Frequently Asked Questions

Sophie reads it and follows up to schedule a meeting. That first conversation is about scope — what the work involves and whether we are the right firm for it — before anything is agreed. Send a message.

Yes. The first conversation is free and it is a scoping conversation, not a sales call: what you need, what it would involve, and whether this is the right practice for it. What the consultation covers.

Last year's return is the single most useful document, because it tells a preparer more in five minutes than an hour of questions. Beyond that it depends on the work. The documents checklist is organized by situation, and sits with the rest of the tax resources.

It is not a blocker. A transcript can be requested from the IRS, and for a business the entity filings and the books tell most of the story. Bring what you have and we will work out what is missing at the first conversation.

No. Books that are behind are one of the most common reasons people call in the first place, and a clean-up is ordinary work. See bookkeeping for what catching up involves.

Through the client portal rather than email attachments. Tax documents carry everything an identity thief needs, and an emailed PDF sits in two mailboxes forever. Ask at the first meeting and we will set access up.

Earlier than feels necessary. Work arriving in the last fortnight before a filing date generally goes on extension, which is not a failure but does move the conversation. The tax deadline calendar shows what falls when.

What work is being done, for which periods, what you are providing, and what falls outside it. It exists so neither side is guessing about scope later. Nothing starts until it is agreed.

Ask it. If it takes a sentence you will get a sentence. If the honest answer is that it depends on facts nobody has looked at, you will get that instead of a guess. Get in touch.

You need the prior returns, the depreciation schedules and the books. Depreciation detail is the item most often lost in a move, and reconstructing it later is tedious and imprecise. Ask your current preparer for it before you give notice, and bring it to the first meeting.

If you want us to, and with your authorization. Often it is faster to request the file directly from you, since you are entitled to your own records and the handover is usually a matter of documents rather than a conversation.

A trial balance or reconciled books for the year, the prior year return, the depreciation schedule, details of any asset purchases or disposals, loan statements and owner distributions. The documents checklist breaks it down.

Yes. Unfiled years are more common than people assume and the position is usually more fixable than it feels. What matters is the order the years are filed in and how any balance is handled — see tax controversy.

That is what the first conversation is for. Describe the situation in plain terms and the scoping is our job, not yours. Schedule it here.

Yes, in person or virtual, whichever is easier. Hours are Monday to Friday, 9:00 a.m. to 5:00 p.m., by appointment. Book a time.

Send a message through the contact form or call the office, and Sophie will follow up to find a time. There is no online self-booking, deliberately — a two-minute conversation about what you need makes the meeting a better use of your time.

You describe the situation, we ask what we need to scope it, and you get a straight answer about whether it is a fit and what the work would involve. Nothing is signed in the room. More on the consultation.

No. A scoping conversation needs facts about the situation, not identifiers. Personal information belongs in the portal once an engagement is agreed, not in an email or a first meeting.

Yes, and for a joint return or a partnership it is usually better. Decisions about entity structure, distributions or a property sale rarely belong to one person, and it saves a round of relaying. Book a consultation.

Then that is a good outcome for a scoping call. Where we can point you somewhere more suitable, we will. That is why the first conversation exists — see what it covers.

Before the decision rather than after it — before the entity is formed, before the property is sold, before the year closes. Mid-year is a better time to change firms than March, because the work can be set up rather than rushed. Get in touch.

For calendar-year filers: 15 March for partnership and S corporation returns, 15 April for individual and C corporation returns, and quarterly estimated payments in April, June, September and January. Dates move to the next business day when they fall on a weekend or holiday. The tax deadline calendar lists them in full.

The fifteenth day of the third month after the year end — 15 March for a calendar-year S corporation — with a six-month extension available. The extension covers the return, and the K-1s your shareholders need come from it, which is why a late entity return delays personal returns too. See the calendar.

No, and this is the single most expensive misunderstanding in tax. An extension moves the filing date, not the payment date. Tax owed is still due on the original date, and interest and a failure-to-pay charge run from there. More on planning around it.

No. An extension is a routine filing and does not raise your audit risk. A return filed accurately in September is better than a rushed one filed in April, particularly where a K-1 has not arrived. What matters is paying an estimate of what is owed by the original date.

The failure-to-file charge accrues monthly on the unpaid balance and is substantially heavier than the failure-to-pay charge, up to a statutory ceiling. That is why filing on time and paying late is nearly always better than the reverse. If a notice has already arrived, see tax controversy.

File anyway, then deal with the balance. The IRS has installment arrangements and other collection alternatives, and the position is far better from a filed return than an unfiled one. What we can do about it.

If you have income that is not subject to withholding — self-employment, K-1 income, rentals, significant investment income — then generally yes. Underpayment is charged mechanically, not judged, so it is worth getting the amount roughly right. Tax planning is where that gets set.

The usual route is a safe harbor: pay in at least the prior year's total tax through withholding and estimates, at a higher percentage if your prior-year income was above the statutory threshold, or at least ninety percent of the current year. Meeting a safe harbor protects you even if the year turns out much bigger — the thresholds and the current penalty rate are set out in the September estimated tax payment.

You do not have to. The annualized installment method lets the payments follow when the income actually arrived, which suits a business whose year is concentrated in a few months — see HVAC and plumbing for the trade version of this problem.

Mid-April, mid-June, mid-September and mid-January for a calendar-year individual — the quarters are not equal lengths, which catches people out. Exact dates for the current year are on the deadline calendar, and the September payment sets out the safe harbors that stop a penalty.

Often, and it is a useful trick: withholding is treated as paid evenly across the year regardless of when it was actually withheld, so a fourth-quarter adjustment can fix an underpayment that an estimate payment cannot. It works where one spouse has a W-2, or where you are an S corporation owner on payroll — see the September estimated tax payment.

15 March for a calendar-year partnership, the same date as an S corporation, with a six-month extension available. Partners cannot finish their own returns until the K-1s are out, which is the practical reason to start early. Business tax.

15 April for a calendar-year C corporation, with an extension available. A corporation with a fiscal year end follows the same pattern relative to its own year end. The calendar has the pattern set out.

Employment tax returns are quarterly, with wage statements to employees and to the Social Security Administration due at the end of January, and contractor forms on a similar January date. We do not process payroll, but the deadlines still land on the same calendar — see the tax deadline calendar.

Contractor forms go to the recipient and to the IRS at the end of January. The work that makes January easy happens earlier: collecting a W-9 before you pay a new vendor, rather than chasing a tax identification number from someone who has already been paid. Bookkeeping is where that gets built into the process.

