INVESTOR FRIENDLY CPA® (IFC)

🚗 Can You Write Off Your Hobby as a Business Expense? This Lawyer Tried—And Lost.

A personal injury lawyer claimed $50K-$70K per year in car-racing expenses as a marketing cost for his law firm. The IRS disagreed—and so did the Tax Court.

Now, the 10th Circuit Court of Appeals has ruled that these expenses were NOT "ordinary and necessary" for his business, rejecting his claim that car racing was a valid advertising expense.

📌 What Happened?
✔️ The lawyer advertised his firm on his race car and deducted the costs on Schedule C from 2008-2011.
✔️ The IRS denied the deductions and assessed a nearly $1 million tax deficiency.
✔️ The Tax Court ruled that while some expenses were legitimate, racing expenses were not deductible as a necessary cost for a law firm.
✔️ The lawyer appealed, arguing that his enjoyment of racing should not impact tax deductibility.
✔️ The 10th Circuit rejected this, ruling that personal enjoyment can be considered when determining whether an expense is truly business-related.

📌 Why This Matters for Business Owners
💰 The “Ordinary & Necessary” Test – Business expenses must be common and accepted in your industry. If an expense feels more like a personal hobby, the IRS may disallow deductions.

🚗 Personal Enjoyment Factor – If an expense provides significant personal enjoyment, the IRS can question its primary business purpose.

⚖ Marketing Costs Must Make Business Sense – Not all advertising is deductible. If an expense seems extravagant or unrelated to your business, it may not qualify.

💡 Real-World Examples
✅ Likely Deductible: A fitness coach sponsors a sports team with their business logo.
❌ Risky Deduction: A real estate agent sponsors their personal race car while claiming it's a marketing expense.

📌 Key Takeaways for Business Owners & Entrepreneurs
✔️ Keep clear documentation on how an expense directly benefits your business.
✔️ Avoid blending personal hobbies with business expenses unless there’s a clear industry-standard connection.
✔️ Consult a tax professional before claiming large or unique deductions.

💬 What Do You Think?
Have you ever wondered if a unique business expense is deductible? What’s the most unusual deduction you’ve heard of? Drop your thoughts in the comments! ⬇️

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

📢 Tax Prep Tips for Real Estate Investors Before Filing Day

Tax season is here—don’t leave money on the table. Follow these steps to maximize deductions and stay IRS-compliant:

✅ Gather All Documents

- 1099s, rental income records, receipts, mortgage interest & property tax statements.
- HOA fees, insurance premiums, and maintenance invoices.

✅ Maximize Deductions

Claim mortgage interest, repairs, travel expenses, and home office deductions.
Every dollar deducted lowers your taxable income.

✅ Review Depreciation & Cost Segregation

- Ensure all properties are properly depreciated.
- Consider bonus depreciation or Section 179 for eligible assets.
- Cost segregation studies help accelerate depreciation and increase cash flow.

✅ Understand STR Tax Rules & Self-Employment Tax

- Track participation hours to qualify for deductions.
- Rental income from properties rented for 14 days or less per year may be completely tax-free.
- Self-employment tax alert: If you provide services like cleaning or breakfast, STR income may be subject to self-employment tax.

✅ Leverage 1031 Exchanges & Tax Deferral Strategies

- 1031 exchanges allow you to defer capital gains taxes by reinvesting profits into another property.
- Tax deferral strategies help with long-term planning and portfolio growth.

✅ Work With a Real Estate CPA

- Find hidden savings and structure your business correctly.
- Plan ahead for tax-saving opportunities.
- Don’t wait until the last minute—take action now to maximize your tax savings.

