Business Finance

The Augusta Rule (IRC §280A(g)) is one of the most powerful – and most misunderstood – tax strategies available to S-Corp and LLC owners. When used correctly, you can rent your home to your business for up to 14 days per year, deduct the expense on your business return, and pay zero income tax on […]

Q: How can S-Corp owners maximize their QBI deduction? A: By strategically adjusting W-2 wages. For high-income S-Corp owners, the QBI deduction is limited by wage thresholds. Paying too little in salary can eliminate the deduction entirely – while a properly optimized salary can unlock tens of thousands in tax savings. But the salary must […]

Q: What are the biggest tax changes in the One Big Beautiful Bill Act compared to an expiring TCJA? A: OBBBA locks several TCJA breaks in place and softens others. QBI stays permanent, the child credit rises to $2,200, the standard deduction is permanently increased, SALT gets a four‑year $40k cap, Pease is repealed, and […]

Q: Which business entity saves the most tax – sole proprietor, LLC, S-Corp, or C-Corp? A: For owner-operated businesses above roughly $50k profit, an S-Corp usually wins: it slashes self-employment tax on distributions without double taxation. Single-member LLCs add liability protection but no tax break, partnerships keep the full 15.3% SE hit, and C-Corps look […]

Q: Does the $10 million/$15 million QSBS exclusion make a C-Corp the best structure for most small-business owners? A: Rarely. QSBS can erase capital-gains tax, but only when you: (1) run a domestic C-Corp, (2) meet every §1202 rule for all required years (3) find a buyer willing to do a stock sale, and (4) […]

Q: Can the 10.5% Net CFC Tested Income (NCTI) regime really beat an S-Corp for a small-business owner? A: Only in very specific circumstances. Under the Net CFC Tested Income (NCTI – formerly GILTI), the structure can win if you’re a high-earning US expat who (1) routes profits through a US C-Corp that owns a bona fide foreign subsidiary, (2) […]

Q: Is electing a state Pass-Through Entity Tax (PTET) always a smart SALT-cap workaround? A: Almost always – but not universally. PTET converts state tax into a deductible business expense, cutting federal tax. It can backfire only in edge cases, mainly when (1) you already get the full SALT benefit on Schedule A or (2) […]

Q: Can I avoid self-employment tax on partnership profits by having an S-Corp own my LLC interest? A: Yes – if structured correctly. The S-Corp pays you a reasonable salary (subject to payroll tax) and passes the remaining income as distributions that escape self-employment tax. But the entity must have real business purpose, pay reasonable […]

Q: How do I determine a “reasonable salary” for my S-Corp? A: Start with what you’d pay an unrelated employee to do your job, then adjust for profit, duties, time spent, and local market data. Pay at least that amount as W-2 wages; treat the rest of the profit as distributions. Too low invites IRS […]

Q: Does moving income through a licensing agreement between my S-Corp and a C-Corp safely reduce tax? A: Only if it’s real. The deal must serve a bona-fide business purpose, charge arm’s-length royalties / commissions, and be fully documented – otherwise the IRS can disallow the deduction and you could end up paying tax on […]

Q: Does pairing a C-Corp with an S-Corp actually lower your overall tax bill? A: Only in narrow cases. Splitting income lets you defer the second layer of C-Corp tax, but you must leave profits inside the C-Corp for years and avoid Accumulated Earnings Tax penalties. TL;DR Defers double taxation only if profits stay in […]

Q: Does the 21% corporate tax rate make a C-Corp cheaper than an S-Corp? A: No. After double taxation and lost pass-through benefits, most owners pay more overall with a C-Corp. TL;DR Corporate tax (21%) plus dividend tax (up to 23.8%) usually exceeds a top-bracket S-Corp rate. You lose the 20% QBI deduction and state […]