Your Tax, Estate and Business Resource!

Posted on February 8, 2016 by

You have concerns — I have solutions

  • Are you paying high taxes without knowing why? Understand & pay less. 
  • Is your family afraid of what will happen if you die? Plan your estate! 
  • Are you considering a complicated transaction? We can advise you?

As a 2017-2020 Super Lawyer, I can help you overcome these worries with ease and effectiveness. I want to see a smile on your face! 

Here’s How:

YOUR TAXES: The best time to do something is NOW! It is never too early to set up transactions and records. Don’t let it become too late. As your mentor I can help.

YOUR ESTATE: You cannot predict when you will need your estate planning documents. God does not ask your permission before he sends you that invitation. So make sure that you have the best estate plan and that you understand it. For more information, see the Estate Planning and Probate tab or use the Search Box.

CONTRACTS: don’t use internet agreements and don’t sign agreements that you don’t understand. I negotiate contracts that last because they are win-win. They benefit all parties. For more information, see the Business tab or use the Search Box.

This website shows thousands of ways to save thousands of dollars. So read on. 

If you are a successful individual or business or property owner I may be the only tax and legal adviser that you’ll ever need. Here is why:

⊗ As a tax attorney, I am more than an accountant. I am your legal advocate.
⊗ As a former IRS lawyer, I have inside experience.
⊗ Instead of telling you you can’t do it, I show you how to do it.
⊗ As a former corporate counsel, I negotiate win-win contracts.
⊗ As your legal mentor, I teach you how to implement my strategies.
⊗ I provide ease and effectiveness in the most convoluted tax and legal areas.

Hire me for:

  1. Professionally prepared tax returns.
  2. Personal tax planning, generated with my Tax Mastery(c) program.
  3. Answers from a LAWYER  based on respected sources like Bloomberg Law.
  4. Legal representation against the Internal Revenue Service. 
  5. Considerate, personal estate plans, wills, and trusts.
  6. Representation before the Shelby County Probate Court,
  7. Entertaining seminars to inform and entertain your group.
  8. My WealthWISe e-letter: regularly updates you on fast moving laws.
  9. Win-win contracts for your business that benefit both parties,
  10. Knowledge, Knowledge, Knowledge that puts you in control.

Check out my Credentials and Testimonials

Questions? Contact me today and try out my services with a FREE 1/2 Hour Consultation reviewing your question, your tax return or legal documents. We will provide valuable materials covering your question.

This Website only presents the  tip of the iceberg. Do not act on it the advice of a tax professional.

Posted in Business Law, Taxes, Estate Planning & Probate, Individual Tax, Real estate, investing, Representation before the IRS, Speaking, What's New? | Leave a comment

What to do on Tax Day and after

Posted on October 14, 2020 by

If you haven’t filed your tax return, it’s time to get cracking! If you are a small business you will benefit by using an experienced tax professional. As a Super Lawyer in taxation, it is time for me to make sure that my clients get what they need. I provide tax preparation PLUS. Unlike many tax lawyers, I love to work with small businesses. As such, you get personal service and a caring attitude along with the expertise of a former IRS lawyer with years of experience. If you missed me this tax season, you can save taxes for 2020 by learning what I know.

As an Accredited Estate Planner, I don’t drop the ball during tax season or otherwise. Your family will not get advance notice of when they must use your estate planning. I have unusual experience with revocable living trust planning.

You can take advantage of a half-hour free consultation to find out if you will benefit from these services. Do it now, while you can! #tax planning, #estate planning

Posted in Uncategorized

MIND YOUR BUSINESS JUNE 2020

Posted on May 30, 2020 by

Small businesses are my favorite client, especially family businesses. Diane & David Bowling of Commercial Construction and Renovation, LLC , Jackson, TN, said about my tax preparation: Thank you! You truly are a “Super Lawyer.”

