S-corp elections, reasonable compensation, the QBI deduction, and the entity choices that decide how much of what the business earns stays yours.
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.
Read post
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.
Read postThe 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.
Read postSection 1042 defers every dollar of capital gains tax on a sale of company stock to an employee stock ownership plan, but only for C corporation stock. S corporation owners get nothing until sales after December 31, 2027, and then only on 10% of the proceeds.
Read postFor 2026 the 20% pass-through deduction starts phasing out at $201,750 of taxable income for singles and $403,500 for joint filers, and for service businesses it hits zero at $276,750 and $553,500. The One Big Beautiful Bill widened the band, so the deduction now falls more slowly.
Read post
The One Big Beautiful Bill made 100% bonus depreciation permanent, but only for property acquired after January 19, 2025. Sign the contract a day early and you are capped at 40%. The date you committed to buy matters more than the date the asset shows up.
Read postThe S corp loss basis limit stops at the shareholder's stock basis plus loans made directly to the corporation. A bank guarantee adds nothing until the shareholder actually pays it, and Form 7203 carries the unused loss forward.
Read postCapital losses die against wages at $3,000 a year. Section 1244 converts up to $100,000 of a failed corporation's stock loss into an ordinary deduction in a single year, if the stock was set up right when it was issued.
Read post
The self-employed health insurance deduction is alive and well for S corp owners, but only when the premiums run through payroll and land in Box 1 of the W-2. Here is the Notice 2008-1 routing that makes $18,000 of premiums 100% deductible, and the traps that quietly kill it.
Read postThe S election deadline passes quietly, and most owners only find out when the first S corporation return is being prepared and there is no acceptance letter in the file. Rev. Proc. 2013-30 fixes it retroactively, for free, if you follow its script exactly.
Read postThe $600 threshold that has decided who gets a 1099 since 1954 is gone. For payments made in 2026 the number is $2,000, but royalties, attorney proceeds, and your W-9 routine did not get the memo.
Read post
The employee home office deduction died in 2018 and the OBBBA buried it for good, and an S corp owner is an employee of their own corporation. The accountable plan is the one door still open: the corporation reimburses your actual home office costs, deducts them, and none of it touches your W-2.
Read post
Contributions to Trump accounts opened July 4, 2026, and new IRC §128 lets your corporation put $2,500 a year into your child's account without touching your taxable income. Here is the part nobody hands you: the written plan, the borrowed dependent care tests, and the FICA asterisk.
Read postWages you pay your own child for real work are deductible at your marginal rate and taxed to the child at theirs, which in 2026 means a rate of zero on the first $16,100. Run the payroll through the right entity and Social Security, Medicare, and FUTA tax disappear too. The catch is that the Tax Court has been grading these arrangements since 1967, and it publishes the rubric.
Read postThe S corp pitch is built on saving the 15.3% self-employment tax. But 12.4% of that is Social Security, and it stops at the wage base. If your W-2 jobs already maxed it out, an S corp on your 1099/C2C income can cost more than it saves.
Read postAn S corporation pays payroll tax only on the salary, not the distributions. Two politicians showed how far that goes, and the IRS has been drawing the line ever since.
Read postOBBBA made the excess business loss limitation permanent and reset its threshold, so for 2026 a noncorporate taxpayer can deduct only $512,000 of net business loss on a joint return against nonbusiness income, down from $626,000 in 2025. Everything past the cap becomes an NOL carryforward usable against no more than 80% of future income. Here is the §461(l) math and why it bites the cost-segregation and short-term-rental crowd hardest.
Read postA vehicle rated over 6,000 pounds escapes the $20,300 luxury-auto cap that cripples ordinary cars. But the Section 179 deduction for it stops at $32,000 in 2026, and the tool that actually writes off the full SUV is 100% bonus depreciation, which the One Big Beautiful Bill Act just made permanent. Here is the 2026 math and the door-jamb label that decides it.
Read postOBBBA raised the SALT deduction cap to $40,000, then phases it down to $10,000 for incomes over $500,000. For a business owner who pays more than that in state tax, the pass-through entity tax election still deducts every dollar at the entity level, above the cap and outside the phaseout. Here is the 2026 math.
Read post
Treasury Regulation §1.469-2(f)(6) recharacterizes rental income from property leased to your own S corporation as non-passive, while rental losses stay passive. Here's how the self-rental rule for S corp owners traps cost segregation deductions, what the Williams case settled, and how the §1.469-4 grouping election under Rev. Proc. 2010-13 unwinds it.
Read postIRC §280A(g) lets you rent your home to your S corporation for up to 14 days a year, deduct the rent on the business return, and exclude the income on your own. Here's how the Augusta rule works, the rate that survives an audit, and what the Sinopoli case teaches about doing it wrong.
Read postOBBBA created a 12-month window for qualified small businesses to undo the TCJA's Section 174 R&E capitalization and pull back three years of federal tax. Here's how the OBBBA Section 174 small business election works under Rev. Proc. 2025-28, the §280C(c) recoupling step that catches most preparers, and how state conformity changes the size of the refund.
Read postS-corp elections, reasonable compensation, and the QBI deduction reward planning done before the deadline, not after. We run the entity math, file the elections on time, and keep the payroll defensible, so the savings survive an exam.