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October 22, 2019 by admin

Material Participation 1.469-5(f)

Rarely do you see such a broad statement in a Regulation.

(1)In general. Except as otherwise provided in this paragraph (f), any work done by an individual (without regard to the capacity in which the individual does the work) in connection with an activity in which the individual owns an interest at the time the work is done shall be treated for purposes of this section as participation of the individual in the activity.

Rental activity is different, so we need first to divide the world into rental activity and everything else.

All Rental activity is Passive is one mantra of the tax code.

But there is a different voice when it comes to rental activity being passive if a person can qualify as a Real Estate Professional (REP).

An individual who is qualified as a Real Estate Professional (REP) and meets the 2 tests below is able to qualify to show material participation in rental activities and take losses as non passive (losses that can reduce wages, dividends, etc.):

1. More than 50% of your time working is spent in the real estate business. 469(c)(7)(B)(i). The term “real property trade or business” is broadly defined as any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business Sec. 469(c)(7)(C).

2. You must work at least 750 hours in the real estate business. 469(c)(7)(B)(ii). Be mindful that no time will qualify if you are an employee without a 5% ownership interest in the Company. 469(c)(7)(D)(ii).

However, just meeting these 2 tests is not sufficient.

The next objective is to satisfy just one of seven tests for material participation in each activity. (1)

You would think that if you had 750 hours in the real estate industry that would be sufficient, but no. Further, the material participation requirement applies to both rental and non rental (everything else) activity.

For example: Fred is a realtor and also has an ownership interest in a construction corporation. Fred only spent 20 hours a year working at the construction company. Those 20 hours would not be sufficient to catagorize the loss from the construction company as non passive (active). However, even if Fred had 600 hours working at the construction corporation, these hours may not count, if they are not the right type of hours.

Further, even if Fred has material participation as a Realtor and/or as a shareholder in the construction corporation, this would not mean he has met the material participation requirement for the rental properties he owns. Rental Properties require Fred, even after qualifying as a REP, to show material participation in the rental properties separately from other non rental business activities, (for example his construction corporation).

So now we have two issues to face:

What types of hours are acceptable?

No Trivial hours spent watering the office plants and dusting the office furniture in order to meet the material participation requirement is allowed. 1.469-5T(f)(2)(i)

No hours count for time spent as an Investor reviewing financial statements, preparing summaries, monitoring the finances and operations, etc.
Sometimes no hours count for Management if another person has more hours than Fred in Management and that other person gets compensated.(2).

So what hours are left? Chores. Specific tasks that Fred performs for the Corporation. Brown v. Commissioner T.C. Memo 2019-69

Let’s focus in on Chores.

Types of Chores:

1. Handling financing
2. Product development
3. Customer Retention

The Court in Montgomery v. Commissioner T.C. Memo 213-151 adds to the Chores list:

4. Office functions
5. Managing Payroll
6. Preparing official documents
7. Attending business meetings
Can’t all of these items 1 through 7 be considered Management? Yes – So how do you win this argument that these Chores are not Management?

A. There is another person performing the day-to-day Operations.
B. If the IRS argues this other person is not performing Management hours, thenyou will agree that Fred performed more Management hours than any other person. Therefore, now you count the hours as Management hours instead of Chore hours.

When you are keeping records to meet the Material Participation Test you have to keep in mind how these hours are being categorized. Fred could have the most detailed records ever on plant watering, and it will do no good.
Now the next issue is,

What relationship does Fred have to the Construction Corporation?
Is Fred a shareholder, an employee, an agent, a subcontractor, or does it matter?

As Bill Murray proclaimed in Meatballs, “It just doesn’t matter.” Well almost. Fred only has to have an ownership interest. Fred could be the 1st basemen for the NY Yankees and as long as he meets on the 7 material participation tests and has an interest in the activity, he is allowed to take the loss.

If Fred is trying to qualify as a REP to deduct his rental property losses as a employee of a real estate trade or business, then Fred needs to have a 5% ownership interest. Otherwise, if Fred is trying to meet the material participation
test for the construction corporation (non rental), then he only has to show any interest. So, he could have 1% interest in the construction corporation, and he does not need to be an employee.
1.469-5(f) talks about individuals. How do the Courts look at the issue of the relationship of the various parties to a Non Grantor Trust and material participation?

There are 2 types of Trusts to discuss here.

Grantor Trusts. The person who creates the Trust retains one or more powers over the Trust and thus the trust income is taxable to the grantor.

