A fake trading platform and a fake ransom take the same $330,000. One loss comes off the return in full, the other comes off nothing. The difference is §165(c)(2), and in 2026 it is worth $65,068.
Read postThe Journal
Notes on tax strategy.
Weekly writing on the planning conversations that move the needle: S-Corp elections, equity compensation, real estate, and the IRS rules behind them.
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SPX vs SPY Options Tax Treatment: The 60/40 Split.
Two traders run the same S&P 500 strategy. One trades the index, one trades the ETF, and the federal rate on identical profit is 26.8% against 37%. On $200,000 of gain that difference is $20,400.
Read postMissed the Mark-to-Market Election Deadline: The New-Entity Fix.
The §475(f) election for 2026 died on April 15, and §9100 relief almost never revives it. A new trading entity formed now gets its own 2 months and 15 days, which on a $154,000 fourth-quarter loss is worth $39,076.
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F Reorganization Before Selling an S Corp: What It Costs You.
An F reorganization is tax-free when it happens, and then it turns your stock sale into an asset sale. On a $12,000,000 exit with $1,400,000 of fully expensed equipment, that character change costs the seller $238,000.
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1031 Exchange Vacation Home Safe Harbor: Two Years, 14 Rental Days Each.
Rev. Proc. 2008-16 keeps the IRS from challenging a vacation home exchange if you owned the place 24 months, rented it at a fair rental for 14 days in each of the two years before closing, and held personal use to 10% of the rental days. On an $819,000 gain, missing it costs $199,372.
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Double Step-Up in Basis: Why Community Property Beats Joint Tenancy.
Under IRC §1014(b)(6) both halves of community property reset to fair market value at the first death, not just the decedent's half. On a rental that went from a $100,000 adjusted basis to $1,300,000, holding it in joint tenancy instead costs the surviving spouse $147,800.
Read postThe Section 453A Interest Charge on Installment Sales Over $5 Million.
The installment method spreads the gain on a business sale, but if the notes you take back in one year add up to more than $5,000,000, §453A charges you interest on the tax you deferred. On an $8,000,000 seller note that runs about $100,800 over five years.
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Missed the 60-Day Rollover Deadline: The Self-Certification Fix.
Blow the 60-day window on an IRA or 401(k) rollover and the entire distribution becomes ordinary income, plus 10% if you are under 59½. Rev. Proc. 2016-47 lets you fix it with a letter to your custodian, no IRS filing fee and no ruling to wait for.
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Reverse 1031 Exchange Rules: Buy First, But Never in Your Own Name.
You can buy the replacement property before you sell the old one, but only if an exchange accommodation titleholder takes title instead of you. Rev. Proc. 2000-37 gives you 5 business days for the paperwork, 45 days to name what you are selling, and 180 days to finish.
Read postThe Rule of 55 401(k) Withdrawal: One Rollover Kills It.
Leave your employer during or after the calendar year you turn 55 and IRC §72(t)(2)(A)(v) lets you pull money out of that plan with no 10% early distribution penalty. Roll the balance to an IRA first and the exception is gone permanently.
Read postThe Late Portability Election Deadline: You Have Five Years, Not Nine Months.
A portability election belongs on a Form 706 due nine months after death, but Rev. Proc. 2022-32 gives most estates that owed no tax five years from the date of death to file it anyway. On a 2022 death, that late election is still worth up to $12,060,000 of exclusion.
Read postPersonal Use Days on a Rental Property: The 14-Day Test.
A rental turns into a residence under IRC §280A(d)(1) the moment personal use passes the greater of 14 days or 10% of the days it was rented at a fair rental. On a beach house rented 200 days, the 25th night turns a $12,909 deductible loss into $0 and an $11,778 carryforward.
Read postSection 1045 Rollover: The 60-Day Rule When You Sell QSBS Early.
Selling qualified small business stock before the five-year mark normally means paying full freight on the gain. IRC §1045 defers all of it if you buy replacement QSBS within 60 days, and on a $6,050,000 exit that is $1,428,000 that does not come due.
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