South Carolina generally follows the federal filing dates for individual and entity returns, with its own estimated payment schedule and its own portal for payments. Local obligations such as a municipal business license run on their own calendar entirely — see Charleston.

Then your personal return goes on extension, which is exactly what extensions are for. Filing without the K-1 and amending later costs more than waiting. If late K-1s are an annual event, it is worth pushing the entity return earlier — business tax.

Not sensibly, for a pass-through. The business return produces the K-1 that feeds the personal return, so the order is fixed. That dependency is the main reason the March date matters more than people expect.

For the election to apply to the current year, it is generally due within roughly the first two and a half months of that year. Miss it and there is a relief procedure for a late election in many circumstances, but it is a procedure rather than a right. More on entity choice.

The general assessment window is three years from filing, longer where income is substantially understated, and unlimited where no return was filed. Records supporting the basis of property should be kept until well after that property is sold, which is far longer than most people assume.

The late-filing charge for these entity returns is assessed per owner per month, so it accumulates fast in a multi-owner business. Extensions are free and take minutes. If a notice has arrived, tax controversy covers abatement requests.

Before the year closes. After 31 December, the return is a reporting exercise — most of the levers have closed. A conversation in the autumn is worth several in April — year-end planning starts in September, and the deadlines differ by decision. Tax planning and advisory.

The default penalty calculation assumes income arrived evenly across the year, which punishes anyone whose did not — a sale, a bonus, a strong fourth quarter. Annualizing instead matches each required payment to the quarter that actually produced the income, and often reduces or removes the penalty. It needs quarter-by-quarter figures, so the bookkeeping has to support it: quarterly estimates.

It depends on profit, on how much of it is genuinely a return on your labor, and on whether you can support a reasonable salary. Below a certain profit level the payroll cost and the extra return outweigh the saving. We work it out on your numbers — see LLC vs S corporation in South Carolina.

An LLC is a state law entity; S corporation is a federal tax election. An LLC can be taxed as a sole proprietorship, a partnership, an S corporation or a C corporation. The question is almost never LLC or S corp, it is how the LLC you already have should be taxed. More on it here.

Sometimes. The saving is on self-employment tax on the portion of profit taken as distribution rather than salary. It is not a saving on income tax, and it comes with payroll filings, a separate return and a salary you have to be able to defend. Business tax.

What the role would cost to hire — by reference to duties, hours, and what comparable positions pay. There is no bright-line percentage, and the ones circulating online are not a standard. Setting it without any reference point is what makes it indefensible later.

Yes, provided the eligibility rules are met. The consequence is that you become an employee of your own company with payroll obligations attached, so the administrative side has to be worth the saving. Talk it through.

As a disregarded entity: the activity goes on a schedule of your personal return and profit is subject to self-employment tax. There is no separate federal return unless you elect otherwise, which is why the first structural conversation is usually about whether that default still fits.

By itself, no. A default LLC is taxed exactly as the owner was taxed before it existed. What an LLC does is legal — it is a liability question, which belongs with an attorney. The tax consequences follow from the election made afterwards, which is where we come in.

When revenue, ownership or headcount changes materially, when you take on a partner, when you start paying yourself differently, or when a sale becomes foreseeable. The structure chosen at formation is rarely the one that still fits three years later — see small business.

A limited number of shareholders, only permitted types of shareholder, and one class of stock. Most small businesses satisfy them without effort; the ones that trip are those with an ineligible investor or a second class of economic rights created accidentally in an operating agreement.

There is a relief procedure that allows a late election in many circumstances where there was reasonable cause and the business has been operating consistently with the election. It is a procedure with conditions, not an automatic fix, so it is worth doing properly. Get in touch.

It can be revoked, but the consequences are not symmetric — there are restrictions on re-electing for a period afterwards, and the change has knock-on effects for basis and distributions. It is a decision to model before making, not after.

The partnership generally does not pay federal income tax itself. It files a return and issues K-1s, and the partners pay the tax on their own returns whether or not any cash was distributed to them — which is the surprise that makes partnership distributions worth planning. Business tax.

Because a partner is taxed on the allocated share of profit, not on distributions. A profitable partnership that reinvests everything still generates taxable income for its partners. A well-drafted agreement usually provides for tax distributions for exactly this reason.

Basis is your investment in the entity for tax purposes. It limits the losses you can deduct and determines whether a distribution is tax-free or taxable. It changes every year, and a basis schedule nobody has kept is one of the most common gaps we see on a new engagement.

The tax answer is usually neutral — a single-member LLC holding a rental is taxed the same as holding it directly. The reasons to do it are legal and financing reasons, which belong with an attorney and a lender. What we can tell you is the tax consequences of the structure you choose — rental real estate.

You can, and the accounting question is whether you can still see them separately. Where they are genuinely different businesses with different economics, separate books and often separate entities give you numbers you can act on. Bookkeeping.

A C corporation pays tax at the entity level, and distributions to owners are taxed again. That double layer is why most small businesses avoid it, though it can suit a company retaining significant profit for growth or with certain investor plans. It is a modeling exercise — tax planning.

Yes. South Carolina has its own entity-level filings and its own treatment of pass-through income, and the state answer does not always follow the federal one. It is part of the same modeling exercise rather than an afterthought — Charleston.

A deduction of up to twenty percent of qualified business income for owners of pass-through businesses, subject to income thresholds, the type of trade or business, and limits based on wages and property. The thresholds are indexed and the interaction with an S corporation salary is real, which is why the two decisions are made together.

Yes, and it is not a formality. Commingled accounts make the books slower, the deductions harder to support and the entity easier to attack. It is the cheapest single improvement most new owners can make — see the monthly bookkeeping checklist.

A single-member LLC that gains a member generally becomes a partnership for tax purposes, with a new return, capital accounts and an allocation agreement. It is a bigger tax event than the handshake suggests, and it is worth the conversation before the paperwork. Talk to us.

Some changes have specific effective dates and elections, others create short tax years and a return for each period. It is doable, and it is one of those areas where the calendar matters as much as the decision. Schedule a consultation.

Reconciled books turned into a return, the depreciation schedule rolled forward, owner transactions checked, state filings prepared where there is a filing obligation, and K-1s issued for a pass-through. The scope is set out on the business tax page.

Costs that are ordinary and necessary for the business. The test is not whether it feels business-related but whether it is common in your trade and helpful to it, and whether you can show what it was. Substantiation is usually where deductions are lost, not the rule itself.

The business-use portion, using either mileage or actual costs, and the choice is made per vehicle and is not freely reversible in later years. Either way it stands or falls on records kept during the year. For trade fleets, see HVAC and plumbing.