With the Grantor Trust the rules discussed above apply.

Non Grantor Trusts. The grantor is not the trustee nor beneficiary.

The Courts in Mattie K Carter Trust ruled as to counting as material participation the hours spent by the following as counting:

Employees of the Trust – YES
Trustees – YES (this is the only catagory the IRS agrees to)
Trustees working as employees of the Trust – YES
Trustee working as employees for entities owned by the Trust – YES
Agents – YES
Beneficiary – NO

Grouper. A different kind of fish.

If Fred is having trouble meeting the material participation requirements for each of his activities, then he can group one or more activities as one to meet one of the 7 possible material participation test for the group as a whole. Twenty hours working at the construction company is not sufficient, so Fred may group the construction company with his real estate activity.

To refresh, this is all being done to get the losses to flow through to offset wages, dividends and other income.

Items to consider:

Rental Groupers and Non rental Groupers don’t swim in the same pool.
A taxpayer may not group a rental real estate activity with any other activity of the taxpayer. 1.469-9(e)(3)(i).
Also once an activity is in a Group, then it is swimming with the other fish and is part of the Group. It is helpful to qualify for material participation, but imposes limits when you sell one of the activities inside the Group.
What if Fred buys a new business, say, a title company. He can elect to add the title company to the Group or to keep it separate. But if he wants to group the two activities, he has to file a Declaration about an Appropriate Economic Unit.

Also, say 5 years from now Fred wants to take the title company and group it with the Construction company. He can do that but must file a Declaration.
1. A declaration that the regrouping (combining 2 or more existing groups) makes up an appropriate economic unit.

2. A statement on what the material change in the facts and circumstances were that made the original grouping inappropriate.

Even when Fred first acquires the title company and wants to group it with the construction corporation, he has this issue of its addition making an appropriate economic unit.
1. The similarities and differences in the types of trades or businesses,
2. The extent of common control,
3. The extent of common ownership,
4. The geographical location, and
5. The interdependencies between or among activities, which may include the extent to which the activities:
A. Buy or sell goods between or among themselves,
B. Involve products or services that are generally provided together,
C. Have the same customers,
D. Have the same employees, or
E. Use a single set of books and records to account for the activities.
This is a general discussion. See your tax advisor before using this information to make a decision in your specific situation.

1. Material Participation Test Under the Temporary Regulations
Temp. Regs. Sec. 1.469-5T(a) provides that a taxpayer can establish material participation in an activity by satisfying one of seven tests:

1. The individual participates in the activity for more than 500 hours during such year;

2. The individual’s participation in the activity for the taxable year constitutes substantially all of the participation in such activity of all individuals (including individuals who are not owners of interests in the activity) for such year;

3. The individual participates in the activity for more than 100 hours during the taxable year, and such individual’s participation in the activity for the taxable year is not less than the participation in the activity of any other individual (including individuals who are not owners of interests in the activity) for such year;

4. The activity is a significant participation activity (within the meaning of ) for the taxable year, and the individual’s aggregate participation in all significant participation activities during such year exceeds 500 hours;

5. The individual materially participated in the activity (determined without regard to this paragraph (a)(5)) for any five taxable years (whether or not consecutive) during the ten taxable years that immediately precede the taxable year;
6. The activity is a personal service activity (within the meaning of ), and the individual materially participated in the activity for any three taxable years (whether or not consecutive) preceding the taxable year; or
7. Based on all of the facts and circumstances (taking into account the rules in ), the individual participates in the activity on a regular, continuous, and substantial basis during such year.(ii)Certain management activities. An individual’s services performed in the management of an activity shall not be taken into account in determining whether such individual is treated as materially participating in such activity for the taxable year under paragraph (a)(7) of this section unless, for such taxable year –

2. (A) No person (other than such individual) who performs services in connection with the management of the activity receives compensation described in section 911(d)(2)(A) in consideration for such services; and

(B) No individual performs services in connection with the management of the activity that exceed (by hours) the amount of such services performed by such individual.

December 11, 2018 by admin

Tax Cuts and Job Act 199A Calculating the 20% deduction

The hurdles in obtaining the deduction under the Tax Cut and Job Act.

If you pass all of the limits below you still have an umbrella limit of 20% of (taxable income- capital gains).

In addition to the umbrella limit there are three bucket tests.

