is very little guidance. It applies to most businesses except C Corporations which pays double taxes. Other business associations are pass-through entities which only pay a single level of income tax.

Step One: Organizational Qualifications

Section 199A’s intent is clear. The TCJA gives substantial breaks to many individuals, and the government does not want to exclude small … Read more →

Almost a year has passed since the tax changes were enacted under the 2017 Tax Cuts and Jobs Act. Those who were really on top of things took them into consideration in January. Most business owners took a little time, and if you procrastinated, the clock is ticking.

Have you been thinking about how they will affect your business—not just this year but moving forward? Does restructuring your business make sense?

There are two main pass-through entities most startups align with initially. Briefly, pass-through entities refer to entities such as LLCs and S corps. C corps are generally not considered for most.

The Tax Cuts and Jobs Act works well for pass-throughs because of the new 20 percent deduction (through … Read more →

For as long as the government has levied income taxes, there have been tax loopholes. One of the first, going back to the 1913 tax code, was the non-cash income exclusion. So, if the boss made your house payment, you didn’t pay income taxes on that portion of your salary.  

Alas, that loophole is long gone. But there are many others that many people frequently. So, the IRS generally does not even ask questions.

 

Yacht or Second Home

If you have the cash to make one of these major purchases, you are almost certainly looking for ways to reduce your income tax liability. These items are extremely straightforward. Two houses means two property tax and other payments. To … Read more →

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