The Tax Cuts and Jobs Acts (TCJA) of 2018 stirred up mixed responses by introducing a $10,000 cap on state and local tax (SALT) deductions for individual taxpayers. However, since the legislation did not include a limit for businesses, the states most impacted by the SALT cap have leveraged this as a workaround for their constituents. This led to the introduction of a pass-through entity (PTE) tax, which allows S corporations, LLCs, partnerships, and sole proprietorships to pay their state tax at the entity level. This enabled participants to sidestep the $10,000 cap.  As of today, 19 sta ..read more

Among its many changes, the Tax Cuts and Jobs Act of 2018 introduced a new limitation on state and local tax (SALT) deductions. The new $10,000 cap has primarily impacted taxpayers living in areas with high state-level taxes like California, Connecticut, Illinois, New Jersey, New York, or Pennsylvania. These states quickly began searching for ways to provide relief to their taxpayers. Only individual taxpayers using Form 1040 Schedule A (used for itemized deductions) are affected by this limitation. State taxes, property taxes, and personal property taxes are limited to $10,000 in deductions ..read more

When the Tax Cuts and Jobs Act of 2018 introduced a new $10,000 cap on state and local tax (SALT) deductions, taxpayers living in areas with high state-level taxes felt the hit. Highly-impacted states like California, Connecticut, Illinois, New Jersey, New York, or Pennsylvania quickly began searching for ways to provide relief to their taxpayers. Only individual taxpayers filing itemized deductions Schedule A are affected by this limitation. State taxes, property taxes, and personal property taxes are limited to $10,000 in deductions, but taxes for C corporations and rental and investment pro ..read more

Real estate can be a profitable investment, but once the investor is ready to sell, they also have to be ready to take a hit with the hefty capital gains tax. For investors who want to delay paying that tax and who are willing to stay in the real estate market, the IRS does offer one solution: the 1031 exchange. The 1031 exchange allows property owners to trade property held for business or investment purposes for a “like-kind” property without paying a capital gains tax right away. A 1031 exchange does not eliminate the tax, just defers it. If and when you sell the property outright in the fu ..read more

Taxpayers often make the mistake of focusing on the potential payout from an investment without considering how much of that will disappear to taxes. A classic example is real estate. Owning a business or investment property can result in significant profits, but when it comes time to sell that property, taxpayers may be unprepared for the massive capital gains tax attached. This is where you come in as a tax professional—with the strategies that taxpayers need to minimize that tax bill. Sometimes the key is simply time. Investors may benefit from delaying the moment that they have to pay that ..read more

In our last blog, we discussed the benefits of the 1031 exchange. This IRS rule allows property owners to delay paying capital gains taxes if they trade their property for a like-kind property. If both your old and new properties are used for business or held as an investment, you may qualify for a 1031 exchange. What if the property in question is owned not by an individual but by a partnership or LLC? The original partnership may even have been formed as a real estate investment partnership where each partner contributes properties of different values. Since partnerships are allowed to use s ..read more

If you own a business or investment property, deciding when to sell it can be complicated, in part because of the hefty taxes you will have to pay on the profit or “gain” from that sale. What if there was a way to delay taxation by simply trading one property for another? This is the concept behind the 1031 exchange. The IRS allows taxpayers to postpone paying the usual capital gains tax tax if that gain is reinvested into a similar property. Keep in mind that tax deferral is not tax elimination. This strategy simply allows taxpayers to delay paying tax until a future year when it may be more ..read more

In a previous blog, we discussed the benefits of the 1031 exchange. This IRS rule allows property owners to defer capital gains taxes when they trade a property for a like-kind property. So if your client has a property that is used for business or held as an investment and exchanges it for another property that is used for business or held as an investment, they may qualify for 1031 treatment. The matter can become more complicated when the property is owned not by an individual but by a partnership or LLC. Partnerships may be formed as a real estate investment partnership where each partner ..read more

A common conversation with clients is how to minimize taxes on their investments. When it comes to business or investment properties, taxpayers may be hesitant to sell, even if the investment is turning out to be an unprofitable one, because doing so will mean paying a sizable capital gains tax. What other options are available? Taxpayers who are willing to stay in the real estate market could benefit from a 1031 exchange. This IRS provision allows taxpayers to postpone paying capital gains tax if that gain is reinvested into a similar property. Of course, taxpayers must be advised that a 1031 ..read more

American gaming has boomed since sports betting and online gambling were legalized. Complex tax laws for filing and deducting gambling winnings and losses provide new hurdles for taxpayers. Internal Revenue Service (IRS) reporting rules from W-2Gs to 1099-Ks are very confusing for taxpayers to understand. So, as an accountant of a gambling client, you need to have detailed knowledge about gambling winnings and losses, as well as all the rules and regulations related to tax on gambling income. Without knowing that information, you can’t serve your client the legal help required to avoid paying ..read more