I. Everyone who has taxable income under 157,500 single and 315,000 married. 20% of the Qualified Business Income (net income from your business).

So for example in this bucket it is the lessor of 20% of TI or 20% of QBI.

II. Specific Service and Trade Business. Lawyers, Doctors, Consultants who make over the 157,500 single and 315,000 married. Phase out until 207,500 for single and 415,000 for married. After the phase out of 207,000 and 4150,000 no deduction.

III. Non Specific Service and Trade Business over 157,500 single and 315,000 married. Lessor of:

20% of QBI

the greater of 50% of wages vs 25% of wages + 2.5% of assets.

For example a roofer does not have that much in the way of equipment. So I think 50% of wages is most likely to be the greater number. Of course you should do the 25% + 2.5% of asset test.

So it comes down to the lessor of

20% of QBI

50% of wages.

IF you are an employee of a S corp you should consider taking a year end bonus to increase your 50% number. Or consider hiring your spouse if you are a Sole proprietor or and LLC.

For example your QBI (net income ) is 100,000

So 20% of $100,000 is $20,000. But what if you wages are only 5,000. Then 20% of 5,000 is 1,000 and so you end end with just 1,000 as the 20% qualif

Now for example, you pay yourself a bonus of 23,000. Let’s see what happens.

100,000 -23,000 = 77,000 x .2 = 15,400.

compared to 23,000 + 5,000 = 28,000 X 5 =14,000 So now the QBD is 14,000( the lessor of 15,400 or 14,000)

Okay so the 14,000 X your tax rate (IRS and state) is for example .35 = 4,900.

What is the payroll cost of the additional salary ? 23,000 X .153 = 3,519

So you save roughly 1,400.

The use of the salary bonus works best when the employee is over the SS limit already.

So for example maybe you have already paid yourself from the company over the social security limit, or your spouse works for the government and makes over 128,400 for 2018. Then the business is only paying the employer side and the benefit of the bonus is improved.

Of course the IRS could ask what your spouse did for the company for 23,000 salary.

This is just a general discussion. See your tax preparer for any questions.

July 8, 2018 by admin

Why start a Health Savings Account?

Health Saving Account

Why start a Health Savings Account? In today’s world the health insurance policies being offered have high deductibles. (HDHP – high deductible health plan). What is offered today is in a word “catastrophic” health insurance. You the patient are paying the ordinary maintenance costs of going to the doctor.

So how to fund these maintenance costs up to the deductible amount?

One way is to use a Health Saving Account to pay with pretax dollars. Either your employer or you can contribute to a HSA.

If made by your employer, then the contribution is not included in your income.

Or you can take your own pre- tax dollars and make a deductible contribution.

ELIGIBILITY

1. You must be presently covered by a HDHP on the 1st day of month you want to set up your HSA account. Now you may ask how do I know if I’m covered by an HDHP. Now days the insurance company in its descriptions of the various plans offered will tell you which of their plans is an HDHP plan.

2. You must have no other health coverage. For example a health insurance program with a low deductible premium (say $500). Now of course there’s always an exception to the rule. So you can have coverages for specific diseases or medical coverage for dental for example, and that will not be considered to have “ other health coverage”.

3. You’re not enrolled in Medicare. Now remember that that means you’re actually enrolled. You could be over 65 and be eligible but just not participate in Medicare, and that would be fine.

4. You cannot be claimed as a dependent on another persons tax return.

5. We spoke above about how you cannot be enrolled in a Medicare program. And there are other programs that will disqualify you or make you ineligible for a health savings account : Medicaid, flexible spending plans, health reimbursement arrangements. Now there are some exceptions even to this rule. For example, if your flexible spending plan commences after you’ve met your deductible then that flexible spending program would be acceptable.

PREVENTATIVE CARE

As I mentioned above, the idea of the high deductible health plan is that you are paying for the ordinary “maintenance costs”of healthcare yourself vs. the insurance company.

But your HDHP plan can still qualify and provide preventative care benefits without any deductible. For example preventative care would be immunization, annual checkups, and screening services. So the whole idea with a high deductible health plan program is to provide catastrophic coverage but also to provide an incentive to use wellness programs in order to reduce the high cost of healthcare. So even though the deductible may be very high for these certain types of treatment, the HDHP allows for preventive care. The health insurer wants you to get immunized, so there is no cost or very little cost for that type of medical benefit.

THE NUMBERS

A HDHP has certain dollar requirements regarding premiums. Now these amount are different from the limits on the funding of your HSA.