New clients often come to me for advice on forming a new business. Some are interested in S corporations since S corporation earnings are not subject to the self-employment tax. There is a lot more to know before you choose an S corporation. I was once in house counsel and CFO of a $15 million dollar + S corporation. S Corporations have pluses and minuses. The rules are complex. They are audit magnets. One of my clients suffered criminal investigation because the IRS did not understand the rules.

The S corporation is an unusual hybrid business entity. It is a corporation under state law. However, for federal tax purposes, the IRS treats it much like a partnership. However, there are key differences between an S corporation and a partnership that confuse the shareholders.

For a corporation to become an S corporation it must file an S corporation election (Form 2353) within two months and 15 days (75 days total) of the date of formation for the election to take effect in the first tax year. The corporation itself is not taxed. Instead, the character and amount of income and deductions pass through to the shareholders. S corporation income is reported on a Form 1120 S and shareholder shares are reported on a K-1 form.

Shareholders’ wages. The IRS has ruled that S corporations must pay shareholders wages for their services, subject to social security and Medicare withholding, which must be matched by the corporation, so it is equivalent to self-employment tax. S corporations not paying wages to owners may draw IRS audits.
One class of stock. Furthermore, S corporations have other complicated rules and can lose their status easily. For example, an S corporation can have only one class of stock. No preferred stock.

Limits on shareholder loss deductions. Generally S corporation’s shareholders cannot deduct losses exceeding the sum of their stock cost plus what they loaned to the corporation. Loans to the corporation from third parties don’t count. Shareholders don’t like to worry about these nuances.

IRS Audits. Shareholders tend to misunderstand some rules and to abuse others. So, the IRS loves to audit S corporations. The IRS is challenging these cases and often wins in the Courts. Furthermore, the IRS does not understand the rules so I have seen them suggest criminal investigation where it was not warranted.

My advice. I have formed and managed several successful S corporations. However, they are not suitable for many taxpayers. I advise getting expert legal advice before making a deci.

Posted in Business Law, Taxes, What's New?

ESTATE PLANNING JUNE 2020

Posted on May 30, 2020 by

Is your estate plan or lack of an estate plan a trap for your family? Is it going to be expensive and aggravating for your family after your have passed away when life is already miserable? Let me show you how to save yourself and your family significant time and money for a lot less than going with your current “plan” talking with a professional, preferably an attorney who can draft or redraft documents

As an Accredited Estate Planner, I review a lot of estate plans. One of the most popular estate plans for wealthy clients prior to 2011 placed part of a deceased spouse’s estate in an irrevocable “bypass” or “credit shelter” trust when the first spouse dies. This strategy was designed to keep those assets from adding to the surviving spouse’s estate where it might be exposed it to a higher estate tax. However, these days, 99% of taxpayers have no need for such trusts since the lifetime estate and gift tax exemption per couple is ($11,580,000).

In general, funding a credit shelter trust at the first spouse’s death is a disaster. It is expensive and inconvenient to operate. Typically the trust has a separate trustee. It is a separate irrevocable taxable entity requiring a separate tax return and tax ID number. It deprives the surviving spouse of control. It has the highest tax rate at the lowest taxable income level of any taxable entity. It can increase capital gains in the spouse’s heirs.

If you have a will or trust that provides for a credit shelter trust, NOW is the time to remedy the situation. If you already have a credit shelter trust, Tennessee has laws under which, with professional help, you can eliminate these trusts even if you are deceased. An improved estate planning document can be much simpler and qualify for lower taxes. The assets can receive an increase in “cost” (stepped up basis) upon the surviving spouse’s death.

My Advice: This article is the tip of the iceberg. It is almost always painless to have your will, trust, and other estate planning documents reviewed. I offer a free ½ hour consultation that will get you started. Call me!

Posted in Estate Planning & Probate, What's New?

INDIVIDUAL TAX PLANNING June 2020

Posted on May 29, 2020 by

I WON’T KID YOU!


