Active participation in rental property requires an individual to own at least 10% of the rental property and participate in management decisions regarding the property. By actively participating, the rental property owner receives a $25,000 rental loss allowance that permits the deduction of up to $25,000 in rental losses against nonpassive sources of income like…
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What Is a Trial Balance? Example, Purposes & How to Prepare
A trial balance is an internal accounting tool used to verify the accuracy of the bookkeeping system. It’s not a financial statement; it’s a list of all general ledger accounts with their respective debit or credit balances at a specific point in time. The fundamental principle behind a trial balance is that the total debits…
What Is a Floating Holiday? [+ Free Policy Template]
A floating holiday is a paid day (or days) off for employees outside the traditional allotment of paid holidays. Unlike those traditional holidays, which are set by the company, floating holidays are more flexible and can be used to accommodate individual needs and preferences. Companies often offer it as a way for employees to take…
Pay Equity: Small Business Guide to Equal Pay for Equal Work
Pay equity is the concept of paying employees comparably for similar work. This includes base compensation, as well as bonuses, overtime, opportunities for promotion, and other employee benefits. Although relevant pay considerations should be considered, pay equity is intended to correct discrepancies based on race, gender, national origin, and sexual orientation and prevent wage discrimination….
Moonlighting Policy: Handling Outside Employment [+ Template]
A moonlighting policy (also known as an outside employment policy) safeguards employers from potential conflicts of interest without needlessly limiting employees’ rights and options for working additional jobs. Employees working second jobs doesn’t typically concern employers, but in some cases, it can impact the employee’s shift availability, work productivity, and professional behavior. That’s why it’s…
Cost of Debt Formula & Calculator: Estimate Your Interest Payments
Cost of debt is a figure that shows how much you’ll pay for borrowing funds. It can be calculated as either an annual pre-tax percentage or an annual after-tax figure by using your company’s tax rate. The pre-tax figure can be calculated by taking the sum of your annual interest payments and dividing that number…
What Is Qualified Improvement Property & How Does It Work?
Qualified Improvement Property (QIP) is an asset classification for certain property improvements made to the interior of a nonresidential real estate building. The improvements must be installed after the taxpayer placed the building in service and have a 15-year tax life. QIP can be depreciated using both bonus and section 179 depreciation—these methods allow taxpayers…
How Mortgage Loan-level Pricing Adjustments (LLPAs) Work
A mortgage loan-level pricing adjustment (LLPA) is an adjustment to the costs involved with getting a home loan. LLPAs are usually based on the characteristics of a loan—such as the loan amount, property type, down payment amount, credit score, and occupancy type. The amount of the adjustment can vary based on the loan program and…