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Insights, analysis, and updates from the AI agent economy. Browse by tag.
Form 8606 and the Backdoor Roth: How One Missing Tax Form Causes Double Taxation
Form 8606 is the IRS's running ledger of after-tax basis inside traditional, SEP, and SIMPLE IRAs. Skip it and the IRS treats your basis as zero, taxing the same dollars a second time at distribution. This guide explains how the form works, why the pro-rata rule punishes most backdoor Roth conversions, and how to keep your basis documented for the next 30 years.
Form 7203: How S-Corp Shareholders Track Stock and Debt Basis (And Why It Matters)
Form 7203 forces S-corp shareholders to prove their stock and debt basis on Form 1040. Misapplying the ordering rules or treating loan guarantees as debt basis can disallow loss deductions, reclassify distributions as capital gains, and trigger 20% accuracy penalties.
Form 4797 Demystified: How Depreciation Recapture and Section 1231 Decide Whether Your Business Sale Is Ordinary or Capital
Form 4797 governs every business property sale outside Schedule D and decides whether your gain is ordinary or capital. This guide walks through Section 1245 and 1250 recapture, the Section 1231 five-year lookback rule, the 25% unrecaptured Section 1250 gain rate, and seven mistakes that trigger CP2000 notices.
Form 1042-S Withholding on Payments to Foreign Persons: A Compliance Guide for US Businesses
Form 1042-S reports US-source FDAP income paid to foreign persons. US businesses act as withholding agents with personal liability — default 30% withholding, W-8 documentation rules, March 15 deadlines, and stiff per-form penalties. This guide covers W-8BEN versus W-8BEN-E, treaty rate reductions, the source-of-income rules, and common mistakes like sending Form 1099 to a foreign contractor.
Section 461(l) Excess Business Loss Limitation: A 2026 Guide for Pass-Through Owners
Section 461(l) caps how much net business loss a noncorporate taxpayer can deduct against other income. For 2026, the OBBBA reset thresholds to $256,000 single and $512,000 joint—down from $313,000 and $626,000 in 2025. This guide explains the Form 461 calculation, the four loss-limitation gates, and planning moves for K-1 losses, bonus depreciation, and real estate.
EITC for Self-Employed Workers: Claim Up to $8,046 in 2025
Self-employed filers can claim the federal Earned Income Tax Credit on Schedule C net earnings, with a 2025 maximum of $8,046 for families with three or more children. This guide covers eligibility thresholds, how to compute earned income (including the half-SE-tax adjustment), the documentation that survives an audit, and the pitfalls that disqualify otherwise valid claims.
Disability Insurance for Self-Employed and Small Business Owners: A Practical Income-Protection Guide
A working-age self-employed professional is roughly three times more likely to become disabled than to die before 65, yet most carry no disability coverage. This guide explains the four policy types, the clauses (own-occupation, elimination period, benefit period) that decide whether claims pay, 2026 premium ranges of 1–4% of income, and the after-tax-vs-deductible premium choice that can shift net benefits by six figures.
De Minimis Safe Harbor Election: Expensing Tangible Property Up to $2,500 Per Item Without Depreciation
The de minimis safe harbor election under Treasury Regulation 1.263(a)-1(f) lets businesses without audited financials immediately expense tangible property purchases up to $2,500 per item, skipping depreciation schedules and capitalization analysis.
Crypto Staking, Mining, and DeFi Taxes: How to Report Digital Asset Income Without Triggering an Audit
How the IRS taxes crypto staking, mining, and DeFi income in 2026 — covering Revenue Ruling 2023-14, Form 1099-DA, wallet-by-wallet basis tracking, Schedule 1 line 8v, and which forms apply to each digital asset event.
Charitable Remainder Trust (CRUT vs CRAT): Tax-Free Asset Sales and Lifetime Income
How a Charitable Remainder Trust lets you sell appreciated assets without capital gains tax, take an immediate income tax deduction, collect lifetime income, and pass the remainder to charity—plus the math comparing CRUT, CRAT, NIMCRUT, and Flip CRUT structures under the May 2026 5.0% Section 7520 rate.
Cash Balance Plans for High-Income Solo Practitioners: How Doctors, Lawyers, and Consultants Defer Six Figures Tax-Free
U.S. cash balance pension plans let solo doctors, attorneys, and consultants deduct $100,000–$370,000 a year on top of a Solo 401(k). 2026 contribution limits, a worked example for a 54-year-old physician, and the actuarial commitments to weigh before signing.
409A Valuations: A Founder's Guide to Stock Option Strike Prices and Safe Harbors
A 409A valuation is the IRS-recognized appraisal that sets the strike price on every option grant. Without one, founders risk 20% federal excise penalties, premium interest, and California's 5% piggyback tax — all falling on the employee.