226 results for author: Daniel Morris
Understanding Tax Deductions for Charitable Clothing Donations: The Case of Duncan Bass
Tax-related issues can be complex and challenging, especially when it comes to charitable donations. In this article I explore the tax-related problems faced by Duncan Bass, an individual with multiple jobs and businesses, who made substantial donations of clothing to Goodwill and the Salvation Army. By taking a look at Mr. Bass's predicament, our objective lies in delineating the core tenets and fundamental facets of tax deductions for charitable clothing donations, highlighting the importance of adhering to IRS rules and regulations.
Duncan Bass's Diverse Work and Philanthropic Endeavors
Duncan Bass exemplified a diligent work ethic, balancing ...
Wildfires and Storms: Tax Relief—A Joke
Last week, the IRS provided tax relief to taxpayers who lived in Hawaii, where wildfires caused disaster.
It also provided tax relief to taxpayers in Illinois and Mississippi who lived in areas affected by the severe storms that occurred during June and July of this year.
What Does IRS Tax Relief Mean?
Not much. With the relief, you get to file and pay your taxes later. For example, individuals and businesses that lived or operated in Maui and other affected Hawaii counties have until February 15, 2024, to file returns and pay any taxes that would have been due after August 8, 2023, and before February 15, 2024.
Similar rules apply ...
Key Insights into Depreciation from Beginning to Middle to End
Depreciation is a pivotal concept for anyone with assets in the business or rental sector.
Yet despite its significance, depreciation can leave many taxpayers puzzled over when it truly begins.
In essence, depreciation commences not when an asset sees actual utilization, but when it is set and ready for its intended use. This subtle distinction, as outlined by the IRS, is crucial for understanding tax deductions and maximizing asset value.
This article delves into the specifics of when depreciation starts and offers guidance on the nuances of this crucial tax concept, using real-world examples to shed light on the IRS’s perspective. ...
Hobby Loss Rule Raises Its Ugly Head
You could run into the ugly hobby loss rule if you have an activity that creates a tax loss.
Why “ugly”? Because you could lose all your deductions and pay taxes on the income.
Example: Your activity income is $200,000, and expenses are $350,000. If the hobby loss rules apply, you could pay taxes on $200,000 of income.
Think of it:
You lost $150,000 on the hobby—cash out of pocket ($350,000 - $200,000).
And now, because of the rules, you pay taxes on $200,000 of income.
Yep, that’s ugly.
Know This: The ugly hobby loss rule applies to all taxpayers. Mary Kay consultants have suffered. Amway distributors have suffered. ...
Are Corporate Advances to the Owner Loans, Dividends, or Salary?
If you operate your business as a C or an S corporation and if you loan money to the corporation or the corporation loans money to you, you need documentation that the loan is a loan.
With the S corporation, the loan that fails as a loan can result in taxable wages to you.
With the C corporation, the loan that fails as a loan can result in taxable dividends to the shareholder.
Good News, Bad News
Nariman Teymourian got a real shock when, at the end of his IRS audit, the IRS claimed that he owed over $600,000 in taxes and penalties, primarily because he had received advances from the corporation in which he had majority control.
Good ...
Find Cash: Repair Your Properties—Don’t Improve Them
Let’s visit your business or rental building.
Here’s a Fact: The repair deduction is worth far more after-tax cash than a depreciation deduction.
Depreciation Deductions—Strike 1
The depreciation deductions allowed on business or rental buildings are not in the same league with real deductions. Why not?
Recapture taxes!
To the extent of gain on sale, you pay a special capital gains recapture tax of up to 25 percent of the straight-line depreciation you claimed on a building. Technically, the law considers this recapture tax on your straight-line depreciation to be a tax on net long-term gain attributable to “unrecaptured ...
Discover the Hidden Potential of Business Meals: Maximizing Your Tax Benefits
If you go to a Dutch-treat lunch with a colleague or have a member lunch at your monthly chamber of commerce meeting, you face two opposing tax laws:
The law that denies your deductions for personal living expenses (food)
The law that allows business meals as tax deductions
Tax professionals know this conflict as the “Sutter rule,” named after Dr. Sutter, who had a bad experience with the Tax Court. When the IRS and/or the courts invoke the Sutter rule, you lose your business meal deductions to the extent they don’t exceed your personal meal costs.
Example: Your Dutch-treat meal deductions for business entertainment for the year are ...
Unlock the Power of Employee Healthcare with Qualified Small-Employer Health Reimbursement Arrangement (QSEHRA)
As a small employer (fewer than 50 employees), you are exempt from the requirements of the Affordable Care Act and need not offer your employees medical coverage.
But if you desire to give your employees medical coverage, consider the Qualified Small-Employer Health Reimbursement Arrangement (QSEHRA) as one of four good ways to help your employees with their medical expenses.
In this first article of four on small-business health plans, you will learn how the QSEHRA medical plan benefits both the employer and employees, as well as who qualifies and who doesn’t.
Key Point: The QSEHRA enables an employer to reimburse individually purcha...