Do you own business or investment property that has gone up in value? Would you like to acquire new property? If you sell the old property, you’ll have to pay tax on your profits. Don’t do that. Instead, do a tax-deferred Section 1031 transaction. With a properly constructed Section 1031 transaction, you sell your old property,buy the replacement property, andpay no taxes. To make this work, your first step is to engage a Section 1031 intermediary. Second, you need to buy a replacement...

The federal Rehabilitation Tax Credit, or rehab credit, offers significant financial incentives for owners and leaseholders of historic buildings to renovate those structures. What’s the big deal? Why are tax credits so exciting? Tax credits, unlike deductions, reduce your tax bill dollar-for-dollar. If you spend $100,000 and get a 20 percent tax credit, you reduce your tax bill by $20,000. That’s Uncle Sam putting $20,000 in your pocket. And there’s more. You likely reduce your taxes...

Since 1986, lawmakers have limited business meal deductions: first to 80 percent, and then to 50 percent (unless an exception applies). But on December 27, 2020, in an effort to help the restaurant industry due to the COVID-19 pandemic, lawmakers enacted a new, temporary 100 percent business meal deduction for calendar years 2021 and 2022. To qualify for the 100 percent deduction, you need a restaurant to provide you with the food or beverages. The law requires only that the restaurant...

When you know the rules, you can party with your employees and deduct 100 percent of the cost. The IRS says that the following types of entertainment qualify for the 100 percent employee entertainment tax deduction: Holiday parties, annual picnics, and summer outingsMaintaining a swimming pool, baseball diamond, bowling alley, or golf course The IRS makes it clear that the above are examples, and that other types of entertainment may also qualify for the 100 percent entertainment deduction....

When you know the rules related to business mileage, you protect yourself in the event of an IRS audit, andpay less tax. Take Henry, for example. Before he knew the mileage rules, he deducted 30 percent of his SUV’s cost. Once he learned the rules, he deducted 92 percent. Or look at poor Mark—he lost almost all his vehicle deductions in an IRS audit. Be like Henry. Here’s how. Know the business mileage rulesDocument your mileage Create an administrative office for your business...

Disasters such as storms, fires, floods, freezes, and hurricanes can damage or destroy vital business records. You need accounting and tax records not only to file your taxes (including claims for casualty losses), but to file insurance claims, bill clients, pay bills, obtain loans, deal with federal and state audits, determine business cash flow and solvency, and otherwise continue in business. Record reconstruction after a disaster may not be as hard as you think. It’s likely that much...

This is likely it—your last chance to obtain first- and second-draw Paycheck Protection Program (PPP) monies. A new law, the PPP Extension Act of 2021, extends the expiration date to the later of May 31 or when the money runs out. Note the phrase “when the money runs out,” and be forewarned that this can happen within weeks. So don’t procrastinate—not even for one day. If you qualify for the first-draw PPP money, complete your application now. The money is going to run out fast—and once...

Members of the tax community struggle with the “solo corporate owner” qualification for the employee retention credit (ERC). The IRS in one of its answers to frequently asked questions explains the rule as follows: 59. Are wages paid by an employer to employees who are related individuals considered qualified wages? No. Wages paid to related individuals, as defined by section 51(i)(1) of the Internal Revenue Code (the “Code”), are not taken into account for purposes of the Employee Retention...

First, say thanks to the Consolidated Appropriations Act, 2021 (CAA), enacted December 27, 2020. It opened the door (retroactively and going forward) for Paycheck Protection Program (PPP) participants to also claim the employee retention credit (ERC). Reminder. Tax credits are the best. They usually reduce taxes dollar-for-dollar. (The ERC is not quite as good as the usual tax credit because you increase taxable income by the amount of the credit. But it’s still good—very good.) The...

You likely already know that the employee retention credit (ERC) is a good deal—if you qualify. Now, thanks to the recently enacted American Rescue Plan Act of 2021 (ARPA), you can qualify for up to $100,000 of ERC in the third and fourth quarters of 2021 if you begin the business after February 15, 2020 (you could start today),have average annual gross receipts of $1 million or less, anddo not meet either of the ERC tests—the suspended operations test or the gross receipts test—in place...