Business Tax

IRS Clarifies Rules Regarding When Rental Property Activity Should be Reported as a Schedule Business

According to the IRS, not all rental property activity should be reported on Schedule E.   If the property owner provides “substantial services” to short-term renters, the IRS says that the rental activity should be reported on Schedule C, and that the property owner must pay self-employment taxes on the income.   If there is a loss, it can be fully deducted without regard for the passive loss limitation rules.   Substantial services are defined by the IRS as:   regular cleaning, changing linens, or maid services…furnishing of utilities or cleaning of public areas do not count as substantial services.  For example, if you rent out a room in your house on Airbnb to short-term renters, the “substantial service” requirement can be satisfied if you are cleaning and changing linens after each short-term […]

By |September 15th, 2018|Categories: Business Tax, Individual Tax, IRS, Real Estate|Comments Off on IRS Clarifies Rules Regarding When Rental Property Activity Should be Reported as a Schedule Business

Deferral of Stock Options or RSU Income Available Under the Tax Act of 12/22/2017

In the past, non-statutory stock options (non-ISOs or ESPPs) and restricted stock grants/RSUs were considered taxable income at FMV at exercise/vesting, potentially creating a tax problem for an employee of a privately held company, as there would be no avenue for selling some of the shares to cover the related tax liability.   Starting in 2018, a qualified employee of a qualified company can postpone recognition of that income for up to 5 years, but no later than an occurrence of a triggering event (e.g. an IPO).  The newly introduced Section 83(i) of the Internal Revenue Code provides guidance.

For more details click here.

By |June 29th, 2018|Categories: Accounting & Bookkeeping, Business Tax, Individual Tax, IRS|Comments Off on Deferral of Stock Options or RSU Income Available Under the Tax Act of 12/22/2017

Reporting Bitcoin Cash

On August 1, 2017 Bitcoin Cash split from Bitcoin.  Each investor that owned Bitcoin on or before the split received Bitcoin Cash in an amount equivalent to their current Bitcoin holdings.  Investors who were fortunate enough to receive the cryptocurrency for free must report it on their 2017 tax return as income.

Click here for more info.

By |June 18th, 2018|Categories: Accounting & Bookkeeping, Business Tax, Individual Tax|Comments Off on Reporting Bitcoin Cash

California Supreme Court Ruling Significantly Limits Independent Contractor Classification

The California Supreme Court has established new criteria for classifying workers as Independent contractors.   In Dynamex Operations West, Inc. v. Superior Court, the Court rejected the previous multi-factor test and instead issued a rigid 3-factor test, called the “ABC” test.

Under the ABC test, each of the following three factors must be met in order to classify a worker as an independent contractor:

  1. The worker must be free from the control and direction of the hiring company in performing the work.
  2. The work must take place outside the usual course of the business of the hiring company’s business.
  3. The worker is customarily engaged in an independent established trade, occupation or business.

This ruling will no doubt have a significant impact on gig companies in the Bay Area (Uber, Lyft, and DoorDash, etc.), […]

By |June 6th, 2018|Categories: Accounting & Bookkeeping, Announcements, Business Operations, Business Tax, Individual Tax, IRS, Real Estate, Retirement Planning|Comments Off on California Supreme Court Ruling Significantly Limits Independent Contractor Classification

2018 Tax Reform-Business Tax Changes

The Tax Cuts and Jobs Act (H.R. I; the Act) provides for major changes to business tax law.  Most of the changes are effective January 1, 2018.  The majority of the business provisions do not expire.

The following are a few changes that may save you significant tax dollars this year and in future years:

  • C-corporations: Are now subject to a flat tax of 21% and the special tax rate for personal service corporations is eliminated.
  • Small business deduction: Probably the most revolutionary addition to the tax law is the new deduction for qualified business income from “pass-through entities,” which also applies to sole proprietorships and rental properties. This provision can provide a deduction of up to 20% of your net “qualified business income”. This new law is too complicated to […]
By |February 8th, 2018|Categories: Announcements, Business Operations, Business Tax, IRS, Real Estate|Comments Off on 2018 Tax Reform-Business Tax Changes