Yes, and a reconstructed one made in April is exactly what does not hold up. A contemporaneous log — app or notebook, it does not matter — showing date, destination, purpose and miles is what supports the deduction.

Business meals are generally deductible in part, with the percentage having moved more than once in recent years and entertainment treated differently from food. Keep who, where and why with the receipt; that detail is what turns a card charge into a supportable deduction.

It requires space used regularly and exclusively for business, and there are two methods — a simplified rate and an actual-cost calculation. Exclusivity is the condition people fail: a desk in a room the family also uses does not qualify.

Often, through immediate expensing provisions and bonus depreciation. Both have changed under recent federal legislation, and the year the asset is placed in service decides which rules apply. We check the year rather than assume — tax planning is where the timing decision belongs.

No. A deduction spent in a flat year is not available in the year the business doubles, and accelerating everything can waste the benefit of lower brackets. That trade-off is the whole point of planning before the year closes.

Spreading the cost of an asset across the years it is used rather than deducting it all at once — with a set of provisions that let you accelerate it. The schedule tracking it is one of the most valuable documents in your file, and the one most often lost when changing accountants.

Part of the gain is generally recaptured and taxed at ordinary rates rather than capital gain rates. That is why the write-off is a timing benefit rather than a permanent one, and why the sale needs planning as much as the purchase did — see tax planning.

Costs incurred before the business begins operating are treated under specific rules — a limited immediate deduction, with the remainder amortized over time. The trap is the date the business is considered to have started, which is a facts question worth settling early.

The interest generally is; the principal is not. Recording the whole payment as an expense is one of the most common bookkeeping errors we correct, and it overstates the deduction while understating what you owe. Bookkeeping.

Not when you buy it. Inventory generally reduces income as it is sold rather than as it is purchased, which is why a business can be profitable on paper and short of cash. Smaller taxpayers have simplified options here, and which one applies depends on your receipts.

A state can require a return once your activity there crosses its threshold — employees, property, deliveries or sometimes just sales volume. Service businesses cross state lines more easily than they expect. It is ordinary work here; see business tax.

It depends on what you sell, where, and whether it is taxable in that state. In South Carolina the answer also turns on whether work is a retail sale or an improvement to real property, which is a genuinely different question for contractors.

A charge some states impose for the privilege of operating there, calculated on capital or a flat basis rather than on profit — meaning it can be owed in a year with no income at all. It is a state-by-state question and part of the multi-state review.

Self-employed owners and certain S corporation shareholders have specific routes for health insurance, and the S corporation route requires the premiums to run through payroll and appear on the wage statement to work. Getting the mechanics wrong loses the deduction entirely.

Subject to a per-recipient annual limit that is low and has not moved in a long time. Branded promotional items of small value are treated differently. It is rarely a large number but it is often claimed wrongly.

The business-use portion, and a reasonable allocation is expected rather than the whole bill. Where employees are reimbursed, doing it under an accountable plan keeps the payments out of wages — see bookkeeping.

Enough to show the amount, the date, the payee and the business purpose. A bank statement alone shows three of those four, which is why the fourth — purpose — is the one that gets challenged. Building it into the monthly process is what the monthly checklist is for.

A repair keeps property in operating condition and is generally deducted; an improvement betters, restores or adapts it and is generally capitalized. The line is fact-specific, there are safe harbors, and it matters more for property owners than almost any other classification decision — see rental real estate.

Generally yes if they are genuinely business costs, but the cleaner route is reimbursement through the business under a documented arrangement so the expense sits where it belongs. Personal cards paying business costs for years is how basis and books drift apart.

Both write off an asset in year one, and they behave differently. Section 179 is elective and asset-by-asset but cannot create a loss; bonus is automatic by class, has no income limit, and can create one. The deciding factor is often the state return — South Carolina does not recognize bonus depreciation and adds it back, which leaves you running two depreciation schedules for the life of the asset: Section 179 and bonus depreciation.

More businesses qualify than assume they do — it is about developing or improving a product or process through a systematic process of experimentation, not about laboratories. Domestic research costs are deductible in the year incurred again, which reversed the amortization rule that had been generating tax bills for unprofitable businesses. South Carolina adds a credit of its own on top: do you qualify.

No. Payroll processing sits outside the practice and we work alongside whichever provider you use. What we do is the tax consequences of it — owner compensation, the return, and the year-end filings that depend on payroll being right. Our services.

It depends on the entity. A sole proprietor or partner takes draws and pays tax on profit; an S corporation owner takes a salary through payroll and can take distributions beyond it. Getting this wrong is the most common structural error we see — business tax.

No. A salary is wages with payroll tax and withholding attached; a distribution is a return of profit and is not subject to self-employment or payroll tax. An S corporation owner cannot take only distributions, which is where reasonable compensation comes in.

It is a facts test about control — who sets the hours, who supplies the tools, who bears the risk of profit and loss — not a matter of what the agreement says. Misclassification exposure is back payroll tax plus penalties. See construction for the trade version.

Assessment of the employment taxes that should have been withheld, plus penalties and interest, and it can reach back across years. There are relief provisions in some circumstances. If a notice has arrived, tax controversy is where it goes.

Get one before the first payment, not in January. Chasing a tax identification number from a vendor who has already been paid is the reason 1099 season is unpleasant, and backup withholding obligations can attach where the number is missing.

Broadly, unincorporated vendors paid over a threshold amount during the year for services, with exceptions and different forms for certain payment types. Payments made by card or third-party platform are generally reported by the processor instead, which is a common double-reporting mistake.

It depends how the LLC is taxed, which is what the W-9 tells you. That is precisely why the form is collected up front rather than guessed at from the vendor's name.

An arrangement for reimbursing employee expenses that, if the substantiation and return-of-excess conditions are met, keeps the reimbursements out of wages. Without one, the same payments become taxable compensation — a paperwork failure with a real tax cost.

If they genuinely work in the business, yes, and it can open retirement plan and benefit options. If they do not, it is wages without substance and it costs payroll tax for nothing. The test is whether the role would exist if you hired a stranger.

Where the work is real, the pay is reasonable for it, and the records exist, yes — and the payroll tax treatment depends on the entity type. It is legitimate planning that becomes indefensible the moment the work is notional. Tax planning.

Withheld income tax and the employee share of social security and medicare, plus the employer share and unemployment taxes, deposited on a schedule set by your history and reported quarterly. Deposit timing is where penalties are generated, more than the calculation.

Withheld employee taxes are held in trust for the government, and where they are not remitted the liability can be assessed personally against people responsible for paying them — through an entity, not around it. It is the sharpest edge in payroll, and worth acting on early: tax controversy.

