Listener Q&A with Mike Jesowshek CPA (02/15/2023)

Feb 15, 2023

On this Podcast we answer listener questions! If you have a question you would like discussed on a future episode, submit it now!

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You never know, your question may be on the next Q&A session. Below are today's questions, tune into our Podcast to hear the answers!

Bilal: Can you give ideas on how to circumvent or go beyond the $500k business loss limitation against personal W2 income for a high income earner? Strategies that go beyond charitable contribution, conservation easement, green energy credit like solar panels. I am trying to maximize tax savings for each year. Thanks in advance.

Curtis: I know you can't write off jeans as a business expense, but what if you attach a patch with your company logo on the pocket, would that change jeans with a company logo patch to a marketing expense?

Eunjin: I am planning to do airbnb and furnishing with the furniture i already have. Can this furniture be depreciated?

Scott: I am a teacher and contribute to a governmental Roth 457(b). Since it is a Roth I should be able to take it out tax-free, correct? Even before the age of 59 1/2 as I plan to "separate from service" aka retire at age 54. Is this all correct to assume?

Will: Dear Mike, Thanks for your wonderful podcast and all you do. I have a question regarding Trust taxation. I imagine it might make a good podcast episode topic given that many people are affected by such. Specifically, is only the income generated from assets within an Irrevocable Trust taxed at the higher trust tax rates? Or are assets that are transferred to an Irrevocable Trust also taxed at the higher tax rates if those assets stay within the Trust. Take as an example someone with a Revocable Living Trust who passes away in July with $100,000 in stocks. Following his passing, the assets are journaled to a newly established Irrevocable Trust. From July to December that $100,000 earns $1,000 in dividends/interest and no distributions were taken from the Trust that year. Would the tax rate only apply to the $1,000 in earnings (i.e. income) or also the $100,000 as well? And if it only applied to the $1,000, if one distributed that $1,000 to the individual beneficiary prior to 12/31 of that year, then I assume there would be no tax due on part of the Trust (but instead the beneficiary would be responsible for the tax due on the $1,000 which would be reflected on a K-1)? In other words, is only the income generated on the principal (not the principal itself) from the inherited proceeds within the Trust taxed at the Trust tax rates if it is not distributed by year-end? And if that is the case, no harm (in terms of Trust tax) on leaving the $100,000 principal in the Trust - if so desired. Is my understanding correct? Thanks so much. 

Curtis: I recently did work for a church and gave them a good discount. Would it be better to do work at no discount and give them a donation instead. What are some good strategies. I'm a single member LLC.

Debra: Is it too late to take an S-corp election? I discovered your podcast and this extremely valuable information just 10 days into the new year. Is there a way to retroactively pay myself the “reasonable salary” and take S-corp status for 2022? I’m a single member LLC, one employee. Thank you! 


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