Tax Tuesday with Toby Mathis 04-27-2021

From entity formation, income, and inheritance to losses, proceeds, and profits, Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

• How does a single, high W-2 earning individual take advantage of passive losses? It’s difficult because passive losses for a high earner are going to be subject to limitations
• How are inherited stock shares treated when sold? If you inherit stocks, they are valued at fair market value now, not when they were bought due to the step-up in basis
• Should an S Corp pay profits as dividends? An S Corp does not pay dividends; it passes on profits and losses to shareholders
• Is it preferable to have a C Corp or an LLC as your holding entity? It’s better to have an LLC as your holding entity; there’s no tax treatment for an LLC
• Are proceeds received from winning a court case ($20 million) taxable? It depends on the source of the claim, as a matter of rule, and attorney fees are no longer deductible

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Resources:

Anderson Advisors’ Infinity Investing Through Stocks and Real Estate - Free event on May 15

http://aba.link/iiw

Infinity Investing: How The Rich Get Richer And How You Can Do The Same by Toby Mathis

http://aba.link/infinitybook

Capital Gains and Losses

https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0

Charitable Organizations

https://www.irs.gov/charities-non-profits/charitable-organizations

Wills and Trusts

https://andersonadvisors.com/living_trusts/

Entity Formation

https://andersonadvisors.com/entity_formation/

Retirement Plans

https://andersonadvisors.com/retirement_plan/

Real Estate Professional Requirements

https://www.irs.gov/pub/irs-utl/33-Real Estate Professionals.pdf

Home Office Deduction

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

Kiddie Tax

https://www.irs.gov/taxtopics/tc553

1031 Exchange

https://www.irs.gov/pub/irs-news/fs-08-18.pdf

Step-Up in Basis

https://www.investopedia.com/terms/s/stepupinbasis.asp#:~:text=A%20step%2Dup%20in%20basis%20is%20the%20readjustment%20of%20the,for%20tax%20purposes%20upon%20inheritance.&text=The%20asset%20receives%20a%20step,of%20property%20transferred%20at%20death.

Bonus Depreciation

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-cuts-and-jobs-act

Depreciation Recapture

https://www.investopedia.com/terms/d/depreciationrecapture.asp

California Proposition 19

https://www.boe.ca.gov/prop19/

Self-Employment Tax

https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes

Old-Age, Survivors, and Disability Insurance (OASDI) Program

https://www.ssa.gov/policy/docs/progdesc/sspus/oasdi.pdf

121 Capital Gains Exclusion

https://www.irs.gov/taxtopics/tc701

CARES Act

https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

Schedule A

https://www.irs.gov/forms-pubs/about-schedule-a-form-1040

Schedule E

https://www.irs.gov/forms-pubs/about-schedule-e-form-1040

Section 162 - Trade or Business Expenses

https://www.irs.gov/pub/irs-drop/rr-99-7.pdf

Form 1040

https://www.irs.gov/forms-pubs/about-form-1040

Form 1099

https://www.irs.gov/forms-pubs/about-form-1099-misc

Tax Cuts and Jobs Act (TCJA)

https://www.irs.gov/tax-reform

Rich Dad Poor Dad by Robert Kiyosaki

https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1543626610

Insperity

https://www.insperity.com/

Payroll City

https://payrollcity.com/

Paycheck Protection Program (PPP)

https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program

Toby Mathis

http://tobymathis.com/about-toby-mathis/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors Events

https://andersonadvisors.com/all-events/

Events@andersonadvisors.com

Anderson Advisors Tax and Asset Protection Workshop

https://andersonadvisors.com/asset-protection/

Anderson Advisors Tax-Wise Workshop

https://andersonadvisors.com/tax-wise-workshop-for-businesses-investors/

Anderson Advisors Infinity Investing Workshop

https://andersonadvisors.com/investing-workshop-passive-income-generating-machine/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ

Anderson Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Advisors Podcast

https://andersonadvisors.com/podcast/