No. Where an owner performs services, wages are expected before distributions, and characterizing all of it as distribution is a well-known examination issue. What is reasonable is a facts question, and it should be documented when set.

For a sole proprietor or partner, a draw is not itself a taxable event — you are taxed on business profit whether or not you draw it. Confusing the two is why owners are surprised by a tax bill in a year they took very little out.

That is an insurance and state law question rather than a tax one, and it belongs with your carrier and your attorney. We will flag where the classification of your workers has implications on both sides, but we will not opine on the coverage requirement.

Duties, hours, experience, what the role pays in your market, and what the business can support. Anchoring it to a percentage of profit found online is not a method. Documenting the basis when you set it is what makes it defensible years later.

No, and framing it that way is the problem. If the working relationship is employment, calling it contracting does not change the tax result — it just moves the exposure to you, with penalties attached.

Employees receive a wage statement; contractors receive an information return for the services they were paid for. Both have end-of-January deadlines, and both are built from records kept during the year rather than assembled in January. Bookkeeping.

For a profitable business it is often the single largest planning lever available, and there are plan types scaled to a one-person business as well as one with staff. Design is a conversation with a plan provider; the tax modeling is ours.

Federal and state registrations, withholding set up for Social Security, Medicare, FUTA and South Carolina unemployment, a W-4 and an I-9 on file, and workers' compensation once you regularly employ four or more people or your payroll reaches the statutory threshold. The part that surprises owners is that withheld payroll tax is trust fund money and the people who control the payments can be held personally liable for it: the payroll setup.

Transaction entry, bank and card reconciliations, consistent coding, month-end close and financial reporting, with QuickBooks support. It explicitly does not include payroll processing or accounts payable and receivable management. Full scope on the bookkeeping page.

They are different jobs. Bookkeeping is the record kept through the year; the return is built from it. Where nobody is keeping the record, the return work becomes reconstruction, which is slower and less accurate than doing it monthly.

Yes — catch-up and clean-up work is ordinary. It usually means rebuilding reconciliations, correcting coding and squaring the balance sheet to reality, and it is worth doing before a return rather than around one. Bookkeeping services.

Agreeing your records to the bank or card statement so that every transaction is accounted for. Without it, a profit and loss is a guess: duplicated entries, missing transactions and unrecorded fees all hide in an unreconciled account.

Finishing the month and not touching it again — reconciled accounts, accruals and prepayments where they apply, and a set of statements you can rely on. Open months that keep changing are why last quarter's numbers never match themselves. See the monthly checklist.

Yes, QuickBooks support is part of the bookkeeping service — including tidying a file that has drifted rather than starting over. More detail.

Cash is simpler and tracks money in and out; accrual matches income to when it was earned and costs to when they were incurred, which gives a truer picture for a business with receivables or inventory. Eligibility depends on your size and activity, and the choice has tax consequences.

Monthly, and at closed months rather than live ones. The point of bookkeeping is that the profit and loss you read in July is telling you the truth about June, in time to do something about it.

Profit is an accounting measure; cash is what you can spend. Loan principal, inventory purchases, owner draws and receivables all separate the two. A profitable business running out of cash is common and it is a bookkeeping question before it is a financing one.

Because errors live there. Negative cash, a loan balance that does not match the lender, an undeposited funds account growing forever — all of them mean the profit and loss is wrong too. Nobody catches those from an income statement.

Yes, and it is usually driven by a filing that has to happen or a lender who wants statements. The order matters: the earliest year has to be right before the later ones can be. Get in touch.

Bank and card feeds or statements, loan statements, and answers on the handful of transactions that are genuinely ambiguous. A good process asks you few questions and the same ones each time.

Owner draws and contributions belong in equity, not in income or expenses. Personal spending run through the business account and coded as an expense is one of the fastest ways to make a return wrong and an audit unpleasant.

A statement shows amount, date and payee but not purpose, and purpose is what gets challenged. Digital copies attached to the transaction are the practical answer — the habit matters more than the storage method.

It is a holding account for payments received but not yet grouped into a bank deposit. When it grows without limit it usually means deposits are being recorded twice — a classic overstatement of income that shows up in the return if nobody reconciles.

Yes. Deposits arrive net of processing fees, and recording only the deposit understates revenue and omits a real deductible cost. It matters most for businesses paid mainly by card or through insurance — see dental and medical practices.

By setting the file up so costs are coded to the job as they happen, not allocated afterwards. It is the difference between knowing which work makes money and guessing. For contractors it also drives the schedules lenders read — construction.

It is usually the deciding factor. Lenders want statements that are internally consistent across periods and agree to the tax return. Books closed monthly produce that as a by-product; books assembled in a hurry rarely survive the questions.

It is normal for there to be differences — depreciation and certain expenses are treated differently for tax — but they should be identified and reconciled rather than unexplained. Unreconciled differences are how errors compound year over year.

No. Monthly bookkeeping here covers the record and the close, not running your payables or chasing your receivables. The bookkeeping page sets out that boundary explicitly rather than leaving it to be discovered.

It depends on how many months, how many accounts and how much of the source material still exists. What we can do at the start is tell you what is missing and what has to be reconstructed, so the scope is known before the work begins. Ask.

The threshold is lower than most owners assume. Once there is a business account, a card and any regular expenses, the cost of not having a record shows up as lost deductions and a slower, more expensive return. Small business.

Not for a single W-2 and a standard deduction. It starts to matter when there is business income, rental property, equity compensation, a house sale, multi-state income or a K-1. That is what the personal tax page is aimed at.

You take the larger of a fixed standard amount or the total of specific deductible items — mortgage interest, state and local taxes within the cap, charitable gifts and certain medical costs. The amounts are indexed annually, so it is a calculation each year rather than a habit.

Not worried, but it does mean your return depends on someone else's filing. K-1s report your share of an entity's income whether or not cash was distributed, and late ones are the usual reason a personal return goes on extension — see the deadline calendar.

There is an exclusion of gain on a main home for those who meet the ownership and use tests, at one amount for a single filer and double for a married couple filing jointly. Gain above the exclusion, and periods of rental or business use, change the answer — bring the closing documents.

Qualified dividends and long-term capital gains are taxed at preferential rates; short-term gains and ordinary dividends are not. Holding periods therefore do real work, and an investment sale in December is one of the few late-year levers left — tax planning.

Selling at a loss and acquiring a substantially identical position within a window around the sale, which disallows the loss for now and adds it to the basis of the replacement. It catches people harvesting losses in a hurry at the end of December.

