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Partnerships

Partnership accounting, profit sharing, and financial management

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13 min read

Schedules K-2 and K-3 in 2026: The Domestic Filing Exception, the 1-Month Deadline, and the Foreign Tax Credit Trap

Schedules K-2 and K-3 pulled even purely domestic partnerships and S-corps into international tax reporting starting in 2021. This guide explains the 2026 filing rules, the four-condition domestic filing exception, the January 15 partner notification and February 15 1-month K-3 request deadlines for calendar-year filers, the $250,000 small entity carve-out added in 2024, and the per-partner, per-month penalty math for non-compliance.

Mike Thrift

taxtax-compliancepartnerships
12 min read

Section 199A QBI Aggregation Election Under Reg 1.199A-4: How Pass-Through Owners Combine Commonly Controlled Trades or Businesses to Beat the W-2 Wage and UBIA Limits

The Section 199A aggregation election under Reg 1.199A-4 lets pass-through owners combine commonly controlled trades or businesses before applying the W-2 wage and UBIA of qualified property limitation. This guide walks through the five eligibility tests, the Form 8995-A Schedule B disclosure, the irrevocable consistency rule, and when pooling QBI across an operating-and-leasing or multi-entity structure actually unlocks more deduction.

Mike Thrift

tax-planningtax-deductionss-corp
11 min read

Family Limited Partnership Valuation Discounts in 2026: How Wealthy Families Quietly Shave 25–40% Off Estate and Gift Tax Bills

A practical 2026 guide to Family Limited Partnership valuation discounts — how high-net-worth families combine 10–25% lack-of-control and 20–35% lack-of-marketability discounts to cut estate and gift tax exposure, with worked numerical examples, the IRC Section 2036 traps that have collapsed estates in Tax Court, setup costs, and the bookkeeping required to defend the structure on audit.

Mike Thrift

estate-planningtax-planningpartnerships
12 min read

Form 8886 Reportable Transactions: The 75 Percent Penalty Hiding in Your Tax Return

Form 8886 discloses reportable transactions to the IRS. Missing it triggers a Section 6707A penalty up to $200,000 per year for entities and keeps the assessment statute open indefinitely on listed transactions under Section 6501(c)(10). This guide breaks down the five categories, the penalty math, filing mechanics, and the foreign currency loss trap that catches accidental filers.

Mike Thrift

taxtax-compliancecompliance
11 min read

Section 1061 Carried Interest Three-Year Holding Period: How Hedge, PE, and VC Fund Managers Lose Long-Term Capital Gains Without It

Section 1061 recharacterizes carried interest gains from long-term to short-term unless the underlying asset was held more than three years — a 17-point federal rate swing for hedge, PE, and VC fund managers. A practitioner guide to applicable partnership interests, Worksheet A and B reporting, the capital interest exception, and 2026 planning moves.

Mike Thrift

taxtax-planningtax-compliance
13 min read

The Self-Employed Health Insurance Deduction: How Section 162(l) Beats Itemizing

Section 162(l) lets sole proprietors, partners, and more-than-2% S-corp shareholders deduct health, dental, vision, LTC, and Medicare premiums above the line on Schedule 1, line 17 — bypassing the 7.5%-of-AGI floor that gates itemized medical deductions. Form 7206 enforces three limits — earned income, subsidized-coverage months, and PTC coordination — and S-corp owners must include premiums in W-2 Box 1 (not Box 3 or 5) to preserve the deduction.

Mike Thrift

tax-deductionsself-employmenthealth-insurance
10 min read

Section 170(h) Conservation Easement Deductions: Why High-Income Donors Face 40% Penalties, Automatic Audits, and a 6% Court Allowance Rate

Section 170(h) lets landowners deduct the value lost when they place a permanent conservation restriction on real property, but the IRS has labeled high-ratio syndicated structures listed transactions and now disallows over 90% of the claimed deduction in court. This guide explains the four-part qualification test, the 2.5x basis cap under Section 170(h)(7), the 40% strict liability penalty, Form 8283 requirements, the six-year statute of limitations, and the 2026 IRS settlement window.

Mike Thrift

taxtax-deductionstax-compliance
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