Tax Rules For Free Meals and/or Lodging to Employees

If you’re wondering about tax-free treatment for employer-provided meals and lodging, you may find the following overview helpful. Under Section 119 of the Internal Revenue Code, businesses can offer employees tax-free meals and/or lodging, provided they meet certain conditions. Tax-free means that such benefits are not subject to federal income tax for the employee, nor […]

The Tax Implications of Shutting Down a Sole Proprietorship

As you consider shutting down your sole proprietorship or your single-member LLC treated as a sole proprietorship for tax purposes, it’s crucial to understand the tax implications of this decision. Here’s an overview of key points you need to consider. 1. Asset Sale Tax Implications When you sell a sole proprietorship, you sell its assets, […]

Cost Segregation: What Is It & When Should You Use It?

One significant tax benefit of owning residential rental property or non-residential commercial or investment property is depreciation—a deduction you get without spending any additional money. But regular depreciation for real property is slow. Residential rental property is depreciated over 27.5 years and non-residential property over 39 years, providing a relatively small deduction each year. Fortunately, […]

Tax Implications of Partnership Dissolution

As you consider winding down your partnership, here’s a concise overview of what you might expect under three typical scenarios of partnership dissolution. Scenario 1: One Partner Buys Out the Others If one partner buys out the others and continues the business, the exiting partners will likely recognize a capital gain or loss on the […]

Rental Property Tip: Add a New Roof, Deduct the Old One

The IRS in its repair regulations gives you a partial disposition election that benefits you when you replace a structural component such as a roof on your office building or rental property. Previously, when you replaced a structural component such as a roof, the old roof’s remaining depreciation continued on your books, an ugly result. […]

Is Your Sideline Activity Considered a Business or a Hobby?

Do you have a sideline activity that you think of as a business? From this sideline activity, are you claiming tax losses on your Form 1040? Will the IRS consider your sideline a business and allow your loss deductions? If you have such an activity, we should have your attention. The IRS likes to claim […]

Buy-Sell Agreements: Does Your Co-Owned Business Need One?

As a co-owner of a business—whether it’s an existing venture, a new enterprise you’re founding, or a company you’re considering buying into—you must consider the structural and legal frameworks that are crucial to ensuring the stability and continuity of your investment. One such framework is a buy-sell agreement, an essential tool for managing ownership transitions […]

Self-Employment Taxes for Partnerships and LLCs?

Here’s a question: Does a member of a limited liability company (LLC) or a partner in a partnership have to pay self-employment taxes (Social Security and Medicare tax) on the member’s or partner’s share of the entity’s income? Incredibly, the answer is not always clear. If you are a general partner in a general partnership, […]

Converting Your Partnership into an S Corporation Tax-Free

Let’s say you’re considering converting your partnership into an S corporation. The reason might be to reduce exposure for you and the other owners to Social Security and Medicare taxes, which come in the form of the self-employment tax for partners. Specifically, each partner’s share of net partnership income is usually fully exposed to the […]

Deducting Start-Up Costs For Your Rental Property

Are you interested in becoming a commercial or residential landlord? If so, you’ll likely have to shell out plenty of money before ever collecting a dime in rent. The tax code treats some of those monies as start-up expenses. Start-up expenses are some of the costs you incur before you offer a property for rent. […]

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