October 30, 2013
If you own a Limited Liability Company (LLC) that you are not actively managing, but you claim tax deductions, this blog post will be of interest to you. Close to 30 years ago, the IRS passive activity loss (PAL) rules (I.R.C. Section 469) were enacted to limit the degree to which money-losing LLCs could be used as tax shelters by their owners claiming losses—such as depreciation, interest, and other deductions. These rules created the passive income or loss category and they apply to all business activities, including real estate rental activity.
There are two types of passive income or losses including income earned from:
Essentially, the PAL rules are intended to prevent individuals from deducting passive losses (such as from rental activities) from their non-passive income. However, if you own or co-own an LLC on a part-time basis or have someone else manage it on your behalf, as long as you are active in the business you can claim any related losses against your non-passive income, if you meet the IRS definition of "material participation." The IRS defines “material participation” as being “involved in the operations of the activity on a basis which is regular, continuous, and substantial.” There are several tests that the IRS uses to define material participation in a business, based on your activity and the amount of time you spend working. Read about it in detail here.
Another point to keep in mind—the PAL rules state that passive losses from a business activity can only be used to offset passive income from other passive activities. Passive losses in excess of your passive income for the year are capped, but they can be carried forward and deducted in future years when and if you have passive income or if you sell or dispose of the activity that generated the suspended losses. For additional information about PAL tax regulations, please visit IRS.gov.
June is national safety month, and it never hurts to remind your clients and community that safety always comes first. Our goal with this blog is to help you augment your marketing initiatives with a few ideas around safety. While we can’t cover every industry in a single post, we hope that you find the tips below useful and that they spark some innovative new marketing ideas!
It’s graduation season, and for many parents that means it’s almost time to start shelling out for college tuition. For those well-prepared parents with established 529 plans in place, the time has come to tap into that money pool. Of course, when it comes to tax-advantaged savings, trust that the IRS is keeping close watch, so it’s important to avoid making any rookie mistakes. It’s also important to keep saving as you move forward.
Having a remote workforce can be challenging, especially if you are trying to build a positive, collaborative work environment. So, how do you create a sense of comradery when you have staff in remote locations? These tips can help: