195 results for author: Daniel Morris


Tax Consequences of a Short Sale of Your Principal Residence

The real estate boom appears to be over for now. Morgan Stanley predicts that house prices could fall by 10 percent by the end of 2024, or perhaps twice as much in a worst-case scenario. Those who purchased their homes at the top of the market could be in trouble, especially if the U.S. falls into a recession. It is true, homeowners donʼt want to go through a foreclosure and the resulting destruction of their credit rating. Fortunately, there is an alternative for homeowners having trouble making their mortgage payments: a short sale. Short sales avoid foreclosure, but they can result in tax liabilities. What Is a Short Sale? A ...

Section 1031: Don’t Miss This Depreciation Election

As you likely remember, the Section 1031 exchange allows you to sell a piece of appreciated real estate and defer all the taxes as long as you invest the entire proceeds in like-kind property. And then consider this: a cost segregation study allows you to separate qualifying real estate into separate components with shorter depreciable lives that speed up deductions and in many cases create immediate write-offs. Can you (a) defer a large gain via Section 1031 and (b) immediately create a large write-off on the new asset with a cost segregation study? You can, but you have to make sure you donʼt miss this one important step. 1031 Exchange ...

Do You Owe Self-Employment Tax on Airbnb Rental Income?

In Chief Counsel Advice (CCA) 202151005, the IRS opined on this issue. But before we get to what the IRS said, understand that the CCA’s (Central Collection Agency) conclusions cannot be cited as precedent or authority by others, such as you or your tax professional. Even so, we always consider what the CCA says as semi-useful information and cover it here, along with some analysis that goes beyond what the IRS came up with. So, here goes. The Exact Question To be specific, the CCA asks whether net income from renting out living quarters is excluded from self-employment income under Section 1402(a)(1) of our beloved Internal Revenue ...

Best Practices: What You Can Do with Your Annual Credit Management

It’s the new Year, and now is a great time for you to review your credit. Here are six (6) ways we suggest so that you might be able to do better in the coming year: 1. Home Loan Mortgage: If your Home Loan Mortgage payment is on an automatic payment schedule, change the payment to include any increases in property taxes and insurance (if impounded). This is significant since most servicers don't post any "partial payments" which will result in a late payment being reported. 2. Free Credit Reports: Check your credit report for free, at least three times a year. Each credit bureau is required to provide a free annual credit report at: ...


$80 Billion to the IRS: What It Means for You

For the business owner and tax practitioner, the most important part of the Inflation Reduction Act of 2022 was not the tax credit for flashy new electric cars. It was something much more basic: a long-term budget commitment to help the struggling, failing IRS. ...the new funding will impact all taxpayers. The average taxpayer should benefit because the IRS will be able to upgrade its operations and improve its woeful levels of service The Inflation Reduction Act invests an additional $80 billion in the IRS over the next 10 years. This is the biggest budget increase the IRS has ever received. To put this in perspective, it is ...

Crowdfunding: Is It Taxable?

Crowdfunding is the process of asking members of the general public for small amounts of money through any one of hundreds of crowdfunding websites. Crowdfunding is used by both individuals and businesses, and the amount raised is substantial: over $17 billion is generated yearly through crowdfunding in North America.1 Is this money taxable? Though it may seem strange given the amount of crowdfunding going on, there has yet to be a court decision or IRS ruling on the subject. The IRS has issued only two brief information letters. The gist of the information letters is that “the IRS will examine all facts and circumstances . . . and use general ...

2022 Last-Minute Year-End Retirement Deductions

The end of the year is near, so this week I'll speak to your Year-End Retirement Deductions since your retirement is one year closer as your clock continues to tick. The good news is that you still have time before December 31 to take steps that will help you fund the retirement you desire. You might find several thousand dollars (and maybe much more) in your pocket by taking the actions in this article pertaining to your Year-End Retirement Deductions. But you’ll need to act now to get the cash. Big Picture Here are the four opportunities we explain in this article: Establish your 2022 retirement plan before December 31 so ...

2022 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you have children under the age of 18 and you file your business tax return as a proprietorship or partnership, you can find big savings in the work your children do for your business. And if you operate as a corporation, don’t neglect to hire your children; there are good savings for you there, too. In this article, you will find five year-end tax-deduction strategies that apply if you are getting married or divorced, have children who did or could work in your business, and/or have situations where you give money to relatives and friends. 1. Put Your Children on Your Payroll Did your children under age 18 help you in your ...

2022 Last-Minute Vehicle Purchases to Save on Taxes

Do you need a replacement business car, SUV, van, or pickup truck? Do you need tax deductions this year? Do you need a tax credit to offset what you owe to the IRS? If you answered yes to any of these questions, you need to examine this article and get ready to smile. Thanks to the Tax Cuts and Jobs Act (TCJA), you can write off the cost of a vehicle purchase in 2022—including, in many cases, up to 100 percent of the cost—faster than ever before. And if you plan on purchasing an electric car or a plug-in hybrid electric vehicle, you may qualify for a tax credit of up to $7,500. Get the Timing Right Donʼt procrastinate. If ...