Raising children is expensive! You cannot afford to overlook tax breaks. Here are some of my favorites. There are $2,000 and $500 child credits. There is a child-care credit for up to $600 per child up to $1,200. Tax credits reduce taxes dollar for dollar. The rules are complex. I have a surprise or two for you.
CHILD CREDITS. There is a $2,000 child credit for parents of a “qualified child,” replacing the previous $4,000 deduction for dependents. In addition, there is a $500 credit for “qualified relatives.” The credit phases out if you have “modified adjusted gross income’ exceeding $400,000 for married filing jointly and $200,000 for other statuses. These rules are simplified so do not act upon them without advice.

QUALIFYING CHILD: entitles parents to a $2,500 credit.

  1. your legal child, stepchild, or foster child,
  2. under 19 or under 24 and a full-time student.,
  3. provided not more than half of his or her support,
  4. claimed as a dependent on your tax return,
  5. lived with you in the U.S. for more than half the year,
  6. a U.S. citizen, and

QUALIFYING RELATIVE. A qualifying relative entitles parents to a $500 credit.

  1. who is not a qualifying child?
  2. a household member who is a close relatives or in-laws or certain others.
  3. who made less than $4,200 in gross income in 2019 (the former deduction for a dependent).
  4. is one for whom you provided more than half of the total support during the year.
    For exhaustive information, see IRS Publication 501

DEPENDENT CARE CREDIT

The dependent care credit is a valuable tax benefit for parents, up to $1,200 (20% of qualifying expenses). This credit applies to expenses for the well-being and protection of your child that are necessary for the gainful employment of the parents. Here are some requirements.

To qualify: (1) Must be your qualifying child who is your dependent and who was under age 13. The expenses must be for that person’s care. (2) You must share your principal residence with the qualifying persons. (3) You must pay the expenses so that you and your spouse can work, and each must have income from work that year. (4) Your expenses may not be paid to someone you can claim as a dependent. If you are married, you must file a joint return. (5) Necessary household services qualify like the services of a housekeeper, maid, or cook but not the services of a chauffeur, bartender, or gardener.

NOT qualifying are amounts for food, lodging, clothing, education, and entertainment. Education means kindergarten or a higher grade but does not include before or after-school care.

Amount limits. The qualifying expenses are limited to the lower of a dollar limit and an earned income limit. The dollar limit is $3,000 for the first q ($6,000 for two or more qualifying persons). The earned income is the smaller of your or your spouse’s earned income for the year. The credit is 20% of qualifying expenses, so it can be up t o $1,200
TIP: A qualifying child’s Summer day camp costs qualify for the dependent care credit including day camps for sports, computers, math, theater or just for fun, and includes camps to help improve reading or study skills. Not qualifying are overnight camps, summer school, and tutoring.
This article is oversimplified and before you try to apply it, I suggest that you ask a professional. Here are a mere 20 pages or so that the IRS has provided of guidance in IRS Publication 503 Child and Dependent Care Expenses.

Posted in Individual Tax, What's New?

The Tax WISard’s Thoughts for Investment Advisors June 2020

Posted on May 18, 2020 by

Taxpayers pay unnecessary taxes every year because they are ignorant of the tax laws. For example, a tax return client bragged to me about over $50,000 in dividends, all foreign companies. That client paid TWICE as much tax as he would have with domestic dividends, 32% versus 15%. To help remedy this situation, I recently sent my guide, The Tax Wizard’s Thoughts for Investment Advisors to over 50 top investment advisers.

Capital gains and losses. Long Term Capital gains (on investments held 12 months or more) are taxed at lower rates than ordinary income, generally half as much or less. For short-term gains, the tax rate can hit 40.8%. Timing is everything.

If you or someone you know are interested in some of the strategies let me know. Read more

Pick your cost. A great trick: If you purchased several blocks of stock over a period of time, you can specify which you are selling, saving taxes by selecting those that cost the most.

