At-Risk Rules
At-Risk Rules are IRS guidelines that limit the amount of loss a taxpayer can deduct from certain investments based on the amount of money they have at risk in the activity. These rules are designed to prevent taxpayers from using excessive deductions on investments where they have limited or no actual financial risk. The at-risk […]
Tax Basis
Tax Basis, also known as cost basis, refers to the value used to determine the gain or loss on the sale of an asset for tax purposes. It represents the original cost of an asset, adjusted for certain factors like depreciation, improvements, and other costs associated with the asset. When the asset is sold, the […]
Estimated Quarterly Taxes
Estimated Quarterly Taxes are payments made to the IRS by individuals or businesses that do not have taxes withheld from their income throughout the year. This includes self-employed individuals, freelancers, business owners, or anyone whose income is not subject to automatic withholding. These payments are made four times a year, typically on April 15, June […]
Fringe Benefits
Fringe Benefits are additional compensations provided by employers to employees, over and above their regular salary or wages. These benefits can be in the form of non-cash perks, such as health insurance, retirement plans, company cars, and bonuses. Fringe benefits can be taxable or non-taxable, depending on the nature of the benefit and the tax […]
Income Shifting
Income Shifting is a tax strategy that involves moving income from a higher-taxed individual (typically a parent or high-income earner) to a lower-taxed individual (usually a child or family member) in order to reduce the overall family tax burden. This strategy is commonly used in family-owned businesses, trusts, or estates to distribute income in a […]
Qualified Business Income (QBI) Deduction
The Qualified Business Income (QBI) Deduction, introduced by the Tax Cuts and Jobs Act (TCJA) of 2017, allows eligible businesses to deduct up to 20% of their QBI from a domestic business operated as a sole proprietorship, partnership, S-Corp, or LLC. The deduction aims to reduce the tax burden on pass-through entities, which don’t pay […]
S-Corp Election
The S-Corp Election refers to a tax status that a small business entity can choose under the Internal Revenue Code (IRC) Section 1362. By electing to be taxed as an S Corporation (S-Corp), a business can pass its income, losses, deductions, and credits directly to its shareholders, avoiding double taxation (taxes on both the corporation’s […]