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The 20% Qualified Business Income Deduction – Congress Denies the Deduction to Certain Successful Business Owners
In Part 1 of this 4-part series, we introduced the extraordinary power of the Qualified Business Income (QBI) deduction to slash your business owner client’s taxes by as much as 20%. We ended Part 1 with a heads-up that restrictions apply. We’ll take a close look at a key restriction in this article – Part…
Saving Taxes for Shareholders – Buy/Sell Agreements: Stock Redemption vs Cross Purchase
Course: Insurance Planning Lesson: 17 – Business Uses of Life and Disability Insurance Student Question: Under the Stock Redemption Method – how is basis treated specifically to stock remaining outstanding (not Treasury stock) and how does this compare to the Cross Purchase Method? Is basis treated the same – do both methods provide the same…
CFP® Practice Question: Bankruptcy Discharges
Chuck lost his job last year when his company moved their factory overseas. Chuck has been unable to find another job and had to file for a Chapter 7 bankruptcy. Which of the following debts can be discharged in the bankruptcy? $10,000 of rent he owes his landlord $20,000 of taxes he owes the IRS…
Identifying Skip and Non-Skip persons.
Course: Estate Planning Lesson 7: Transfer Taxation IV – Generation Skipping Transfers Student Question: Wouldn’t Ellen be a non-skip person since Jane is deceased and she bumps up the ladder one step to be just one generation behind?? (See question below in which Ellen is identified as a skip person.) Question 1: The following chart shows the…
CFP® Practice Question: Investment Advisors Act of 1940
Which of the following individuals need to register with the SEC under the Investment Advisers Act of 1940? Adam, who retired last year from a big brokerage house but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing. Belinda, who writes weekly investment articles for…
Good to Know: Claiming Dependents – Waste of Time or Great Way to Save on Income Taxes?
We lost the deduction for personal and dependency exemptions starting in 2018 under the Tax Cuts and Job Act. With the loss of the deduction, many taxpayers rightly ask, “Should I even bother documenting and claiming my dependents on my tax return?” That a reasonable question and the answer is… YES for many taxpayers. Claiming…
Mortgage-Backed Bonds and Mortgage Pools
Student Question: Course: Investment Planning Lesson 9: Fixed Income Securities I don’t clearly understand how money is made in the mortgage-backed bond process. What are mortgage pools? Does the investor make money from the interest of the pooled mortgages? What if the mortgages default? Thanks, Kevin Instructor Response: Great question. Here’s a quick example: John Doe…
Medical and Charitable Travel Mileage Deductibility after 2017
Course: Income Tax Planning Lesson 8: Arriving at Taxable Income Student Question: Hi – I know that the Miscellaneous Deduction has been suspended; therefore, reimbursed employee mileage is no longer deductible. Can individuals still deduct mileage related to medical and charitable travel? If so, how is this deduction taken? Thanks! Justin P Instructor Response: Hi Justin, Good question…
Good to Know: Should you Convert to a C Corporation for the 21% Tax Rate?
Conventional wisdom says that sole proprietorships, partnerships, Sub-S Corporations and certain LLCs (“pass-through” business structures) should strongly consider converting from their present business form into a C Corporation (C Corp). Why? The 21% C Corp income tax rate from the Tax Cuts and Jobs Act can be seductive, especially when personal income tax rates can…