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Asset sales produce ordinary income (on inventory, receivables, goodwill recapture) and capital gains (on goodwill, real property).
US TaxSelling a business triggers capital gains tax, depreciation recapture, and potentially ordinary income depending on the asset allocation. Stock sales vs.
US TaxSelling business equipment triggers depreciation recapture under IRC 1245. Depreciation recapture rules (IRC 1245): The formula: - Sale price: what you.
US TaxWhen a homeowner sells a personal residence that was also used for business (home office), the gain exclusion under IRC 121 ($250,000 single.
US TaxSelling a rental property triggers multiple layers of tax that many investors do not anticipate. Tax components when selling a rental property: | Component.
US TaxWhen a small business is sold, the tax treatment depends on whether it is structured as an asset sale or stock sale, how the purchase price is allocated.
US TaxShort-term rentals (Airbnb, VRBO, and other vacation rental platforms) have tax rules that differ significantly from traditional long-term rentals.
US TaxSchedule C filers are audited at 3-5x the rate of W-2 employees. Schedule C audit defense documentation system: Income documentation: - Separate business.
US TaxConverting to S-Corp requires filing Form 2553 (due March 15 for calendar-year businesses). Conversion mechanics: Step 1: Ensure you have an LLC.
US TaxAn LLC and a sole proprietorship are taxed identically for federal income tax purposes (both report on Schedule C).
US TaxA solo 401(k) allows self-employed individuals with no employees (other than a spouse) to contribute up to $70,000 per year (2025) as both employee and.
US TaxHiring a spouse as a W-2 employee unlocks health insurance deductions, doubles retirement contributions, and creates legitimate business deductions.
US TaxA specified service trade or business (SSTB) loses the QBI deduction when income exceeds $191,950 (single) or $383,900 (MFJ).
US TaxIRC 195 allows new businesses to deduct up to $5,000 of startup costs and $5,000 of organizational costs in the first year.
US TaxThe first $5,000 in startup costs is immediately deductible, with the remainder amortized over 180 months.
US TaxThe first $5,000 in startup costs is deductible immediately under IRC 195 (phased out between $50,000 and $55,000 in total costs).
US TaxUnder IRC 195, a new business can deduct up to $5,000 of startup costs immediately in the first year (phasing out dollar-for-dollar above $50,000 in total.
US TaxSeveral states impose franchise taxes on LLCs, S-Corps, and C-Corps regardless of profitability. Major state franchise tax regimes: California: - $800.
US TaxNine states have no individual income tax. Moving a business to a no-income-tax state eliminates state income tax but does not eliminate federal tax.
US TaxIf your business has employees, property, or significant sales in another state, you may owe income tax there.
US TaxState nexus determines whether a business has sufficient connection to a state to be subject to that state's income tax, franchise tax, or sales tax.
US TaxA remote employee or independent contractor in another state can create income tax nexus for the business.
US TaxAfter South Dakota v. Wayfair (2018), states can require sales tax collection from out-of-state sellers exceeding $100,000 in sales or 200 transactions.
US TaxThe pass-through entity tax (PTET) is a state-level election that allows S-Corps, partnerships.