Contractors regularly upgrade HVAC systems and lighting in commercial buildings to improve energy efficiency. These projects can be expensive. When the building owner is a government entity, the tax code allows contractors to claim an immediate tax deduction for the cost of energy-efficient improvements under Section 179D. But not every contractor who touches the building……
Tag: Tax Deductions
What is a Statutory Employee and Who Qualifies?
Our tax laws usually look to various foundational definitions, such as units of property, activities, or even roles. When it comes to workers who receive compensation for their work, it is often the role that matters the most. We see this in disputes over whether a contractor is really an employee for payroll tax purposes.……
Split-Dollar Insurance Failure: Income and No Tax Deduction
Business owners frequently seek ways to maximize tax deductions while providing benefits to key employees. Life insurance arrangements can play a part of this strategy. Life-insurance related strategies can be particularly useful if they come with significant tax advantages and help the parties meet their financial goals. However, the line between legitimate business expenses and……
Can You Create Deductions by Forgiving Debt to Your Own Entities?
Business owners with multiple entities often transfer funds between their companies. These transfers are often accounted for in an inter-company account. In other instances, they may be structured as loans. When financial difficulties arise, these intercompany loans might be forgiven. If this is the case, can the borrowing entity exclude the forgiveness income while the……
Can Self-Employed Taxpayers Deduct the Value of Their Own Time?
Small business owners and self-employed professionals often spend countless hours developing products, services, or processes that enhance their business operations. A construction contractor might spend weekends designing custom software to track job costs. An engineer might devote evenings to developing a proprietary modeling program. In these situations, many entrepreneurs wonder: if they had hired someone……
Section 179D Tax Deduction Claimed in Final Year
Architects and engineers who design energy-efficient government buildings can qualify for a Section 179D tax deduction. Technically, it is the building owner who qualifies, but since the government is the owner of the building and does not pay tax, our tax law allows the allocation of the deduction to the designer. This allocation provides an……
Evaluation of Valuations for Charitable Contributions
The valuation of property for charitable contribution deductions represents one of the most challenging areas of tax compliance for both practitioners and taxpayers. While the tax code encourages charitable giving through deductions, it also demands rigorous substantiation and accurate valuations to prevent abuse. For real estate donations in particular, determining the appropriate value requires careful……
When You Can’t Deduct Annual Business Expenses
Many businesses have significant recurring expenses that occur like clockwork each year. Think of annual maintenance shutdowns for manufacturing plants, seasonal refurbishments for hotels, or equipment rebuilds for industrial operations. While these expenses are predictable and virtually certain to occur, the timing of when they can be deducted for tax purposes isn’t always straightforward. The……
Tax Disputes When You Have Too Many Records
There are quite a few tax court cases involving taxpayers who did not have sufficient records to substantiate their tax positions. This is probably more than half of the cases that end up in the U.S. Tax Court. But what about the opposite situation where there are too many records? How is one to contend……