By Todd A. Stewart, Founding Partner Recently, Joe Hernandez talked with our Vistage group about “High Level Negotiation.” One key takeaway for me runs counter to something that you hear a lot. His point is that you should use anchoring (i.e., the idea that people rely heavily on an idea or number they’ve heard recently) to your benefit and be the person who makes the first offer. Our informal class exercise supported this and the final negotiated value for most groups clustered around the first offer, whether it was near $20,000 or three times this amount. For more information: https://www.lionsharenegotiations.com/. *Intended as […]
Read More
By Todd A. Stewart, Founding Partner On May 20, 2019, I was in a program with author Kevin W. McCarthy where he talked about his book, Chief Leadership Officer: Increasing Wealth So Everyone Profits. Many good takeaways and I particularly like the idea of aligning your three bottom lines: Financial, People and Purpose. If you want more information, the website is: http://chiefleadershipofficer.com/. *Intended as general guidance only and not as legal advice.
Read More
Saving self-employment (SE) tax on the business earnings of a partner or sole proprietor can be significant, with rates from 2.9% to 15.3%. Partners in some cases have avoided this SE tax on their distributive share for an interest as a limited partner in a limited partnership (LP). Today, however, LLCs are in much more common use than LPs for business and investment purposes. This makes it unfortunate that it’s still not clear that a passive member of an LLC can avoid the SE tax. Recently though, the Tax Court allowed limited partner treatment to a passive member of an […]
Read More
Here’s an idea that can be very powerful for some business owners. The 2017 Tax Act provides business owners with a 20% deduction on their business profits (Qualified Business Income or QBI). The catch is that the 20% is applied to taxable income if that’s lower. In other words, if taxable income is going to be lower than QBI, then you miss the opportunity to have some income that will receive a 20% deduction. Therefore, if you accelerate income, some of the cost of doing so will be eliminated by the increase you are creating with a larger QBI deduction. […]
Read More
By now, you’ve likely heard that certain businesses can qualify for a 20% income deduction under the new tax law. This is true for an “active trade or business.” Earlier this year the IRS issued a proposed safe harbor setting out how rental real estate activities can qualify as an active trade or business for the 20% business deduction. By safe harbor, we mean rules that should work, but taxpayers can still use case law to show their activities qualify as an active trade or business. In other words, this safe harbor can allow you to reduce the effective rate […]
Read More
Deferring taxable income to a later year is often an effective strategy for paying less in income taxes and keeping more of your wealth working for you. For example, if you are organized as an S Corporation or Partnership for income tax purposes and anticipate being in the same or a higher tax bracket in 2018 than in 2019, then you may benefit from deferring income into 2019. Here are four ways you might achieve this: (1) Cash Method of Accounting The Tax Cuts and Jobs Act (TCJA) expanded the number of businesses that can use the cash method of […]
Read More
