📥 After a few DMs, I've tried to fix the sending email to get less SPAM flags. My apologies if you've not seen the email in the last few editions! Always check out the link in my X bio for the latest and greatest if that's you! My apologies - I'm good at tax, not so much at DNS set-ups! When a potential new client hands me a prior year return, I check three spots that are dead giveaways for immediate ROI of my fees. These are the spots that tell on a sloppy preparer (no shade, I've made these...
11 days ago • 5 min read
If you own a small business, you have a choice of how to pay tax on business income - accrual or cash. Accrual is where the big boys play (revenue over $30mm) as it's more accurate. But for tax purposes, an accrual basis tax return isn’t entirely accrual. Buried in the code are a handful of transaction types that ignore your method of accounting and behave like cash no matter what. Miss them and you either overpay by leaving deductions on the table, or underpay and hope and pray the IRS...
18 days ago • 4 min read
Penalties and interest. An unfortunate part of paying taxes for most small business owners. Taxable income doesn't always align with liquidity ⚖️ in the SMB world, and when given a choice between making payroll and making an estimated income tax payment all business owners pay their people. But today we're going to look at one strategy available for taxpayers to recalculate penalties and interest - with the potential to significantly drop 🔻 or eliminate the late payment penalties. The Basics...
25 days ago • 3 min read
If investors know one thing it's how much cash they contributed 💸 and what they've received in return. 🫴 Loss allocated to them over the years? Nah. Capital gain treatment vs. ordinary income? CPA jargon. Debt basis coded as qualified nonrecourse for at-risk? Nerd stuff. But those are pretty important distinctions that drive whether the money they receive as a distribution is actually taxable - and if taxable, at what rates. GPs think in terms of (1) returning capital, and (2) paying off...
about 1 month ago • 3 min read
My first year as an audit partner, I had to sign off on a journal entry that cost my client $4 million. He ran an insurance agency and was in the process of selling to a huge agency at 10x GAAP Net Income. 🤯 Here's the full story, why the client became an incredible referral source, and what buyers can take away from it all. Background It was an audit partners dream to start out - summer work, multiple years audits at once, and price elasticity because the buyer needed audits to finalize the...
about 1 month ago • 3 min read
You opened the K1. The number is bigger than you budgeted for. 👀 Maybe a lot bigger. And now you are wondering if it is too late to do anything about it. Here are five areas worth checking before you just write the check. Unrelated Party Expenses (UPE) on Partnerships If you are a partner in a partnership (i.e. the K1 came from a 1065), you may have unreimbursed expenses directly connected to that partnership income. These are called Unreimbursed Partner Expenses, and they directly offset...
about 2 months ago • 3 min read
"I don't know what I'm looking at. So I'm trusting you guys did it all right." Tax pros across the country usually get this reply after sending out draft tax returns for clients to review and approve. 🫢 I recently recorded a 10+ minute Loom for a client on exactly how to spot check the return from their side. Here's the framework, broken into three questions: What is the anatomy of a tax return? What should the client look for? How to tell if something is off? Tax Return Anatomy One note...
about 2 months ago • 3 min read
The IRS doesn't care what you meant as much as it cares what the document says. Your tax pro has to file returns based on what the document says. If those two things are not aligned, you pay for it. Most operating agreements handle the legal relationship well. ⚖️ Few handle the tax reality. Here are five questions to bring to your CPA before you sign the next operating agreement: 1) Does the allocation language match the deal you're actually making? Most owners read the distribution waterfall...
2 months ago • 3 min read
Our firm has been building and iterating on the next phase of client experience 👨💻 and we're excited to share the first look at it. Here's what it feels like what it will do 👀: Avatars and Life Events We started plotting out the most common tax strategies 📊 a few years ago. That evolved with documenting a separate Notion page for each major strategy to help our team recognize and execute that item. Things like, "where to find this," "how to calculate it," and "how to know it works" are all in...
2 months ago • 2 min read