#tax-planning
Strategic tax planning to minimize liability and maximize savings
A practical guide to IRS Section 1212 for individual investors: the $3,000 annual ordinary-income cap, indefinite carryforward, short-term vs. long-term character preservation, the Schedule D ordering rules, and how wash sales interact with carryovers.
Section 1244 lets eligible founders and early investors convert up to $50,000 ($100,000 joint) of capital loss on failed C-corporation stock into ordinary loss deductible against W-2 wages, freelance income, or interest. This guide covers who qualifies, the $1 million capital ceiling, Form 4797 reporting, and the formation steps that keep the deduction defensible.
When you sell depreciated business property, Section 1245 recaptures prior depreciation as ordinary income (up to 37%), while Section 1250 caps the recapture on real estate at 25% — turning a 100% bonus depreciation deduction into a large tax bill at exit unless you plan with cost segregation, 1031 exchanges, and a clean fixed-asset register.
Section 1259 treats short-against-the-box trades, equity swaps, and tight collars on appreciated stock as constructive sales — taxable today, even with no proceeds. Covers the variable prepaid forward workaround, the 30-day closing exception, and the related-party trap.
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.
OBBBA permanently restored 100% bonus depreciation and raised the Section 179 cap to $2.56M for 2026. A practical framework for small businesses to choose between them — covering taxable-income limits, state decoupling, SUV caps, and the new Section 168(n) qualified production property deduction.
Section 197 requires buyers in a taxable asset acquisition to amortize acquired intangibles — goodwill, customer lists, workforce in place, covenants not to compete — straight-line over 180 months. This guide walks through Form 8594 purchase price allocation, the anti-churning rules for related-party deals, the no-loss rule on dispositions, and Form 4562 reporting across the full 15-year cycle.
Section 199A's 20% QBI deduction phases out entirely for high-income doctors, lawyers, consultants, and other specified service trades or businesses (SSTBs) — costing a married surgeon at $700,000 of K-1 income roughly $52,000 a year. This guide covers the 2026 income thresholds (~$394,600 MFJ phase-in, ~$544,600 fully phased out), the de minimis safe harbor at 10% / 5% of receipts, the anti-"crack and pack" rules under Reg. §1.199A-5(c)(2), and practical strategies like defined-benefit plans and W-2 wage planning to preserve the deduction.
Section 199A's SSTB rule denies the 20 percent qualified business income deduction to high-earning doctors, lawyers, consultants, and financial advisors. In 2026 the joint-filer phase-out runs from $403,500 to $553,500, and OBBBA added a permanent $400 minimum deduction for active business owners.
Section 263A forces producers and resellers above the $32 million 2026 gross-receipts threshold to capitalize warehouse rent, purchasing, and mixed service costs into inventory. Here is how the exemption, simplified methods, and Form 3115 method changes actually work.
Section 351 lets founders incorporate without immediate tax only if the transferor group owns 80% of voting power and every non-voting class right after the exchange. Miss the control test, contribute services instead of property, or assume liabilities greater than basis, and the gain surfaces anyway. A practical playbook covering boot, the Section 357(c) trap, basis carryover under Sections 358 and 362, and how to preserve QSBS eligibility under Section 1202.
Section 368 defines seven reorganization types (A through G) that defer corporate and shareholder tax in M&A. This guide covers the 40% Continuity of Interest test, Type A statutory mergers, Type B stock-for-stock swaps with the 80% control requirement, Type C asset deals, and forward/reverse triangular merger structures with their consideration limits.