Capital Losses. You can save taxes by selling loss investments toward year end to offset up to 100% of your gains from such sales. You can use excess losses to offset up to $3,000 of other taxable income. If yet more losses remain, you can carry them forward to offset gains in future years.

“Qualified dividends” are those from domestic US companies. Qualified dividends are taxed at lower rates, just like long term capital gains.

3.8% Surtax on net investment income. This tax applies to the lesser of: (i) net investment income or (ii) “modified adjusted gross income” that exceeds $250,000 for joint filers, $125,000 for married separate filers or $200,000 for other taxpayers. Investment income includes interest, dividends, capital gains, annuities, royalties and passive rental income. See Form 8960.

Net investment interest. If you pay interest on debt used to purchase investments, like margin interest or interest on a loan to purchase an investment partnership, S corporation, LLC or corporation, the interest can be deducted on Schedule A as an itemized deduction up to the amount of net investment income. You can elect to increase net investment income with long term capital gain or qualified dividends but they are then taxed as ordinary income.

More important rules and strategies in the next WealthWISe.

Posted in Business Law, Taxes, Individual Tax, Real estate, investing, What's New?

What Can Wis Do for You?

Posted on December 24, 2019 by

This is a brief summary of Business, Tax and Estates Planning tasks that Wis can do for you. If you wonder if Wis can do it, call and see!

  • TAXES
  • Tax return preparation
  • Tax Mastery© Analysis
  • IRS Examinations
  • IRS Appeals
  • ESTATE PLANNING
  • Revocable living trusts
  • Wills
  • Advance Care Plans
  • Power of Attorney
  • BUSINESS CONTRACTS
  • Buy or sell businesses
  • Form LLC’s & Partnerships
  • Employment law
  • Real estate contracts, leases
  • Technology
  • Confidentiality
Posted in Uncategorized

REAL ESTATE, INVESTMENTS Sept. 2019

Posted on October 6, 2019 by

Rental Real Estate Tax Strategies – more advanced
Real estate rental properties can be a fine tax shelter and a satisfying way to build retirement income if you know what you are doing. However, watch out for the complexities. The last WealthWISe discussed some of the basics. This article will get into more complex matters. These include a deduction of up to 20% of net rental income, taxation of gain at lower rates if you miss the traps for flippers, “phantom income,” PAL rules that limit rental operating losses, and the self-employment tax on rentals that provide significant services. Read more.

20% QBI Deduction. Is It For You? The new 20% deduction for domestic income from pass-throughs can apply to landlords if they have moderate incomes, but it is not automatic. Partnerships, S corporations, or sole proprietorships can qualify and can deduct up to 20% of profits from their taxable income. However, the rental activity must involve regular, continuous and substantial activities intended to make a profit. This does not mean a triple net lease. You may qualify for a safe harbor if you are an owner that devotes at least 250 hours to the rental activity. If your taxable income does not exceed a threshold of $315,000 (joint filers), or $157,500 (all other taxpayers), there are no further limits to this deduction. The deduction phases out as income exceeds $160,700 ($321,400 for a joint return).

Capital gain Rental properties held 12 months or more qualify for long term capital gain treatment. They are generally taxed at half of normal tax rates or less.

Dealer trap. Loss of capital gain trap: A property held primarily for sale does not qualify for capital gain treatment. So a real estate flipper, who is in the business of buying and selling properties, may not qualify.

Special rules must be strictly followed for the sale to qualify as a “like kind exchange rules.” Get professional advice to qualify.

“Phantom gain” is a taxable gain that occurs even though you have no equity because the property’s adjusted basis was decreased by depreciation or where you previously refinanced and took out cash.

Vacation Homes What about property you use personally and rent, such as a vacation home? This situation is complicated. You must divide all deductions between personal and rental use. The IRS and the courts disagree on how. The specifics are beyond the scope of this article.