#RealEstateInvesting #TaxPlanning #TaxSeason #RealEstateCPA #InvestorFriendlyCPA #1031Exchange #STRTaxTips #CostSegregation

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

Top 5 Tax Deductions Real Estate Investors Shouldn’t Miss in 2025

Real estate investors can reduce taxes and maximize returns by leveraging these key deductions in 2025

1. Depreciation
✔ Residential (27.5 years) & Commercial (39 years) depreciation allows gradual tax savings.
✔ Bonus depreciation drops to 40% in 2025—a cost segregation study can help accelerate deductions.
📌 Pro Tip: Faster depreciation means larger upfront tax savings and improved cash flow

2. Interest Deductions (Including Personal Loans!)
✔ Mortgage & business loan interest for rental properties is fully deductible.
✔ Under the interest tracing rule, even personal loan interest qualifies if used for real estate investments.
📌 Pro Tip: Maintain clear documentation to support deductions

3. Repairs & Maintenance
✔ Routine repairs (painting, plumbing) are fully deductible.
✔ Major improvements (roofing, HVAC) must be depreciated over time.
📌 Pro Tip: Use safe harbor elections to expense certain improvements upfront

4. Travel Expenses
✔ Mileage, airfare, lodging, & meals for property management are deductible.
✔ Keep a mileage log to track business-related travel.
📌 Pro Tip: Mixed-use trips? Only business portions qualify for deductions

6. Professional Services & Tax Structuring
✔ Fees for CPAs, tax advisors, attorneys, and property managers are deductible.
✔ LLCs & S-corps can help reduce taxes and offer asset protection.
📌 Pro Tip: Consult a real estate tax strategist to structure your investments efficiently

💡 Don’t Overpay on Taxes!

Are you maximizing your deductions? Let’s discuss how to reduce your taxable income and optimize your real estate tax strategy in 2025.

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

Forex Trading & Taxes: Key Benefits You Should Know 💰📊

Forex trading can offer several tax advantages depending on where you live. Here are some key benefits to keep in mind:

✅ Capital Gains Treatment - Forex trading profits are taxed as ordinary income but can be treated as capital gains under IRC §1256 if elected, subject to eligibility.

✅ Loss Deduction – If you incur losses from your forex trades, you may be able to deduct those losses, which can help offset other gains. By default, they offset ordinary income, but if §1256 is elected, they are treated as capital losses with a $3,000 annual deduction limit against ordinary income. There is no passive loss limitation, meaning you do not need to meet the material participation requirements to claim these losses.

✅ Mark-to-Market Election – Some traders can elect mark-to-market accounting, treating their forex gains and losses as if they were realized at year-end. However, this election is typically limited to professional traders and does not usually apply to spot forex trading.

✅ Tax-Deferred Accounts – Forex trading may be allowed in self-directed IRAs, enabling tax deferral on gains until withdrawal. However, most IRAs and 401(k)s do not permit forex trading.

✅ Tax Treaties – Depending on your country of residence and the country where your forex broker is located, you might benefit from tax treaties that reduce or eliminate double taxation on forex gains.

Pro tip: Forex tax rules can be complex, so consulting a tax professional is always a smart move. ✅

Are you trading forex? What’s your biggest tax challenge? Drop your thoughts below! ⬇️
#ForexTrading #TaxPlanning #Investing

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

Turn Your Vacation Into a Business Trip & Save on Taxes!
Did you know your vacation could double as a tax-saving opportunity? With strategic planning, you can legally deduct flights, hotels, meals, and more—as long as your trip has a valid business purpose. Here’s how:

Key Deductible Expenses

✅ Transportation Costs – 100% deductible if business is the primary reason for travel (flights, rental cars, trains).
❌ Not deductible if the trip is mainly personal.
✅ Lodging & Meals – Deduct lodging & 50% of meals for business days.
❌ Extra personal days don’t qualify.
✅ Conference & Meeting Costs – Registration fees, co-working spaces, and networking events are fully deductible.

5 Key Rules for IRS Compliance

1. Profit Motive: Travel must serve a clear business purpose (meetings, conferences, client visits).
2. Overnight Stay: The trip must require an overnight stay.
3. Primary Purpose Test: 50%+ of trip days should be business-related.
4. Documentation is Key: Keep receipts, meeting notes, and a detailed itinerary.
5. The “For Only” Test: Would a rational businessperson take this trip solely for business?

