Understanding the Decline in Bonus Depreciation

Bonus depreciation of 100 percent ends on December 31, 2022.  This is sad news for business owners.  .  Then, starting in 2023, lawmakers scheduled bonus depreciation to decline by 20 percent each year.  It will be reduced to 80 percent in 2023 and will decline 20 percent each succeeding year through 2027 when it will … Read more

Converting to an S Corporation: 7 Mistakes to Avoid

There are many good reasons to convert your business to an S Corporation.  The opportunity to save on taxes is likely the chief reason. Forming an S Corporation may appear simple but there are some hidden rules that become potholes if they are not avoided. It is crucial for a business owner to identify these … Read more

Learn the Tax Law Changes for Electric Vehicle Purchases

Thanks to the newly enacted Inflation Reduction Act, there is much to consider when buying an electric vehicle or a plug-in hybrid. Significant Changes in the Electric Vehicle Credit for 2022 Applying to both business and non-business vehicles, the $7,500 maximum credit for fully electric cars or plug-in hybrid electric vehicles remains in place through … Read more

More on the Series I Bonds from the US Treasury

If a Series I bond is purchased from now through October 31, 2022, it can earn 9.62 percent for six months, guaranteed.  The Treasury Department at the end of six months: adds the interest earned to the principal, and pays interest on the new principal balance at the new rate that is determined on November … Read more

Buy Series I Bonds Now and Earn 9.62 Percent Tax-Deferred

Series I bonds pay 9.62 percent interest until the end of October 2022. Until the end of October 2022, it is possible to purchase Series I bonds that pay 9.62 percent interest. The 9.62 percent interest rate is applicable for 6 months from the time of purchase.  The interest earned for the first six months … Read more

Eight Common Mistakes in a Like-Kind Exchange and How to Avoid Them

A like-kind exchange is a great idea, but when mistakes occur, a failed exchange places the seller in double trouble.  One of the most tax-favored transactions is the like-kind exchange (also commonly called a 1031 Exchange).  In a like-kind exchange, the sellers of real property may defer the gain of the sale of real estate … Read more

The Benefits of Paying a Child on a W-2

A business owner hired his 15-year-old daughter to work in his single-member LLC business.  She is expected to be paid about $12,000 for the year.  What are the benefits of paying her on a W-2 A single-member LLC is a “disregarded entity” for federal tax purposes.  It is taxed as a sole proprietorship unless corporate … Read more

IRS Provides Some Welcome Relief and Increases the Standard Mileage Rate

When the IRS noticed that gas prices across the country went beyond, $5.00 a gallon, it took action.  Small businesses that use the standard mileage rate can now deduct 62.5 cents per business mile from July 1 through December 31, 2022.  This means additional 4 cents a mile from 58.5. The next question is:  what … Read more

Do Partner and LLC Members Need to Pay Self-Employment Taxes?

The outright answer to the question above is not always clear, even if millions of American businesses legally organize themselves as limited liability companies (LLCs), partnerships, or similar entities.  This article will try to provide the answer. What about General Partnerships? If two or more people own a business together and do not form another … Read more