Passive Loss Rules. Congress enacted the Passive Activity Loss rules (PAL) to fight tax shelters, and they automatically apply to most rental activities. Under PAL you must suspend rental losses until there is offsetting income from PAL’s or its sale. However, an exception allows rental property owners to deduct up to $25,000 of PAL in which you actively participate. Active participation means significant management functions but may include using a property manager. The $25,000 limit phases out as modified adjusted gross income exceeds $100,000, so at $150,000 in MAGI you deduct nothing. Married taxpayers filing separate returns may not use the $25,000 allowance unless they live apart during the entire taxable year.

Real Estate Pros If you spend most of your working time in the real estate business, rental real estate losses are exempt from the passive loss rules. We are talking about a majority of work hours and more than 750 hours per year. This means that if you have a full time job elsewhere, you most likely cannot qualify.

Bed And Breakfast Trap Watch out! If the operation of a rental property involves significant services, the IRS could treat it as a trade or business, subject to the self-employment tax (an extra 15%). For example a Bed and Breakfast. This rule is most dangerous to short term rentals like Airbnb.

Posted in Business Law, Taxes, Individual Tax, Real estate, investing

MIND YOUR BUSINESS Sept. 2019

Posted on October 6, 2019 by

After you die, who will own your business?

If you do nothing before you die, your business will pass as part of your estate, probably to your spouse. Is this what you want? More importantly, is this what your spouse wants? Would your spouse rather die? Would your spouse rather have cash? Does your spouse get along with your partner(s) or co-owners? There are many ways to accomplish what you want and I will discuss a few of them.

My advice would be to enter into a “Buy Sell Agreement” with your business partners, or if there are none, a valued employee or even a competitor. Buy sell agreements typically require an owner to first offer his interest back to the business or other owners if he dies, he wishes to sell it or he is no longer employed there. With such an agreement you can provide who will buy your business and for how much. That way, your spouse ends up with cash, and a person who wants and knows the business ends up with the business. Life insurance can be purchased to provide the cash needed to make the purchase. Make sure the buyer is the beneficiary. Another advantage of such agreements is that they keep ownership of the business in the family, so to speak.

There are two major types of buy-sell agreements, a “redemption agreement,” and a “cross-purchase agreement,” Under a redemption agreement, the business that is the expected purchaser owns and is beneficiary of a life insurance policy covering each shareholder. Under a cross-purchase agreement, each shareholder owns and is beneficiary of a policy on each of the other shareholders

There are a number of tax considerations in using buy sell agreements. With a cross purchase agreement, the remaining owners purchase the stock with untaxed insurance proceeds, which establishes their basis in the stock for future sale purposes. Under a corporate redemption agreement, a corporation that uses key man life insurance to fund its redemption of stock there is a definite risk of the alternative minimum tax.

I favor a hybrid buy sell agreement, often called a “wait and see” buy sell agreement. It lets the owners wait until an owner’s death or other sale to decide whether the business or the owners buy the stock. Such an agreement allows the parties to choose the best alternative at the time.

Posted in Business Law, Taxes

THE BEST ESTATE PLAN Sept. 2019

Posted on October 6, 2019 by

More Reasons to Give Your Family an RLT Package.

As I said in my last WealthWISe, estate planning is not just for the rich. Estate planning is for those who are rich in love for their family. My favorite estate planning approach is an RLT package. It contains a revocable living trust (RLT), power of attorney, backup will and advance care plan. As Trustee, you manage the RLT on your behalf as long as you are able.

Your surviving family members will be grateful for the RLT package. For example, a widow recently met with me to find out how to deal with her deceased husband’s trust. She had once been an executor. She was so pleased with the ease of the RLT that she bought one for her daughter and son-in-law. She exclaimed that she was not going to end up as executor for either of them!

In the last WealthWISe I gave five great reasons to give your family an RLT Package. Here you will find more, such as better management, simple taxation, asset protection, and privacy. Interested?