What Qualifies as a Business Trip?

✔ Attending industry conferences & networking events
✔ Meeting with clients or partners
✔ Exploring business expansion opportunities
✔ Visiting investment properties (real estate professionals)
✔ Professional training or research

Common Pitfalls to Avoid

Too Much Leisure – Business must remain the primary reason for travel.
No Clear Business Intent – Keep documentation proving the business purpose.
Weak Record-Keeping – IRS requires receipts, emails, and schedules.

Pro Tip: Plan Ahead to Maximize Savings!

By incorporating legitimate business activities into your travel, you can reduce taxable income while still enjoying your trip.

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

Understanding Household Employment Compliance: What Families Need to Know ✅

When you hire household help—whether it’s a full-time nanny, a part-time babysitter, or a caregiver—you might be taking on more than just the role of an employer. You’re also stepping into the world of payroll tax compliance and legal obligations that come with employing someone to work in your home.

Here’s a quick breakdown to help you identify if your household worker qualifies as an employee:

♦️ Control of Work: If you determine what tasks are performed and how they’re done, that’s a key indicator of an employer-employee relationship.
♦️ Provision of Supplies: Supplying the tools and equipment for the job (e.g., cleaning products, educational materials) may further signal employment.
♦️ Work Schedule: Dictating when the person works or having set hours established by you means they’re probably not an independent contractor.
♦️ Hiring Method: Directly hiring someone typically means they are your employee, while hiring through an agency often means the agency retains the employment responsibilities.
♦️ Exclusive Service: If they work primarily or exclusively for your family, rather than for multiple clients, that solidifies their employee status.

If you determine that you do have a household employee, here’s what’s next:

1️⃣ Get an Employer Identification Number (EIN).
2️⃣ Withhold Social Security and Medicare taxes if you’re paying over $2,700 in wages in 2024.
3️⃣ Issue a W-2 form by January 31st each year.
4️⃣ File Schedule H with your federal tax return to report household employment taxes.
5️⃣ Keep up with state and local taxes—they vary by location.
6️⃣ Maintain accurate records of all wages and withholdings.

The Cost of Noncompliance

Miss these steps, and you risk penalties, legal issues, or even tax fraud charges. Imagine an IRS audit, insurance claim denials, or even a messy dispute with your nanny over unpaid taxes. Not a situation any family wants!
Outsourcing payroll and compliance tasks can be a smart move to keep things straightforward. If you’re unsure about your obligations, I’m here to help you navigate the rules and protect both you and your employees.

1 month ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

🚀 Boost Your Multi-Family Real Estate Returns with Smart Tax Strategies 🏢

Maximizing your returns in multi-family real estate isn't just about finding excellent property; it's about using the right tax strategies to keep more of your hard-earned money. Here are a few tactics to consider:

✅ Become a Real Estate Professional: This status allows you to fully deduct real estate losses against other income, providing a significant tax advantage.

✅ Leverage Partial Asset Dispositions: Writing off outdated or removed property elements can reduce your taxable income and keep your properties current.

✅ Implement Cost Segregation: Accelerate depreciation on certain assets to unlock substantial tax savings, improving your cash flow and overall ROI.

✅ Offset Income and Capital Gains: Use these tax benefits to offset active income and gains from property sales, allowing you to reinvest more into your next deal.

✅ Utilize 1031 Exchange: Don't overlook the power of 1031 Exchanges to defer capital gains taxes and keep your capital compounding.

#investorfriendlycpa #taxes #1031

3 months ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

Massachusetts Expands Tax Benefits for Housing with the Affordable Homes Act 🏠

Exciting news for developers and property owners in Massachusetts! The Massachusetts Department of Revenue has issued guidance on new provisions under the Affordable Homes Act (L. 2024, H4977), effective for tax years starting January 1, 2025. Here’s what you need to know:

📌 New Tax Credits Introduced:

1. Massachusetts Homeownership Credit:
Available to taxpayers developing certain homeownership projects.
Credit amount determined by the Executive Director of the Massachusetts Housing Finance Agency.

