Question I have a client who works in corporate America. He is also in the business of real estate and plans to use this platform to support his transition out of corporate life. In 2019, he created a single-member LLC (business license, tax ID number, articles of organization, etc.). He took some expensive real estate courses in 2019 and 2020. My question is, will it raise a red flag writing off the classes in 2019 on a Schedule C? He is not a licensed real estate professional at this...

Here’s good news: the properly used business vacation home or condo does not suffer from the vacation-home rules,the passive-loss rules, orthe entertainment-facility rules. In these days of COVID-19, you may have solid reasons to use your vacation home or condo for two purposes only: personal pleasure, andbusiness lodging. How Business Use Escapes the Dreaded Vacation-Home Rules Do you use your business vacation home or condo solely for business lodging?  If so, you escape...

One of the advantages of operating a business as a partnership is the right to make special allocations of tax items among the partners. You have the same opportunity if you run your business as an LLC that’s treated as a partnership for federal tax purposes.  What Is a Special Tax Allocation?  A special tax allocation is an allocation of an item of partnership loss, deduction, income, or gain among the partners that are disproportionate to the partners’ overall ownership interests.  The...

Question I have an S corporation with eight employees. I applied for and got an Economic Injury Disaster Loan (EIDL) advance of $8,000 from the Small Business Administration (SBA). I didn’t get a Paycheck Protection Program (PPP) loan. Is this taxable? Does this impact my tax deductions? Answer We don’t have any official guidance on these issues related to the EIDL advance payment. But we’ll give you our opinion based on what we see in the law. EIDL Advance The CARES Act...

Every day, clients are calling the office and asking many of the same basic questions.   Some are about taxes, of course, especially with so much SBA money being thrown around and radical changes affecting how companies use those funds in the face of future taxes.  A lot more, though, are about what we think is going to happen.   Well, if we’ve learned anything in the last three months, it how statistics can be made to say anything, but personally?   I...

If the federal tax you pay is dependent on where you are physically located, then COVID-19 likely has thrown a wrench in your physical tax location (and tax situation). If you were living abroad and had to return to the U.S. because of COVID-19, you may wonder if you’ll have a big tax bill for failing to meet the foreign earned income exclusion requirements. If you are a non-resident alien who got stuck in the U.S. because of COVID-19, you may be worried that the IRS will consider you a...

When you are self-employed with no employees, the payroll protection program (PPP) program is a COVID-19 gift designed to help you get through this pandemic. If you now have your PPP funds, we identified nine insights for you. 1. Do I Have to Spend the Paycheck Protection Program (PPP) Loan Proceeds? Yes, it appears so. The instructions for line 9 of Schedule A for the U.S. Small Business Administration’s (SBA) Form 3508 PPP forgiveness application state: Line 9: Enter any amounts...

One thing that stands out to me in all the news of the pandemic is how “regular” folks identified challenges or needs and then, creatively turned their solutions into profits.   Stories like this are everywhere if you look for them – the little girl who learned to sew to make masks, the furloughed teacher who monetized a YouTube channel, and literally thousands of others that have made the news because it shows how determination and a little hard work can create a LOT of extra income.   Personally,...

For the last two months, I’ve been watching and studying the CARES Act and the Payroll Protection Program loan systems very carefully.  Overall?   I think the federal government did a really good job. They moved quickly, they acted far more decisively than most of us could believe possible, and the overall effect was to get money into the hands of small businesses. Were there problems?  Sure. Will there be fraud?  Sure. Should “big” companies like Ruth’s Chris...

Due to the COVID-19 pandemic, Congress made changes to the tax law related to retirement account distributions. The changes open up new, time-limited ways for you to save tax dollars. Congress waived all 2020 RMDs. But if you took your RMD before Congress made this change, you have two ways you can undo it: Use the expanded 60-day indirect rollover, if you qualify.Treat the RMD as a coronavirus-related distribution, and recontribute the funds, if you qualify. Because of the financial...