What we are talking about now is the requirements of the plan itself and we will talk about how much you can contribute into your HSA shortly.

The health plan to be a HDHP plan requires that the deductible has to be at least $1,350 for an individual in 2018. So that means your out-of-pocket costs have to be at least $1,350 before the policy starts to pay. So for example if your insurance policy says that it will start coverage after you reach $800 of out-of-pocket cost, then that plan does not qualify as an HDHP, and thus you cannot have HSA savings account contribution.

Conversely the health plan cannot have a deductible that is so high that it is burdensome on the individual. The maximum amount that you are required to pay out of your pocket before the policy starts covering you as an individual is $6,650. Now the upper and lower limits for families are $2,700 for the amount that you have to pay out of pocket before the policy kicks in and the maximum that you have to pay as a family is $13,300. So for example if your insurance plan said that your deductible is $15,000 for your family that is too high and thus that plan does not qualify as a HDHP plan.
ALLOWABLE CONTRIBUTIONS

For 2018 for an individual the maximum contribution is $3,450 and $3,500 for 2019 with an additional $1,000 if you are are 55 or older. For a family the maximum contribution in 2018 is $6,900 and $7,000 for 2019,and if you’re over 55 an additional $1,000. You have until April 15 the following year to make your contribution for the prior year.

Keep in mind these amounts are the maximum and if you become HSA eligible during the year you have to calculate 1/12 for each month. (general monthly contribution rule).

Now if you become eligible after January, for example you eligible in September 2018 ( you got a job with an employer who has a HDHP) and are still eligible on December 1, 2018, then you get the full year. So I just said the calculation is on a monthly basis and now it gets confusing because we are now saying you can get the deduction for the full year. There is a catch. For example, you became eligible in September 2018, and you get the full year’s allowable contribution for 2018 to your HSA, but you have to remain eligible for 13 months. So stay eligible from September of 2018 to October 2019, otherwise there is a negative tax result. (Full contribution rule)

Hsabank

REPORTING

If your employer has made a contribution to your HSA account, the dollar amount will be reported on your W-2 on box 12 marked as code W. So it’s quite possible that your employer could make a contribution to your HSA and if that amount did not meet the maximum allowed, then you could also make a contribution and deduct that amount on the front of your 1040 tax return. IRS form 8889 is used to report the HSA contributions made by you and your employer contribution. The form 8889 is also where you report your medical expenses. You need to keep track of those expenses and be able to substantiate those medical expenditures if the IRS ever audits you.

The distributions from your HSA account are reported out by the HSA trustee or custodian on an IRS form 1099 SA.

DISTRIBUTIONS

One of the concerns about a high deductible health plan is that people will not have the dollar amount available to pay for healthcare expenses between the first dollar and reaching the minimum deductible amount under the plan. The idea of the HSA is to be able to put money away for that time when you need to meet this deductible.

During this period of time the money is earning interest or dividends and growing tax-free. Of course the limitation to being tax free is the distribution has to be used for healthcare expenses.

And so the distributions from your HSA, if used for medical expense, are never subject to federal income tax, nor social security, nor medicare tax.

If you are under 65 and you take the money out say to buy a new sailboat and you pay income tax and there is a penalty of 20%. However once you reach age 65 then there is no 20% penalty. So you could take the money out at the age of 66 to go by a sailboat and all you would pay is ordinary income tax.

Neither your employer nor the HSA custodian or trustee (for example you bank or broker) determines whether the payment is for a qualified medical expense. This is one feature that distinguishes the health savings account from other types of programs like the flexible spending plan or the health reimbursement arrangement.
You are responsible for making sure the payments qualify.

Also keep in mind that you cannot pay for medical expenses that occurred prior to the establishment of the HSA account out of the HSA funds. On the other hand you could have medical expenses after the HSA plan was established and wait until a later year to reimburse yourself. I’m not sure why you would do that, but perhaps there were not sufficient funds in the HSA in the earlier years to reimburse you fully.

And of course you do not have to use all the contribution money that you put in any particular year. That is the whole idea. The fund can build up over time to meet future medical expenses that may occur. The other great thing about an HSA account is that if you change jobs the money in the account goes with you.

The HSA actually works to pay for the medical expenses up to the point you reach your deductible under your insurance plan, but also serves as a deferred annuity.

