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Q&A: Can the IRS Require Odometer Readings with the Mileage Rate?

Question: Let’s say you are under IRS audit for business mileage. You claimed business miles at the IRS optional rate. The IRS has requested odometer readings for the vehicle. Is this proper? Should you have to provide odometer readings when claiming the business vehicle deductions using the IRS optional mileage rate? Answer: The tax code …

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Update on New Court-Approved Way to Defeat IRS Penalties

Like you, we at Hinrichs+Pesavento don’t like IRS penalties. That’s why we keep you up to date on new ways you can beat the IRS at its penalty game. Section 6751(b) Overview Tax code Section 6751(b) says that the IRS cannot assess a penalty unless an IRS supervisor or higher-level official designated by the Treasury …

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Avoid This Super-Costly Mistake with Your Payroll Taxes

Let’s say you paid your payroll taxes. Is there any way you would have to pay those same payroll taxes twice? Yes, and this sad situation happens to unsuspecting business owners every day. Is there any way this could get even worse? Yes. On top of paying the same taxes twice, you could have to …

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Fraud by Tax Preparer Creates Big Trouble for Client

Is your tax preparer honest? We sure hope so! You likely see indicators one way or the other. If your tax preparer commits fraud that benefits you, that can create trouble for you. Let’s see how this works in real life. Situation The government indicted, tried, and convicted tax preparer Gregory D. Goosby of 30 …

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FAQs on Section 199A Rules

Did you, or your tax advisor, use the wrong Section 199A rules when filing your tax return? The IRS issued “final” regulations in January and then made a few changes before making them truly final in February. Most recently, on April 11 and then updated on April 22, the IRS expanded its Section 199A frequently …

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How to Properly Deduct Sports Team Sponsorship

Are you considering sponsoring a local sports team this year? Maybe you already are. The sponsorship usually entails buying the uniforms (the practice name appears on them), bats, balls, and masks, and possibly even contributing to the fund that pays for the umpires. You get good publicity with this. In fact, the games are reported …

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Roth IRA After TCJA: The Backdoor Is Still Open

As you likely know, the Roth IRA is a terrific way to grow your wealth with a minimum tax downside because you pay the taxes up front, and then with the proper holding period, pay no taxes after that. Eligible individuals can now contribute a total of $6,000 ($7,000 catch-up for ages 50 and up) …

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Life Insurance Policy Loan: A Tax Nightmare

Dr. John Jones fell into the life insurance policy loan trap. A successful dentist, Dr. Jones purchased a life insurance policy from ACME Mutual Life Insurance Company. For the first six and a half years, he paid the insurance premiums by check. For the next 15 1/2 years, he paid the premiums by borrowing at …

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Fixed for Dentists: Top 8 Financial Rules of Thumb

“Price is what you pay; Value is what you get.” – Warren Buffett Rules of thumb are cheap and easy. Up front, they cost you nothing. In the long run, they could cost you significant losses, bad purchases, too much spent or too little saved. We started the series stating a rule of thumb is …

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Did Employee Recreation and Parties Survive Tax Reform?

You take your employees to a hotel meeting room for an all-day intensive training. You buy them lunch. The cost of the training lunch creates a 50 percent tax deduction. You take your employees and their spouses and children to the local country club, where they play golf, play tennis, swim, and enjoy lunch, dinner, …

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