There are education-related deductions and credits with income phase-outs and eligibility rules that differ between them, and only one can generally be used for the same expense. The right one depends on income and on who is claiming the student.

Filing status changes for the whole year based on your status at year end, brackets and phase-outs change, and two incomes can interact in ways neither did alone. Withholding set up as a single filer is the usual source of a first-year surprise.

It is a set of tests about relationship, residency, age, support and, for some credits, income. Divorced or separated parents have specific rules about who claims a child, and it is one of the fastest ways to trigger a notice when two returns claim the same person.

A deduction reduces the income you are taxed on; a credit reduces the tax itself, dollar for dollar, and some credits are refundable beyond your liability. A credit is worth more than a deduction of the same size, often by a lot.

Yes. Income is taxable whether or not a form was issued, and reporting thresholds for third-party platforms have moved repeatedly without changing that. The form is an information return, not the definition of income.

Generally on a schedule of your personal return, with self-employment tax on the profit — and with the same deduction rules as any business. Once it is consistently profitable the structure question is worth asking: LLC vs S corporation.

The social security and medicare contribution paid by people who are not employees, covering both halves. Part of it is deductible in computing income tax. It surprises people the first year precisely because there was no employer paying half of it.

Usually a resident return in your home state with a credit for tax paid elsewhere, plus non-resident returns where the income arose. Remote work has made this far more common and the rules are not uniform across states — personal tax.

Stock options and restricted units are taxed at different points — grant, vest, exercise, sale — depending on the type, and the withholding on your wage statement often covers less than the actual liability. It is a common reason a high earner owes at filing.

If you consistently owe or consistently receive a large refund, yes. A large refund is not a win; it is an interest-free loan. Withholding is also the cleanest way to fix an underpayment late in the year — see tax planning.

Generally not to the recipient. The gift tax framework applies to the giver, with an annual exclusion per recipient and a lifetime amount, and a return is required in some circumstances even when no tax is due. We do not do estate planning, and this is one to coordinate with an attorney.

If you itemize, and subject to limits based on income and the type of gift. Non-cash gifts have substantiation requirements that scale with value, including an appraisal above a threshold. A receipt after the fact will not rescue a large gift with no contemporaneous acknowledgment.

A superseding return replaces an original filed before the deadline; an amendment corrects a return after it. Both have their uses, and which applies depends on timing. If the correction stems from a notice, see tax controversy.

Longer than people expect, and processing times have varied considerably in recent years. It is worth filing correctly the first time where the choice exists, which is an argument for an extension rather than a rushed April return.

It depends on income sources and amounts. Social security can be partly taxable depending on other income, retirement account distributions are generally taxable, and required minimum distributions have their own timing rules with a sharp penalty for missing them.

Inheritances are generally not income to the recipient, but inherited property carries its own basis rules and inherited retirement accounts have distribution requirements that have changed in recent years. We do not do estate work, so this is one to coordinate — our services.

Two approaches. Pay against a safe harbor based on last year's tax, which is certain and ignores this year entirely, or re-forecast each quarter and pay on what has actually happened. Uneven income usually favors the second, combined with annualizing at filing so the payments are measured against the quarters that produced them.

Possibly, under a different test than the one for young children. It turns on the relationship, the relative's own income, how much of their support you provided, and whether anyone else claims them — and it can apply to a parent as readily as to a grown child. Support is the part people misjudge, because it counts everything spent on their behalf, not what you handed them.

Generally by its value at the date of death rather than what the person who died originally paid, so the gain that built up during their lifetime is not taxed to you when you sell. That valuation matters years later and is far easier to establish at the time than to reconstruct afterwards. Returns for a trust or an estate are their own filings and this firm does not take them on; what it handles is your return when the property is later sold: personal tax.

Rent is income; ordinary and necessary costs of the rental are deductible; and the building itself is depreciated over a fixed recovery period rather than deducted when bought. The result is that a property can produce cash and still show a tax loss — see rental real estate.

Mortgage interest, property tax, insurance, management fees, repairs, supplies, travel to the property within limits, and depreciation. Improvements are capitalized rather than deducted, which is the distinction that matters most. Rental real estate.

Rental activity is generally passive, and passive losses are limited to passive income. There is a special allowance for actively participating owners that phases out as income rises, and disallowed losses are suspended rather than lost — they carry forward and are generally freed on sale.

A status with strict hour tests — more than half of personal service time in real property trades and a substantial annual hour threshold — that can allow rental losses to offset other income. It is powerful, frequently claimed and frequently unsupported. Contemporaneous time records are what make it stand up.

Where the average guest stay is short enough, the activity may fall outside the definition of a rental activity, which changes the passive loss analysis and can bring self-employment considerations into play depending on the services provided. It is a genuinely different regime from a twelve-month lease — real estate investors.

In South Carolina, short-term accommodations attract state and local charges, and there are county and municipal layers on top. Platforms collect some of it and not all of it, which is where owners get caught. See the Mount Pleasant page for the permit side.

On sale, depreciation taken — or allowable, whether or not it was taken — is generally recaptured and taxed rather than being treated entirely as capital gain. Not claiming depreciation does not avoid it, which is why skipping it is never the saving it appears to be.

It generally still reduces basis when you sell, so the position is worse than having claimed it. There is a procedure to correct the method and catch up the missed depreciation, and it is usually worth doing — talk to us.

A deferral of gain on the exchange of real property held for business or investment for other like-kind real property, subject to strict identification and completion deadlines and the use of a qualified intermediary. The mechanics and the clock are set out in 1031 exchange timeline and rules.

Replacement property must be identified within forty-five days of the transfer, and the exchange completed within one hundred and eighty days or by the return due date, whichever comes first. Both clocks start at the same moment and neither is extended for inconvenience — the timeline in detail.

No. Actual or constructive receipt of the proceeds generally destroys the deferral, which is why a qualified intermediary is engaged before closing rather than after. The single most common failure is a well-meaning closing that routes funds to the seller.

Only where the property is genuinely held for investment or business use, and there are safe harbor conditions about personal use. A property used mainly by the family is not an investment property because it also gets rented occasionally.

A study that separates a building's cost into components with shorter recovery periods, accelerating deductions. There is a property value below which the study costs more than it returns. The useful advice is which side of the line you are on — rental real estate.

The tax treatment of a single-member LLC holding a rental is generally the same as holding it directly. The reasons to use one are liability and financing reasons that belong with an attorney and a lender. We advise on the tax consequences of whatever structure you choose.

Costs are allocated between rental and personal use, and where personal use exceeds certain limits the deductions available against rental income are capped. Vacation properties are the usual case and the allocation needs to be documented, not estimated.