For example if you’re 20 years old, and were contributing $3000 a year to your HSA account and didn’t need the money to pay for medical expenses by the time you were 40 years old there would be $60,000 in that account plus interest, dividends, and appreciation on the stocks bonds are mutual funds that you invested in. And hypothetically another 20 years later there would be $120,000 in the account plus interest, dividends and appreciation. So by the time you reach the age 65 you could easily have $200,000 in the account.

Also keep in mind that if you have a medical bill and are submitting it to the HSA account to be reimbursed, with what are in effect pretax dollars, then your prohibited from deducting that same expense on your schedule a 1040. Since the schedule A medical expenses have to be over 10% of your AGI to be of any benefit, all the more reason for an HSA account. In other words use the HSA pretax dollars to pay for medical expenses, versus trying to get a tax deduction where you are limited on schedule A. Please keep in mind if some other source of funds has reimbursed you for this medical expense than that medical expense is not eligible to be paid out a second time from your HSA account. No double counting.

WHAT HAPPENS TO THE MONEY WHEN YOU DIE

For the living spouse that is the beneficiary of the HSA account as if it were their own, with no immediate tax consequence. For a non-spouse beneficiary the money is immediately taxed.

This is a general discussion and for any question you have on the topic see your own tax preparer.

June 24, 2018 by admin

Depreciation recapture on conversion of business asset to personal use

Recapture of deprecation for business property
converted to personal use.

Do you have to recapture the 179 depreciation and special depreciation allowance (bonus depreciation) on a simply conversion from business use to personal use? Let’s discuss the issue of recapture.

Here is an example. Bob, an airplane pilot, has an office in his home and buys a computer. He is self employed and is using the computer 100% for business in the first year and take 179 or special allowance depreciation in the first year. In year three he decides to change his focus, and gets a job with an airline as an employee and only flies for his own clients part time. Now he uses the computer 10% of the time for business. The other 90% he uses the computer to do emails with family and friends.

So we have a self employed individual who starts a company and takes full advantage of code section 179 and special depreciation allowance provisions of the tax code. The businessman is allowed to do this because the property is being used more than 50% for the business purpose vs. personal use.

What happens to all the bonus deprecation and 179 deduction when the property is converted back to personal use. Not sold, not disposed of, but simply now used for personal use.

The issue comes down to whether the property is “listed property”. If the property is listed property, then on the conversion there is a recapture of depreciation taken in prior years.

If the property is not listed property, then the mere conversion from business to personal use creates no recapture. But if after the conversion, the property now being used personally is sold, then there could be recapture of the 179 or bonus depreciation. There is a difference between how the computer is being used vs. the sale of the computer.

What is listed property?

26 US Code §280F(d)(4) defines it as:

(4) Listed property
(A) In general Except as provided in subparagraph (B), the term “listed property” means—
(i) any passenger automobile,
(ii) any other property used as a means of transportation,
(iii) any property of a type generally used for purposes of entertainment, recreation, or amusement, and
(iv) any other property of a type specified by the Secretary by regulations.

Here is an exception for companies transporting people or property:

(B) Exception for property used in business of transporting persons or property
Except to the extent provided in regulations, clause (ii) of subparagraph (A) shall not apply to any property substantially all of the use of which is in a trade or business of providing to unrelated persons services consisting of the transportation of persons or property for compensation or hire.

Not looking so good for Bob at this point is it? But hold on, see that provision under (iv) about regulations.

If you look at Regulation §1.280F-6(b), “listed property” is further defined as

(b)Listed property –

(1)In general. Except as otherwise provided in paragraph (b)(5) of this section, the term listed property means:

(i) Any passenger automobile (as defined in paragraph (c) of this section),

(ii) Any other property used as a means of transportation (as defined in paragraph (b)(2) of this section),

(iii) Any property of a type generally used for purposes of entertainment, recreation, or amusement, and

(iv) Any computer or peripheral equipment (as defined in section 168(i)(2)(B)), and

(v) Any other property specified in paragraph (b)(4) of this section.
(b)(5) there is another exception!!! Let’s take a look at (b)(5),

(5)Exception for computers. The term listed property shall not include any computer (including peripheral equipment) used exclusively at a regular business establishment. For purposes of the preceding sentence, a portion of a dwelling unit shall be treated as a regular business establishment if (and only if) the requirements of section 280A(c)(1) are met with respect to that portion.

Bob is using his computer at his regular business establishment. And he is also okay having used his home office as his regular business establishment.

