Insights
When a Distribution Becomes a Paycheck: The Reasonable Compensation Trap for S Corporations
The S corporation tax structure is a favorite among small business owners. Pass-through treatment? Check. No self-employment tax on S corp profits? Check. However, the final consideration that many S corporation shareholders overlook is wages. Let’s talk about reasonable compensation. If your...
Kitchen Remodels: Deduction vs. Capitalization – What You Need to Know
When it comes to upgrading a rental property, few projects raise more questions than kitchen remodels. At a glance, they seem like improvements—new cabinets, updated appliances, maybe a new layout. But under IRS rules, not all kitchen upgrades must be capitalized. In fact, some expenses can be...
IRS Guidance On Theft Losses From Common Scams (2018–2025)
In recent years, there has been a rise in the number of losses resulting from scams. In our Update seminars, we have discussed the treatment of these losses, particularly as they relate to cryptocurrency. We believed that many of these scam losses qualified as investment losses on the federal tax...
Oil and Gas K-1’s: Self-Employment Tax Tricks
Understanding Self-Employment Tax in Oil and Gas Partnerships Investing in oil and gas partnerships can provide significant tax advantages, but it also brings unique tax obligations—particularly regarding self-employment tax. Many investors enter these ventures without fully understanding how...
Daily Netting of Gambling Wins/Losses
In lieu of filing a separate information return for each payment of reportable gambling winnings, a payor may use the aggregate reporting method to report gambling winnings from bingo, keno, or slot machine play on a daily basis. An information reporting period is either: A "calendar day"...
CA Basis in Paid Family Leave Benefits
Nondeductible contributions create basis If a governmental unemployment compensation program is funded in part by an employee's contribution that is not deductible by the employee, then any amount received by the employee under the program is not taxable until the employee has received an amount...
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Help Me Report K-1 Income from an LLC to a Disregarded SMLLC
Ask Us Anything Dear Brass Tax Presentations, TP is 50% owner in a 2 member LLC (LLC#1). TP forms a CA SMLLC (LLC #2) and receives a tax ID for it. When LLC#1 begins reporting on a K-1 to LLC#2, how do I report on the 1040? Because LLC#2 is a disregarded entity, should I just report the K-1 as I...
Help Me With Navigating S-Elections for C-Corps and LLCs
Ask Us Anything Dear Brass Tax Presentations, After numerous back and forths with the owner of the C-Corp and upon her consulting with a friend of hers who has bought and sold a few businesses over the years, I think the deal is dead. I told her she could reduce the sale price (if it were...
Help Me With Claiming Tax Credits for a Dual-Use Property
Ask Us Anything Dear Brass Tax Presentations, A prospective client and a property that is 50% his primary residence and 50% rental property. Can we claim half of the credit as a business credit and half as an energy-efficient credit? Thanks for your help.From Brass Tax Presentations If 20% or less...
Help Me With Mid-Term Rental Situations
Ask Us Anything Dear Brass Tax Presentations, I recently purchased the Short-Term Rentals Comprehensive Strategy and have gone through it. However, I was hoping it would address Mid-Term rental situations. Mid-term rentals (longer than 30 days due to HOA rules to prevent short-term rentals) but...
Help Me With Basis For Gifted S-Corp Stock
Ask Us Anything Dear Brass Tax Presentations, Please help me with form 1120s on form 7203. My sister elected her LLC to be taxed in the 1120s. She has 200 common stocks in her S Corp, and she had zero stock basis on 1/1/2023, as noted in her form 7203. Suppose my sister transferred (as a gift to...
Help Me With a Rental Held In a Self-Directed IRA
Ask Us Anything Dear Brass Tax Presentations, How is selling a rental held in an IRA treated? Would the proceeds be treated as ordinary income when distributed? Thanks for your help.From Brass Tax Presentations Self-directed IRAs can be complex, with numerous potential issues and a need for clear...
Help Me With Wages Paid To Partners
Ask Us Anything Dear Brass Tax Presentations, I've taken your courses for a few years - since I started preparing returns officially. I have a question about partnership (1065) and payroll. We set up payroll for the partners however, the 1065 doesn't have a wage spot for partners. How do I report...
Help Me With a Question About Child Care Income
Ask Us Anything Dear Brass Tax Presentations, I need your expertise on this because I only have one other client in this similar situation. Grandmother goes to her daughter's home to care for her grandchildren 2-3 times a week. She gets paid by Child Development Asso Inc. It's only $7900. She...
Help Me With a Question About a Leased Tesla
Ask Us Anything Dear Brass Tax Presentations, An individual leased a Tesla Model 3. Can he get any of the $7500 credit on his tax return? I say no. Sorry, just so much conflicting information out there. Thank you so much. From Brass Tax Presentations The taxpayer must purchase the vehicle...
Help Me With COVID Credits For The Self-Employed
Ask Us Anything Dear Brass Tax Presentations, Are there still COVID credits from the IRS for self-employed individuals? I have been self-employed for the last 20 years; I don't have any employees. I keep hearing about COVID credits for the self-employed and wanted to hear from you about this....
Help Me With The EIC Credit 2023
Ask Us Anything Dear Brass Tax Presentations, I have a client who is married and has a 15-month son. She lived in the USA all year with a child in 2023 and paid all expenses. Her husband immigrated to the USA in August 2023 and lived with her. Is any of these questions applied to them for EIC...
Help Me With Employer HSA Contribution Questions
Ask Us Anything Dear Brass Tax Presentations, When the owner of an S-Corp makes an employer HSA contribution. How is it treated on the shareholder's personal tax return? Thank you! From Brass Tax Presentations If an S-Corp makes employer contributions to the HSA of a 2% or more...
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