Depreciation begins at conversion using a basis rule that takes the lower of adjusted basis or fair market value at that date, and the main home gain exclusion is only available for a period afterwards. Getting a value at the conversion date is far easier then than years later.

Repairs generally are; improvements are capitalized and depreciated. There are safe harbors for smaller amounts and for buildings with a low enough basis. Roofs, HVAC systems and full renovations are the recurring arguments — see construction for the other side of that work.

Gain is split between depreciation recapture and capital gain, state tax applies where the property sits, and the net investment income charge can apply above income thresholds. Suspended passive losses are generally released on a fully taxable disposition, which often changes the arithmetic — tax planning.

Closing statements from purchase and sale, the depreciation schedule, capital improvement receipts with dates, and rent and expense records by property. Improvement receipts matter for decades; nobody remembers a 2018 kitchen without them.

Income from property located in South Carolina is generally taxable here, which means a non-resident return, with your home state typically giving a credit. Out-of-state owners of Charleston-area rentals meet this every year — Charleston.

South Carolina assesses owner-occupied legal residences at a lower ratio than other property, and the lower rate must be applied for rather than granted automatically. A rental or second home is generally at the higher ratio — see Summerville for how jurisdiction affects this.

There is no count. What changes the analysis is the level and regularity of activity, the services provided and the hours involved. The consequences run to self-employment tax, the qualified business income deduction and the passive loss rules — real estate investors.

Travel with a genuine business purpose for the rental generally is deductible, allocated where the trip is partly personal, and it invites scrutiny where the property happens to be somewhere pleasant. The purpose has to be documented at the time.

A deferral and exclusion regime tied to investing gains in designated zones, with dates and conditions that have shifted through legislation. Whether it is available and worthwhile for a given gain is a current-law question, and we check it rather than assume — tax planning.

A single-member LLC is usually disregarded for tax, so the properties still land on Schedule E of your own return and the separate entities change liability rather than reporting. Multi-member LLCs file their own returns and issue K-1s instead. Where it does bite is the passive loss rules and grouping elections, where how the properties are treated together decides which losses you can actually use: rental real estate.

The state part, mostly. South Carolina assesses an owner-occupied legal residence at a lower ratio than other residential property, and the lower ratio has to be applied for with the county assessor rather than granted automatically. Short-term lodging carries state accommodations tax plus local taxes the SCDOR does not administer, and an average stay of seven days or less can stop being a rental activity for the passive loss rules entirely: the part that is not federal.

Preparation reports what already happened. Planning changes what happens — entity structure, timing of income and expenses, equipment purchases, retirement contributions, and the sequence of a sale. It is on the calendar before year end, not in April: tax planning and advisory.

For most levers, 31 December. A few things can still be done after year end — certain retirement contributions, for example — but by the time the return is being prepared the year is largely written. Book a planning conversation.

It scales down well. Entity choice, owner compensation, when to buy equipment and whether to open a retirement plan are decisions a small business faces just as a large one does, usually with less margin for getting them wrong. Small business.

At least once before year end for most businesses, and more where something is changing — a sale, a partner, a large purchase, a move across state lines. Planning conversations tied to events beat calendar rituals.

A projection based on the year to date and what is expected for the rest of it is a normal part of planning, and it drives both the estimated payments and the decisions still open. It is an estimate that improves with better books — bookkeeping.

Usually retirement plan design, entity structure and owner compensation, and timing of capital purchases. Each is a real decision with non-tax consequences, which is why they are modeled rather than applied as rules. Tax planning.

Only if you need the equipment. Spending a dollar to save a fraction of it is not a saving, and accelerating a deduction into a low-income year can waste it. The timing question is worth modeling: tax planning.

Moving funds from a pre-tax retirement account to a Roth, paying tax now to remove future growth from taxation. It tends to suit low-income years, early retirement before other income begins, and situations where future rates are expected to be higher. It is arithmetic, not ideology.

A business sale, a property sale or an unusual bonus year distorts everything — brackets, phase-outs, surtaxes and estimated payments. The planning happens before the transaction closes, because most of the useful options disappear at closing. See mergers and acquisitions tax.

Yes, and how you give matters as much as how much: appreciated securities, bunching gifts into alternate years, and donor advised funds all change the result. The substantiation requirements are strict and unforgiving after the fact.

Deliberately filling lower brackets in some years and deferring income in others, rather than treating each year in isolation. It matters most around retirement, in the years between leaving a job and drawing income, and for businesses with volatile profit.

No. Everything here has to be a position we would be comfortable defending, and the strategies that circulate on social media are usually either much narrower than described or not real. If a plan depends on nobody looking at it, it is not a plan.

Yes, and for anything structural it is better. Retirement plan design, a buy-sell agreement or an entity restructuring involves all three, and the tax consequences should be modeled before the documents are drafted. Get in touch.

It interacts with owner salary, with the type of trade or business, and with wage and property limits, so a decision that helps one part can reduce the deduction elsewhere. It is a reason to model rather than apply a rule of thumb — business tax.

Sometimes, and the rules on how far ahead you can prepay differ by method of accounting and by type of expense. It is a real lever for a cash-basis business, within limits, and it works better as part of a projection than as a December reflex.

Withholding becomes a tool: it is treated as paid evenly across the year, so it can fix an underpayment that a late estimate cannot. Beyond that, the side business brings its own structure and retirement plan options — personal tax.

Talk to a CPA before the letter of intent, not after. Deal structure, allocation and the sequence of steps decide the tax, and by the time terms are agreed most of it is fixed. Mergers and acquisitions tax.

A short list — certain retirement contributions, accounting method considerations, and elections made on a timely filed return. It is genuinely a short list, which is the argument for the autumn conversation. Book one.

They have to. Federal legislation in recent years has repeatedly changed expensing, credits and deduction limits, sometimes with mid-year effective dates. Planning built on last year's rules is the most common way a good idea becomes a wrong one — South Carolina rewrote its individual income tax for 2026, which is covered in year-end tax planning.

A projection, a set of decisions with numbers attached, and the estimated payments that follow from them — not a document nobody reads. What it covers is on the tax planning page.

It depends on whether you have employees, how much you want to put away, and when you are reading this. A Solo 401(k) allows the largest contribution for an owner with no staff; a SEP is employer-funded and can still be established after year end, up to the return due date with extensions; a SIMPLE generally has to exist by October 1 to count for that year, which is the deadline people miss: choosing a plan.

When the business has nexus there — a connection the state considers enough to tax. Physical presence has always created it: an office, employees, inventory, property. Most states now also assert it on sales volume alone, with no physical presence at all, and the tests differ by state and by tax. It is worth checking before a state finds you rather than after: business tax.

