Douglas Rutherford, CPA

“Tax Shock” Awaits Many on 2013 Tax Returns

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While most taxpayers are aware of the many tax changes that are effective for the 2013 tax year, many taxpayers may not be.  They may be surprised to learn that the tax landscape has shifted precipitously for those who find themselves on the wrong side of a new divide between “middle class” and “higher earners.” These higher earners are now subject to an array of new taxes, higher rates, and stringent deduction limits.

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Two Simple Tricks to Save up to 11% on Real Estate Rehab Costs

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I flip properties and I own apartment complexes.  As such, I am always looking for ways to save money.  I have been using two simple tricks lately to garner up to 11% discount off my maintenance and rehab costs.  I have spent about $45,000 this year on a rehab project and these two tricks saved me about $4,000 in real money.  It is unbelievably simple and it was cash right back in my pocket.

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A Corporation’s Capital Gain and loss Rules

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This post discusses the tax treatment of your corporation’s capital gains and losses.  The treatment of capital gains and losses for corporations is different from the treatment of such items for individual taxpayers in several important ways.  In particular, as discussed more fully below, there is no favorable treatment for corporate long-term capital gains.  Also, there is no deduction (not even up to $3,000) for capital losses that exceed capital gains.  Be sure to consider the tax rules described in this post when planning your corporation’s capital gain and loss transactions.

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Tax Benefits from Hiring Your Children

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Although unemployment figures are slowly improving, it can still be extremely difficult, if not impossible, in the current job market for some college students and recent graduates to find seasonal or permanent jobs. As this article explains, in addition to the family business perhaps being a child’s only job option, employing a child may generate tax savings regardless of how the family business is organized.

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Owner of 28 rental properties was NOT a “professional” for tax loss purposes

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The Tax Court has held that a taxpayer, who owned over 28 rental apartments and who also was engaged as a full-time research associate for a corporation, wasn’t a real estate professional for purposes of the passive activity loss (PAL) rules. As a result, he couldn’t currently use losses from the rental activities to offset his compensation from the corporation and other income.

 Observation: This case illustrates how difficult it is for a taxpayer to qualify as a real estate professional for purposes of the PAL rules and the necessity of taking steps to document the extent of one’s required participation in that activity.

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Overview of the tax provisions in the 2012 American Taxpayer Relief Act

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The recently enacted 2012 American Taxpayer Relief Act is a sweeping tax package that includes, among many other items, permanent extension of the Bush-era tax cuts for most taxpayers, revised tax rates on ordinary and capital gain income for high-income individuals, modification of the estate tax, permanent relief from the AMT for individual taxpayers, limits on the deductions and exemptions of high-income individuals, and a host of retroactively resuscitated and extended tax breaks for individual and businesses. Here’s a look at the key elements of the package:

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