  • The RLT package is easy to change. The RLT is called “revocable” because you can easily change or revoke it, in writing, signed and notarized writing. So you can test drive your trust and change it as you go.
  • The RLT package offers superior management of your property. After your death or incapacity, your chosen successor trustee manages the trust according to your trust agreement. Your trust agreement instructs the Trustee to manage your estate pretty much in any way that you want. You can tell the Trustee how and when to use income and principal for the beneficiaries. For example, the trustee can provide needed funds for a minor child each year that then and then distribute his share to him at one or more ages of your choice. You can offer incentives to a student who meets certain standards.
  • After you pass away, the RLT package protects trust asses from beneficiaries’ creditors. My RLT’s contain a “spendthrift provision” that protects a beneficiary’s share from his creditors, even from a divorcing spouse!
  • The RLT package does not affect your income taxes during your life. The RLT is generally neutral, tax wise. It uses your social. security number so that during your lifetime, you pay taxes on Trust income and the Trust need not file a tax return or get a separate tax identification number. After your death the trust does pay taxes until it is terminated.
  • The RLT package offers superior privacy. If you don’t have a RLT controlling all your assets, your family will probably end up in the Probate Court to manage your estate. Your will is filed at the Courthouse, where the whole world can see it. On the other hand an RLT is a private contract. In fact, Tennessee law allows me to draft a trust agreement that is kept secret, even from the family.
  • There are many more good reasons for using an RLT Package. It is generally easier to use.
Posted in Estate Planning & Probate

INDIVIDUAL TAX PLANNING Sept. 2019

Posted on October 6, 2019 by

ConquerTax Reform Headaches!

As a result of Tax Reform, most of my clients had surprises on their 2018 tax returns. The best way to avoid surprises in 2019 is to understand and take control of your tax situation. You have a few months left to do it in 2019. Some taxpayers will be able to use their standard deduction for 2019 ($12,200 for singles and $24,400 for joint filers) instead of itemized deductions (medical, mortgage interest, etc.). However, most of my clients use itemized deductions. In the last WealthWISe, I showed you how to use less known charitable deductions to beat the standard deduction. In this WealthWISe I will focus on other itemized deductions, like unusua medical deductions. Read on.

Less known Medical Deductions Make the most of these because you can deduct only the excess of Medical Deductions over 7.5% of adjusted gross income. However, sometimes health insurance premiums alone, if not reimbursed, will so the job. You can deduct premiums for yourself, your spouse and your dependents. Don’t forget Medicare premiums that are taken from Social security benefits. You can deduct long term care premiums but not if paid for a “hybrid” policy that combines life insurance with coverage for long-term care.

Self-employed taxpayers who are not covered by health insurance subsidized by an employer can deduct their health care insurance premiums as adjustments to income on Form 1040 thus avoiding the 7.5% floor.

Less known medical deductions include just about anything prescribed by a doctor and the cost of acupuncture and chiropractor services. You can deduct laser eye surgery Also, you can deduct 20 cents per mile driven for medical reasons. For a service animal that helps a disabled person, you can deduct the costs of buying, training, and maintaining the animal. You can also deduct expenses for food, grooming, and veterinary care. See IRS Publication 502, Medical and Dental Expenses.
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Home modifications or improvements to help a medical condition, such as wheelchair ramps, support bars, and handrails can qualify, except to the extent that they increase the fair market value of your property. For example, one of my clients installed a heated exercise pool to help with recovery from knee operations. It cost $12,000 but it did not increase the value of the house. In fact, if the house were sold it would require a crane to remove it. So she could deduct $12,000. To be deductible, the improvements must be made for medical, not architectural or aesthetic reasons. and all or a part of physician-prescribed home improvements

One great trick is to prepay or delay expenses into a year so as to exceed the standard deduction then take the standard deduction in the year that is thereby lowered.

Posted in Individual Tax