Economic nexus means a state taxes you on the strength of your sales into it rather than any presence in it. It arrived first in sales tax and has since spread into income and franchise taxes in many states, on separate thresholds and often separate rules. Crossing a sales tax threshold in a state does not automatically create an income tax filing there, and the reverse is also true.

The K-1 usually carries a state schedule apportioning your share of the income to each state the business operates in, and each of those states may want a nonresident return from you. Your home state then taxes the same income and gives credit for what you paid elsewhere. A K-1 arriving late is the usual reason an individual return goes on extension: the deadline calendar.

Your resident state taxes your income wherever it was earned, then credits you for tax paid to the other state on the same income so it is not taxed twice. The credit is generally limited to what your home state would have charged on that income, so a higher-tax state on the other end leaves a difference you absorb. It only works if the nonresident return is actually filed.

Payroll withholding and registration obligations in each state where the work is performed, and often income tax nexus for the business itself. A single remote employee is enough in many states. This firm does not process payroll, but it files around it and will tell you what a new state costs you before you hire there: business tax.

A composite return lets a pass-through entity file and pay in a state on behalf of its nonresident owners, so the owners do not each file there. It is simpler, and it usually costs more, because it applies the top rate and skips deductions and credits the owner might have used. Whether it is worth it depends on how much income the state gets and how many owners are involved.

US citizens and residents report worldwide income, so foreign earnings go on the return in dollars whether or not the payer issues any US form and whether or not the money is brought into the country. Foreign tax paid on the same income is usually relieved through a credit or a deduction. What the income is — wages, contract work, a distribution from a foreign entity — changes which forms come with it: personal tax. Whether the relief comes as a credit or an exclusion is covered in Form 1116 vs Form 2555.

The return itself, because the obligation follows citizenship rather than residence, plus any foreign account and asset reporting that applies. Living abroad brings an automatic filing extension and may bring an exclusion or credit that reduces or removes the tax, but it does not remove the requirement to file. The reporting forms carry their own penalties independently of whether any tax is owed. There is a fuller explanation in the guide on dual citizenship and US tax filing.

FBAR is the report of foreign bank and financial accounts. It applies to a US person with a financial interest in, or signature authority over, foreign accounts whose combined value passes a threshold at any point in the year — including accounts you only sign on, and accounts held for a business. It is filed separately from the tax return, to Treasury rather than the IRS. The FBAR and Form 8938 comparison sets the two side by side, because both often apply to the same account.

FATCA reporting covers specified foreign financial assets and is filed with the tax return. FBAR covers foreign accounts and is filed separately with Treasury. They overlap heavily, use different thresholds and different definitions, and neither substitutes for the other. It is common to owe both, and common for people to have found only one of them. The thresholds and filing destinations are laid out in FBAR vs Form 8938.

Yes. The reporting is triggered by the account existing and by its value, not by whether it produced income. A dormant account, an account inherited abroad, and an account you merely have signature authority on all count. This is where most unintentional non-compliance comes from.

GILTI is a US tax on the earnings of a controlled foreign corporation, built so that profits held offshore are not left untaxed indefinitely. It reaches US owners of foreign companies, which includes small ones and not only multinationals. If you own a foreign entity rather than simply earning foreign income, it is worth looking at before the year closes: tax planning and advisory.

Usually as a part-year resident return in both states, each taxing the income earned while you lived there, with anything sourced to a particular state taxed by that state regardless. The date residence actually changed matters, and states look at where you live rather than where you say you live: Charleston, SC. If the move was from outside the country rather than another state, the returning to the US checklist covers what else changes.

Registration with that state, income or franchise tax filings there, payroll withholding for anyone working there, and an apportionment of the business's income between the states rather than all of it being taxed at home. Sales tax obligations often follow. It is a conversation worth having before the lease is signed: talk it through.

There are established procedures rather than a single penalty, and which one fits depends on the facts — particularly whether the failure to file was non-willful and whether you were living outside the United States at the time. The Streamlined and delinquent filing paths guide sets out each route and what it requires. If the IRS has already contacted you about those years, say so at the first conversation, because it changes which routes remain open.

The international tax section is organised by situation rather than by form — living abroad, moving back, unfiled years, foreign accounts, or foreign tax paid — and each guide cites the IRS page behind it. It is general information; which rules apply to you depends on facts that have to be reviewed.

Read it, note the deadline, and do not ignore it — most notices have a response window and the options narrow when it closes. Do not pay a proposed amount just because it is printed on a letter, either. Start with what to do after an IRS audit letter.

Usually not. Most letters are automated: a mismatch against reported forms, a balance due, an adjustment, or a request for one document. A genuine examination arrives differently and says so. Tax controversy.

An automated proposal to change your return because information reported by third parties does not match what you filed. It is a proposal, not a bill, and it is often wrong in part — particularly where basis in a securities sale was not reported. It has a response deadline.

Not before it is checked. Automated notices frequently overstate the liability because the system sees gross proceeds without cost, or a form issued twice, or income that was reported in a different place on the return. Paying an incorrect notice is difficult to undo.

Generally three years from filing, extended where income is substantially understated, and unlimited where no return was filed or in cases of fraud. State windows can differ from the federal one.

Mostly scoring and matching rather than suspicion — figures out of line with comparable returns, mismatched information forms, large or unusual claims, and certain credits. Filing an extension does not increase risk, contrary to the folklore.

Yes. A CPA has unlimited representation rights before the IRS, which covers examination, collection and appeals. In practice that means correspondence goes through us and you are not on the phone improvising. Tax controversy.

An authorization allowing a representative to act for you before the IRS — obtaining transcripts, corresponding, and appearing on your behalf. There is also a narrower form that permits information access without representation.

There is an internal appeals process, and beyond that judicial routes with their own deadlines. Appeals is an independent function and a genuinely useful step; a notice of deficiency starts a strict clock that should never be allowed to run out by accident.

The letter that gives you a fixed period to petition the Tax Court before the tax is assessed. The deadline is statutory and is not extended. If one arrives, it needs attention that week — tax controversy.

The account moves through collection: liens, levies and wage garnishment become available once the required notices have been issued. Almost every option is better earlier, and almost none of them require you to have the money in hand today.

Installment arrangements exist at several levels, with the simplest available almost automatically for smaller balances and more involved arrangements requiring financial disclosure. Filing all required returns is normally a precondition. We can handle it.