So good news for Bob. His computer is not listed property and no recapture on the simple conversion. If however he sold the computer in year 3 at a gain, then yes he would have to get out his MACRS depreciation schedule and calculated the recapture. He would report the excess depreciation on his year 3 tax return as ordinary income on form 4797.

How much is the recapture when listed property is converted from business use to personal use?

IRC §280F(b)(2)(A) says it is the difference between the “excess depreciation”.

(2) Recapture
(A) Where business use percentage does not exceed 50 percent If-
(i) property is predominantly used in a qualified business use in a taxable year in which it is placed in service, and
(ii) such property is not predominantly used in a qualified business use for any subsequent taxable year,
then any excess depreciation shall be included in gross income for the taxable year referred to in clause (ii), and the depreciation deduction for the taxable year referred to in clause (ii) and any subsequent taxable years shall be determined under section 168(g) (relating to alternative depreciation system).
(B) Excess depreciation For purposes of subparagraph (A), the term “excess depreciation” means the excess (if any) of-
(i) the amount of the depreciation deductions allowable with respect to the property for taxable years before the 1st taxable year in which the property was not predominantly used in a qualified business use, over
(ii) the amount which would have been so allowable if the property had not been predominantly used in a qualified business use for the taxable year in which it was placed in service.

See you own tax preparer for your specific issue, as this is a generic discussion.

A final thought. Now that we have a better understanding of depreciation recapture, how did we capture it in the first place?

May 26, 2018 by admin

How the 20% deduction rule works

How the 20% deduction rule works
Specific Service Industries All other industries
(CPAs, attorneys, brokers, Drs, etc –
But not engineers nor architects)
___________________________________________
LESSER of: | LESSER of:
A. 20% of net business income A. 20% of net business income

B. 20% of taxable income B. 20% of taxable income

UNDER TAXABLE INCOME

****TAXABLE INCOME 157,500 single 315,000 Married ****

OVER TAXABLE INCOME

Then phase out of benefit over these levels
50,000 for single and 100,000 for Married

No 20% deduction over phase out LESSER of these 3 numbers:

A. 20% of net business inc.

B. 20% of taxable income

C. Which is Greater?

1. 25% of wages + 2.5 % X cost basis of assets

2. 50% of wages

No 20% deduction over phase out
Taxable income greater than:
Single 207,500
Married 365,000

May 10, 2018 by admin

Converting your SEP or traditional IRA to a ROTH

Considering converting your SEP or traditional IRA to a ROTH?

Here is an example of why it may not make a difference? It all depends on your tax rate when you retire.

For example say your taxable income is 170,000 for 2017.

For 2018, if everything remains the same you will be in a 24% tax bracket (2018 24% bracket is 165,001 to 315,000).

So you convert 100,000 to a ROTH from your SEP. If the tax is paid out of the converted funds (24% +6% VA), now there is 70,000 starting in the ROTH. Notice that if you converted instead 200,000 to a ROTH, this would put you in a 32% bracket.

So the choice is leaving the 100,000 in the SEP and growing to be taxed at a later date,

paying the tax now and having 70,000 to invest tax free. Assume the same rate of return of 6% for both options. Assume you and spouse are 79 and will live another 12 years per the joint annuity IRS table.

70,000 in 12 year is worth 140,854

Leaving in SEP the 100,000 is worth 201,220. Pay the tax at 30% = 60,366. So after taxes the amount is 140,854 (201,220 – 60,366).. If you or you beneficiary are still in a 30% (IRS and VA) bracket, then no difference. If you or your beneficiary are in a lower bracket then leaving the money in the SEP is best.

The $64 dollar questions is what will be you tax bracket when your retire or for your beneficiaries when you die ( for 2018 the rates are 22% 77,401 – 165,000 and the 12% bracket is 19,051 – 77,400).

Why people recommend converting is they assuming that the cash to pay the immediate tax bill will come from another source of funds and the ROTH account will start out with the 100,000.

Material Participation 1.469-5(f)

Material Participation 1.469-5(f)

Tax Cuts and Job Act 199A Calculating the 20% deduction

Why start a Health Savings Account?

Depreciation recapture on conversion of business asset to personal use

How the 20% deduction rule works

Converting your SEP or traditional IRA to a ROTH

Get started by contacting us

Send us a message

Looking for accounting help?

Arthur Lander, Certified Public Accountant

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Material Participation 1.469-5(f)

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