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EXECUTIVE SUMMARY Individual taxpayers are subject to different rules for deducting different types of interest expense. The five primary types of interest for individual taxpayers are student loan interest, qualified residence indebtedness interest, investment interest, business interest, and personal interest. The law known as the Tax Cuts and Jobs Act temporarily introduced new rules for …
Continue reading Five types of interest expense, three sets of new rules
EXECUTIVESUMMARY Under Sec. 1202, gain on the sale of qualified small business (QSB) stock held for five years is partially or entirely excluded from income. Since Sec. 1202 was enacted, the maximum exclusion has ranged from 50% to the current 100% of gain on qualifying stock sales. For stock to be QSB stock, the corporation …
Continue reading Qualified small business stock gets more attractive
Fueled by the law known as the Tax Cuts and Jobs Act of 2017 (TCJA), P.L. 115-97, and a market of retiring Baby Boomers looking to divest ownership interests, the marketplace recently experienced a wealth of transactions. Among this crowd are S corporations engaging in shareholder redemptions — with some also contemplating a subsequent conversion …
Continue reading S corporation redemptions: Navigating Secs. 302 and 301
Sec. 280G, relating to "golden parachute payments," and its Sec. 4999 excise tax counterpart are two of the more draconian provisions in the Internal Revenue Code. Sec. 280G disallows a deduction to a corporation for an excess parachute payment made to an individual, and Sec. 4999 imposes a 20% nondeductible excise tax penalty on a …
Continue reading Revisiting the application of Sec. 280G on partnerships and LLCs
Married couples that jointly own a business often by default choose to treat the business as a partnership, which requires the business to file a partnership return. However, in many cases, treating the business as a partnership and filing partnership returns is optional. A recent Tax Court case highlights how a married couple's choice to …
Continue reading Filing ‘optional’ partnership return costly
The IRS on Thursday explained how taxpayers who may be eligible for the Sec. 36B premium tax credit or who may have to pay the Sec. 5000A shared-responsibility payment should determine their status now that the law known as the Tax Cuts and Jobs Act, P.L. 115-97, has reduced the personal exemption deduction under Sec. …
Continue reading How the suspension of personal exemptions affects health-care-related provisions
Professional gamblers' decadelong streak of being able to deduct a net loss from gambling as a trade or business was ended this year by P.L. 115-97, known as the Tax Cuts and Jobs Act of 2017 (TCJA). Although a relatively minor facet of the wide-ranging tax reform package, the TCJA's amendment to Sec. 165 overturning …
Continue reading Tax reform law deals pro gamblers a losing hand
The IRS on Monday issued 34 questions and answers on new Sec. 45S, which was added by the law known as the Tax Cuts and Jobs Act, P.L. 115-97, to provide a general business credit for employers who provide paid family and medical leave to their employees (Notice 2018-71). The credit equals a percentage of …
Continue reading Rules issued on paid family and medical leave credit
The IRS issued proposed regulations on Aug. 1 (REG-104226-18) on the Sec. 965 transition tax, which was added to the Code by P.L. 115-97, the law known as the Tax Cuts and Jobs Act. Sec. 965 applies to the last tax year of a deferred foreign income corporation (DFIC) that begins before Jan. 1, 2018. …
The IRS on Wednesday issued guidance clarifying that taxpayers may generally continue to deduct 50% of the food and beverage expenses associated with operating their trade or business, despite changes to the meal and entertainment expense deduction under Sec. 274 made by the tax law known as the Tax Cuts and Jobs Act (TCJA), P.L. …
Continue reading Meals continue to be deductible under new IRS guidance
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