A settlement of a liability for less than the full amount, based on what the IRS calculates it could reasonably collect. It is a formula-driven analysis, not a negotiation, and the advertisements suggesting otherwise are why so many people are disappointed by it.

Sometimes. There is administrative relief for taxpayers with a clean compliance history, and reasonable cause relief where circumstances genuinely prevented compliance. Interest is far harder to remove than penalties. It is worth asking rather than assuming.

A claim against your property arising from an unpaid assessed liability after notice and demand, and it becomes public when filed. It affects credit and complicates sales and refinancing. There are routes to release, discharge or subordination depending on the situation.

A lien is a claim; a levy is the actual taking — a bank account, wages, or receivables. Levies follow required notices, which is why an unopened envelope is so expensive. Get help early.

File them, generally starting with the oldest required year, and deal with the balance afterwards. Substitutes for return prepared by the IRS almost always overstate the liability because they include no deductions. The position is nearly always better than it feels.

Coming into compliance voluntarily is a substantially better position than being found. Penalties may apply, relief is often available, and the alternative — waiting — only adds interest and forecloses options.

A record of what the IRS has for your account: filings, payments, assessments, and the information forms third parties reported. It is the fastest way to see the actual position rather than the one on the letter, and it often resolves the question outright.

Yes, and a state notice follows its own procedures and deadlines, which are not the federal ones. A federal adjustment frequently produces a state one months later. Both are handled here — tax controversy.

Levy on a principal residence requires court approval and is rare, but liens against it are common and the practical effect on selling or refinancing is immediate. Engagement early makes the difference, not the drama of the worst case.

Generally three years from the return due date or two years from payment, whichever is later. Late-filed returns claiming a refund outside that window are simply out of time, which is a quiet and avoidable way to lose money.

Relief from joint liability where one spouse should not fairly be held responsible for an understatement attributable to the other. There are several forms of relief, each with conditions and time limits, and the facts do most of the work.

It is a specific IRS process with its own forms and unit, and it is worth starting immediately because the resolution is slow. An identity protection PIN prevents repeats. We can help you work through it.

It can. An examination that starts on one item can widen to others on the same return, and a pattern the examiner sees may pull in adjacent years still open under the statute. What gets produced, and how questions are answered, shapes whether that happens — which is the practical argument for being represented from the first letter rather than the second: IRS representation.

Before the letter of intent. Structure, allocation and sequence decide the tax, and they are effectively fixed once terms are agreed. Bringing us in at closing means reporting a result rather than shaping it — mergers and acquisitions tax.

In an asset sale the buyer acquires the assets and generally gets a stepped-up basis to depreciate; in a stock or equity sale the buyer takes the entity as it is. Buyers usually prefer assets, sellers usually prefer equity, and the price should reflect which one it is.

Because it decides what the seller pays tax on and what the buyer can depreciate or amortize. Equipment, goodwill and a non-compete are all taxed differently. Both sides report a consistent allocation, so it is negotiated once and lived with — mergers and acquisitions tax.

To the seller it is generally capital gain; to the buyer it is amortized over a fixed statutory period of fifteen years. That mismatch between one year of tax and fifteen years of deduction is a large part of why allocation is contested.

Amounts allocated to a non-compete are generally ordinary income to the seller and amortized by the buyer over the statutory period, regardless of the agreement's own term. It is often the least favorable bucket for a seller and worth negotiating deliberately.

Installment reporting can spread the gain as payments are received, with exceptions — depreciation recapture is generally taxed up front rather than spread. That mismatch surprises sellers who assumed the whole gain follows the cash.

Contingent consideration paid on future performance, and its treatment depends on how it is structured — purchase price versus compensation for continued services is the key distinction, and the difference in rate is large. It should be modeled during negotiation.

Valuation is a separate discipline and we are not holding ourselves out as valuers. What we can do is show what different deal structures leave you with after tax, which is the number that actually matters when comparing offers. Talk it through.

Returns, payroll filings, sales tax compliance, worker classification and any open notices. Unfiled state registrations and contractor classification are the two that most often surface late and reduce the price. Cleaning them up early is cheaper than conceding on them.

That is a solvable problem and a common starting point. Reconciled books and consistent statements across periods are what a buyer's diligence tests, and rebuilding them takes time you have before a process rather than during one — bookkeeping.

Frequently the property is held separately and leased to the operating business, and keeping it can be the better outcome. Where it is sold, a like-kind exchange may be available on the property portion — see 1031 exchange timeline and rules.

It depends on whether you are buying an interest from an existing owner or the entity is issuing you one, and whether the entity elects to adjust the basis of its assets. Dental and medical buy-ins meet this constantly — dental and medical practices.

Elections that can allow an equity purchase to be treated as an asset purchase for tax purposes in defined circumstances, giving the buyer a basis step-up. They have conditions and consequences for the seller, and they are a modeling exercise before they are a decision.

For a business with more than one owner, yes, and it is a legal document that belongs with an attorney. The tax side — how a buyout is funded, valued and characterized — is where we contribute, and it is much cheaper agreed in advance.

It can terminate on a transfer to an ineligible shareholder or through certain restructurings, sometimes accidentally and sometimes retroactively, which can create a very unwelcome year. It is one of the first things to check in a share transaction.

They are separate allocation buckets with different consequences: inventory generally produces ordinary income, equipment can produce recapture. Both are usually less favorable to a seller than goodwill, which is why the schedule matters more than the total.

Sometimes, through installment reporting or deal timing, and sometimes not, where recapture or an entity structure forces recognition. Which applies depends on the structure — that is precisely the conversation to have before signing. Mergers and acquisitions tax.

The state where the business operates generally taxes the gain attributable to it, and if you have moved recently, expect the question of when residency changed to be asked. It is worth planning before rather than arguing after.

Some reorganizations are structured to be largely tax-deferred where the statutory requirements are met; many small-business mergers do not qualify and are taxable. The requirements are technical and unforgiving of loose drafting.

Clean books, resolve open tax matters, review the entity structure while there is still time for it to matter, and model the after-tax outcome of the likely structures. A year of preparation typically changes the net more than a point of price — start here.

The portion sold for cash is generally taxable now. The portion rolled into the buyer's entity can often be deferred, so tax on it is postponed rather than avoided and arrives when that interest is eventually sold. Whether the rollover qualifies turns on how the deal is structured, which is settled in the documents and is very hard to fix afterwards: M&A tax.

By separating the questions, because they have different answers: who runs it, who owns it, and how the tax lands. Assets inherited at death generally get a basis step-up and assets given during life generally do not, which drives most of the sequencing. Note that this firm does not do trusts and estates work or give legal advice — the team needs an attorney: the tax decisions, in order.