Tax Warrior Chronicles

Understanding REITs and Their Place in Your Portfolio

Posted on Fri, Mar 06, 2020

By: Stuart Shikiar, Albert Sipzener, Lockwood Sloan and Sam Shikiar

 

Real estate has been a time-tested addition to investor portfolios. Real Estate Investment Trusts, or REITs, provide an opportunity for tax-advantaged income investing. Today’s post features a discussion by the team at Shikiar Asset Management, a New York-based registered investment advisor and long-time friend of Drucker & Scaccetti.  Here is what they have to say about REITs…

 

Real Estate Investment Trusts (REITs) have been a central component of our strategy for several years. REITs offer investors the benefits of exposure to real estate coupled with the ease and advantages of investing in publicly traded equities,

Read More

Inflation Adjustments Increase Tax Deductions for 2020

Posted on Thu, Nov 14, 2019

By: Eric R. Elmore

 

Often, “inflation’ is a bad word for economists and financial experts to utter.  But last week, the IRS announced its annual inflation adjustments for 2020 and many tax deductions have increased as a result. In today’s post, we’ll get you up to speed on the increased deductions available in 2020. Let’s get at it!

 

Revenue Procedure 2019-44 explains these annual adjustments. Some tax law changes in the Revenue Procedure were added by the Taxpayer First Act of 2019, which, among other things, increased the failure to file penalty to $330 for returns due after the end of 2019. The new penalty will be adjusted for inflation beginning with tax year 2021.

 

Many amounts,

Read More

Your Kids in the Family Business Post-Trump Tax Reform

Posted on Mon, Aug 12, 2019

By: Melissa Boyce, CPA

 

The Tax Cuts and Jobs Act of 2017 (TCJA) changed many areas of the tax code, including when family business hires their child(ren). While there was a similar pre-TCJA benefit to hiring one’s child(ren), the new law increased several tax savings and warrants another look at hiring children into the family business.

 

Income Shifting

The largest benefit of hiring a child into a family-owned business is the ability to convert the parents’ high-taxed income into tax-free or low-taxed income. There are rules that must be followed; specifically, the children’s work must be legitimate, and the amount the enterprise pays them must be reasonable for the wages to be

Read More

Tax Considerations for Pass-Through Entities: §§ 199A and 163(j)

Posted on Tue, Jul 30, 2019

By: Jeremy Ferman, CPA, MA

 

The Tax Cuts and Jobs Act (“TCJA”) added several complicated tax laws to the books, adding a level of complexity for even the smallest pass-through entity returns.  As we enter the home-stretch of the extended filing season, we will examine arguably the two most difficult areas for pass-throughs to navigate: §§ 199A and 163(j). 

Section 199A: The 20% Pass-Through Deduction

Written to help lessen the gap between the corporate tax rate and the individual tax rates for pass-through income, § 199A allows a deduction of up to 20% of qualified business income reported by a pass-through entity.  While simple at face-value, the application of § 199A is far from it. 

 

Read More

TCJA: What it Said vs. What it Did

Posted on Mon, Jul 22, 2019

By: Joe Brunell, CPA

 

The Tax Cuts and Jobs Act of 2017 (TCJA) is the most significant tax code overhaul since the Tax Reform Act of 1986.  The TCJA had four goals; tax relief for middle-income families, simplification for individuals, economic growth and repatriation of oversea income.   It cut individual income tax rates, doubled the standard deduction, eliminated personal exemptions and capped state and local itemized deductions.  While on the surface tax compliance now sounds simpler, as you will see, this isn’t the case.

 

Individuals

First and foremost, the new 1040 tax form is now postcard sized.  However, smaller is not always simpler; the new tax forms have become more

Read More

New Partnership K-1 Disclosure Requirement - The IRS's Threat and Partial Retreat… We Mean Relief!

Posted on Fri, Mar 08, 2019

By: Chris Catarino, CPA, MT and Joseph Criscuolo, CPA

 

Buried in the 2018 instructions to Form 1065, U.S. Return of Partnership Income, is a new reporting requirement with a whopping noncompliance penalty. The blow-back from practitioners on this sneaky new disclosure was so great the IRS issued penalty relief provisions this week… here's the scoop.

 

In its simplest form, the TCJA created a nightmare of new limitations, calculations and disclosures for pass-through entities in 2018. Keeping most CPA's up all night, coffees full, are the interest expense limitations under IRC Section 163(j) and the Qualified Business Income Deduction rules under IRC Section 199A, both of which require

Read More

Understanding the New 1040 Postcard

Posted on Mon, Jan 07, 2019

By: Rachel Kieser, CPA, MT

 

As a complement to the Tax Cuts and Jobs Act of 2017 (“TCJA”), President Trump and others in his administration promised to simplify the Internal Revenue Code so much that individual tax returns could be filed on a postcard.  Well, the final version of the Form 1040 “postcard” has been released and must be used for all 2018 personal tax returns.  We will walk you through some of the major changes to the form and its instructions. But first, this is what the new main form looks like:

 

Like  the old version, there are still two pages to the main form.  These two pages are condensed to half of the page, presumably to be printed on the front and back of half a

Read More

The New Tax Law: 2018 Year-End Planning Tips for Businesses

Posted on Wed, Nov 28, 2018

By: Joseph Brunell, CPA

 

The Tax Cuts and Jobs Act (TCJA) was signed into law on December 22, 2017, and became effective on January 1, 2018.   For many businesses, the TCJA provides benefits such as reduced corporate tax rates, removing the corporate alternative minimum tax, and a new pass-through business income deduction.  However, many tax planning ideas go beyond the big-ticket items.  The Tax Warriors® at Drucker & Scaccetti are here to provide some of the top year-end tax planning tips.

 

Take advantage of business expensing under Section 179

 

Generally, taxpayers can elect to immediately expense up to $1 million of business tangible personal property placed into service after

Read More

GUEST BLOG: TCJA Creates New Tax Deferral Election for Certain Stock Options and RSUs

Posted on Thu, Jul 12, 2018

By:  Kevin Koscil

 

While the The Tax Cuts and Jobs Act of 2017 (TCJA) slashed the corporate tax rate to the delight of many public companies, it also included a slew of tax savings goodies for privately owned businesses. The new Qualified Business Income Deduction and expanded Bonus Depreciation are grabbing headlines, but a lesser-known tax savings nugget for private companies' employee equity plans snuck into the new law, too.

 

The newly created Section 83(i) allows employees the option to defer tax on certain qualifying stock options and restricted stock units (RSUs) for up to five years. For employees of cash-strapped start-ups, this tax deferral can be a powerful incentive and we

Read More

New 20% Qualified Business Income Deduction: An Intro to §199A

Posted on Wed, Feb 21, 2018

As part of the Tax Cuts & Job Act, passed on December 22, 2017, a new provision with significant planning opportunities was added to the tax law.  At its simplest level, the Qualified Business Income (QBI) deduction allows individuals a §199A deduction of up to 20% against income from passthrough businesses (partnerships, S corporations, and sole proprietorships) for tax years between 2018 and 2025. The deduction can have significant benefits, potentially decreasing the effective tax rate on business income from 37% to 29.6% for those in the top bracket.

 

Implementing strategies to optimize this deduction will be a critical aspect of tax planning going forward.  Two initial considerations

Read More