The generally favorable federal income tax rules for partnerships are a common reason for choosing to operate as a partnership with multiple partners instead of as a corporation with multiple shareholders. The most important partnership tax benefit rules are summarized in this article.
Imagine this: your Schedule C business buys a home at the beach, uses it solely as an entertainment facility for business, pays off the mortgage, and deducts all the expenses. Is this possible? Yes, it is.
Do you own or lease non-residential (think “commercial”) real property for your business, or rent non-residential real property to others?
If so, interior improvements you make to the property may be fully deductible in a single year instead of over multiple years.
The strategy behind creating an S corporation and then selling your home to that S corporation comes into play when you want to convert your home to a rental property and take advantage of the exclusions, or you need more time to sell the home to realize the benefits of the $250,000 exclusion ($500,000 if filing a joint return).
If you do some work at home, you’re probably using your home internet connection. Are your monthly internet expenses deductible? Maybe.
The deduction rules depend on your choice of business entity (proprietorship, corporation, or partnership).
When you own rental property, depreciation is your best friend.
One reason depreciation is so valuable is that, unlike deductible rental property expenses such as interest and maintenance, you get to claim depreciation year after year without having to pay anything beyond your original investment in the property.
The IRS likes to claim that money-losing sideline activities are hobbies rather than businesses. If you have such an activity, we should have your attention.
Here’s the deal: if you can show a profit motive for your now-money-losing sideline activity, you can classify that activity as a business for tax purposes and deduct the losses.
When the individual production activity of a partner is outside his or her capacity as a member of the partnership, the partnership has two choices:
If you hire an employee for your Schedule C business, you can qualify for several valuable tax credits.
Each credit is different, and certain limitations apply to all or most employer tax credits.
What if you’re a Schedule C business owner who doesn’t have employees and isn’t involved in one of the niche businesses that come with a credit? You’re not necessarily left out of the tax credit bonanza. Here are six tax credits that many Schedule C businesses with no employees can claim (and of course, you can qualify for these credits with employees, too).
