Liz Smith, CPA, MSTFP

While the naming convention implies that something is included in income, the auto lease inclusion is a calculated amount by which lease payment deductions are reduced. The reduction is triggered if the lease duration is 30 days or more and the fair market value (FMV) of the vehicle exceeds the threshold amount that the IRS…

Our guide will walk you through how to fill out Form 8824. These instructions detail the supporting documents needed to prepare the form and list line-by-line instructions. A completed form is also provided for further clarity on Form 8824 instructions. Step 1: Gather Supporting Information Here is a general summary of the information needed to…

Form 6252 is used to report income from the disposition of property sold under the installment method. In the course of a sale, when one or more payments are made after the close of the tax year, the installment method applies. What Sales Are Reported on Form 6252? Generally, when property is sold, a seller…

The steps shown here will walk you through how to complete Form 5884. These steps address how to obtain the form, complete calculations, report pass-through credit, and file the completed form. To further assist, we’ve provided an example of a filled-out form, prepared in accordance with the IRS’s Form 5884 instructions. Step 1: Obtain the…

Under cash-basis accounting, the taxpayer records income once payment is received and records expenses when payments are made. When noncash payments are received as income, the amount recorded is the fair market value (FMV) of the property received. Payments made with a bank credit card are deductible as cash payments, whereas payments made with a…

An initial boost of cash to keep operations afloat until the company can support itself may be obtained through outside funding. However, if an owner has cash available, then follow our guide on how to loan your business money. The process begins with creating a formal agreement. Next, you’ll transfer funds from your personal bank…

Paying your kids from your business is a legal way to reduce taxes for your company while utilizing your child’s standard deduction to provide tax-free income to your child. This strategy allows you to take a business deduction, teach your kids the family business, and keep money in the family. All businesses can deduct fair wages…

Leasing or renting property to your own business is an innovative way to create a business deduction while retaining and building real estate equity. When you own the building, you can manage the equity and take advantage of depreciation deductions on your personal tax return. If you lease or rent property to your partnership, S…

Installment sales are often used for the sale of a business and for real estate transactions. This sale structure is often chosen for the significant tax benefits to the seller and the unencumbered cash flow afforded to the buyer. How Does an Installment Sale Work? Without the installment sale rules, a gain or loss would…

Reading an IRS transcript can be very manageable if you know what to look for. You’ll first need to choose the right kind of transcript, review it for accuracy, and analyze the codes provided. You may have additional action items based on the information provided, but most likely, you’ll need to just sit tight and…

Code 150 on an IRS transcript means that the IRS has accepted your return for processing and has created a current-year file for you. Transcript code (TC) 150 may be shown with a dollar amount, representing the tax liability assessed. The tax assessment does not automatically mean you will owe the IRS money, as credits…

When transcript code (TC) 766 appears on an IRS transcript, it generally means a refundable credit has been applied to a taxpayer’s account. Refundable credits can generate refunds even when no tax is owed on the return. Sometimes, the transcript description for code 766 will say “tax relief credit”—and since tax relief is government assistance…