Tax Planning Articles

Tax Planning Articles

Tax Watch

Why Did I Owe Tax this Year?

The 2018 filing season has come to a close, and there were many changes that affected the 2018 tax liability of every taxpayer. The reason is the largest tax overhaul seen since 1986, the Tax Cuts and Jobs Act of 2017.

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IRS Releases Additional Guidance Related to Qualified Opportunity Zones

On April 17, 2019, the IRS released additional guidance (Reg-120186-18) related to gains that may be deferred as a result of a taxpayer’s investment in a qualified opportunity fund (“QOF”), as well as special rules for an investment in a QOF held by a taxpayer for at least 10 years. The guidance also provides updates to previously issued proposed regulations.

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TAX ALERT: Mileage Rates & Business Interest Deductions

The Internal Revenue Service issued the 2019 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. There are new business interest deduction limitations for companies with tax years beginning after 12/31/17.

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New Business Interest Deduction Limitations for Companies with Tax Years Beginning After 12/31/2017

The Tax Cuts and Jobs Act of 2017 revised and broadened the already in existence Internal Revenue Code “IRC” §163(j) business interest deduction limitation rules for companies with tax years beginning after December 31, 2017. The IRS released initial guidance on these new rules on April 2, 2018, with Notice 2018-28. And then on November 26, 2018, the IRS issued expansive proposed regulations (439 pages to be exact) which may be relied upon until the final regulations are published. Depending on the size and nature of your business, these regulations could have a significant impact on you and your business’s ability to deduct all interest expense incurred for 2018 and future tax years.

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IRS Issues Regulations on Qualified Opportunity Zones

The IRS has issued proposed regulations and a related revenue ruling regarding the designation of certain low-income community population census tracts as Qualified Opportunity Zones (“QO Zones”), eligible for favorable tax treatment as created by the Tax Cuts and Jobs Act (“TCJA”). Since passage of the TCJA in 2017, many taxpayers have eagerly awaited guidance as to how to defer their capital gains into QO Zone property. The gain deferral incentive is aimed at encouraging economic growth and investment in businesses within the QO Zones.

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The IRS Finally Issues Regulations on The New 20% Business Deduction – What Have We Learned?

On Wednesday, August 8, 2018, the Department of the Treasury released proposed reliance Regulations on Section 199A, also known as the 20% deduction on qualified business income (“QBI”). The words “proposed” and “reliance” are important and meaningful. “Proposed” means that these are draft Regulations that are open to public comment, and may change before they are finalized as a result of the comments of tax professionals received. “Reliance” means that although they are draft and subject to change, taxpayers can rely on these for the time being, which is helpful given that they take effect for the 2018 calendar year, which is more than half over at this point.

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Airbnb Taxation

The Airbnb site has become widely popular in ten short years, largely changing the landscape and economics for travel accommodations worldwide. According to Airbnb’s “Fast Facts,” there are nearly 5 million listings worldwide over 81,000 cities in over 190 countries resulting in over 300 million Guest arrivals! With this gain in popularity, more and more homeowners are looking to get in on the action. Along with this financial opportunity comes the challenge of how to navigate the taxation aspects of Airbnb hosting.

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What to Do If You Can’t Pay Your Tax at Extension Time?

Don’t let your inability to pay your tax liability in full keep you from filing your tax return properly and on time. Include as large a partial payment as you can, and consider borrowing the funds for payment. As discussed below, just filing without full payment can save you substantial amounts in filing penalties. More importantly, procedures exist for payment extension and installment payment arrangements which will keep IRS from instituting its collection process (liens, property seizures, etc.).

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Observations of the New Tax Law – Taking the Best Advantage

Here are some observations on the new tax law. These are things that clients can do to better comply with or make the most of the new rules. Individuals: 1. “Bunching” Deductions: Under the new higher standard deduction, with more limits on itemized deductions, consider focusing your deductions in every other year. This doesn’t work for every client, but for some who’s new itemized deduction total will be near the standard deduction amount, this can be a good plan. For example, in even years, pay two years of charitables (to the extent you can), pay two years of home property taxes (one in January and one in December, for example), and/or schedule pricey medical or dental procedures. In the odd years, plan on claiming the standard deduction…

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