Interesting Article

[Pacun]

When will the IRS hold its annual Tax Forum in Hawaii, so I can use suggestion number 4?

"Some of these will apply to last year. All of these apply to this year.

1.- Eliminate the word "friend" from your vocabulary. From now on, these people are sources of business, so start talking business and asking for referrals over meals or beverages, when playing golf or going to the movies.

2.- Operate as a one-person S corporation to save self-employment taxes.

3.- Hire your children (deductions for you, nontaxable or low-tax income for the children; also, wages paid by parents to children are exempt from payroll taxes).

4.- Combine business and personal trips so that the personal side of your trip becomes part of your business deduction under the travel rules (for example, traveling by cruise ship to a convention on St. Thomas).

5.- Properly classify business-expansion expenses as deductions rather than nondeductible capital costs.

6.- If you are single, operate as a C corporation to obtain medical deductions.

7.- Properly identify deductible start-up expenses rather than letting them fall by the wayside (a common oversight).

8.- Properly classify entertainment that qualifies for the 100% deduction rather than the 50% deduction.

9.- Identify the vehicle deduction method that gives you the largest deductions (choosing between the IRS mileage method and the actual expense method).

10- Know the entertainment facility rules so your vacation home can become a tax deduction.

11.- Know when you can deduct commission rebates.

12.0 Use a 1031 exchange to defer and defer and defer taxes (perhaps until death, when, say the assets are marked up to fair market value and the income taxes are forgiven).

13.- Qualify your office in your home as an administrative office.

14.- Use allocation methods that make your home-office deductions larger.

15.- Install a section 105 medical plan to move your deductions to Schedule C for maximum benefits.

16.- Operate as a C corporation to save Social Security benefits.

17.- Properly identify your maximum business miles so you deduct the largest percentage of your vehicles.

This is not a complete list, but it should give you some ideas that will get you started on your savings. Keep in mind that putting tax-planning ideas into practice is like benefiting from an annuity: You get the benefits every year you are in business."

[joanmcq]

Where was that load of crap from? Doesn't know much about the nondeductibility of cruise travel, for instance. Any list like that is bad because people will think all of them apply to all of them. Hiring your kids only works if you are a sole proprietor, but since they think everyone should be a corp...

[Pacun]

Since you generalized, I will too. You are correct, it doesn't apply to everybody. For example, number 3 doesn't apply to everybody and my clients know that. I thought my clients were not that smart but they know that if they don't have any children, they cannot hire their children. They might ask "can I hire the child of my neighbor and use number 3"? but they know they cannot hire their own children. Anyways...

My point is that there are a few items on the article that are good. For us, tax professionals, sooner or later will will have clients who, combined, will be able to benefit from about 14 items on the article.

Also, 1,2,5,7,8, 11, 17 are GOOD suggestions, agree?

[HV Ken]

My point is that there are a few items on the article that are good. For us, tax professionals, sooner or later will will have clients who, combined, will be able to benefit from about 14 items on the article.

Also, 1,2,5,7,8, 11, 17 are GOOD suggestions, agree?

Something along the lines of #15 saved us between $4,000 and $5,000 on our 2010 taxes.