2. Qualified Conversion Credit:
Designed for taxpayers converting commercial properties into residential housing.
Credit amount determined by the Executive Office of Housing and Livable Communities.

📌 Other Key Updates:
Historic Rehabilitation Credit and Community Investment Credit: Changes have been made to their annual caps and expiration dates to encourage more investments.

These updates aim to boost affordable housing development and the transformation of underutilized spaces into vibrant communities.

Want to know how these changes could benefit your project or business? Our team can guide you through the details and help you take advantage of these valuable incentives.

📩 Reach out to learn more!

3 months ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

🚨 BOI Reporting Halted Again: What You Need to Know 🚨

Recent court rulings have caused significant changes to BOI reporting requirements under the Corporate Transparency Act (CTA). Here’s a timeline of events and the current status:

Timeline of Events

1️⃣ December 3, 2024:
- A federal court in Texas issued a nationwide injunction halting BOI reporting.
- Temporarily relieved companies from filing obligations.

2️⃣ December 5, 2024:
- The Department of Justice appealed the injunction and sought a stay of the order.

3️⃣ December 23, 2024:
- The Fifth Circuit granted a stay of the injunction, reinstating BOI reporting requirements, including the January 1, 2025 deadline for existing entities.

4️⃣ December 26, 2024:
- A different Fifth Circuit panel vacated the stay, reinstating the original injunction.
- BOI reporting is no longer required as of this date, and companies are not liable for failing to file during the injunction.

📌 Current Status
- No BOI reports are required while the nationwide injunction is in place.
- Voluntary reporting is allowed for businesses wishing to comply proactively.

🔍 Why the CTA Matters
- The CTA aims to combat financial crimes like money laundering and terrorist financing by enhancing transparency in business ownership.
- While the law levels the playing field for law-abiding small businesses, legal uncertainties have created compliance challenges.

What’s Next?
- The Department of Justice is appealing the ruling, and further changes could occur.
- Businesses should stay updated and be ready to comply if the injunction is lifted.

💡 Key Takeaways:
- Stay informed of legal developments.
- Prepare your beneficial ownership information to remain ready.
- Consider voluntary reporting to avoid future complications.

📩 Have questions about BOI reporting and how it affects your business? Let’s connect to ensure you’re prepared for what’s ahead.

#BOIReporting #CorporateTransparencyAct #BusinessCompliance #TaxUpdates #LegalNews

3 months ago | [YT] | 0

INVESTOR FRIENDLY CPA® (IFC)

💼 Smart Tax Moves to Keep More of Your Income 💼

Are you looking for ways to keep more of what you earn? Here are some practical strategies to help you reduce the impact of W-2 earnings and build your wealth:

✅ REPS & STR Loophole: Offset W-2 income by materially participating in real estate through the Real Estate Professional Status (REPS) or managing short-term rentals (STR). You can use depreciation and losses to reduce your tax burden.

✅ Start a Business: Start a business that you materially participate in to offset W-2 income by deducting expenses like equipment, travel, and supplies while using business losses to reduce your tax liability further.

✅ Maximize Retirement Contributions: Contribute to your 401(k) or IRA to lower your taxable income. In 2024, you can save up to $23,000—or $30,500 if you’re over 50.

✅ Use a Health Savings Account (HSA): Get a triple tax benefit with deductible contributions, tax-free growth, and tax-free medical withdrawals.

✅ Claim Home Office Deductions: If you work from home or run a side business, don’t miss out on deductions for your home office, supplies, and other business expenses. It’s a great way to reduce your taxable income.

✅ Charitable Giving: Donations can benefit others and lower your tax bill. To maximize your impact, consider itemizing your contributions or using a Donor-Advised Fund.

✅ Education Credits & 529 Plans: Save for education with tax benefits.

Small steps can lead to significant savings. Start planning today!

#TaxPlanning #FinancialWellness #TaxStrategy #InvestorFriendlyCPA

4 months ago | [YT] | 0