#tax-planning
Tax Planning
Strategic tax planning to minimize liability and maximize savings
Section 7874 Anti-Inversion Rules: 60%/80% Ownership Tests and the Substantial Business Activities Safe Harbor
Section 7874 imposes a 10-year inversion-gain floor when former U.S. shareholders own 60-80% of a new foreign parent and reclassifies the parent as a domestic corporation at 80%. The only escape is the substantial business activities safe harbor, which requires clearing a 25% bright-line threshold on employees, tangible assets, and gross income in the foreign country.
Section 7874 Anti-Inversion Rules: Why a Foreign Parent Does Not Always Mean a Foreign Tax Bill
Section 7874 treats a foreign parent as a U.S. corporation when former U.S. owners hold 80% or more, and penalizes inversion gain for 10 years at 60-80%. The substantial business activities safe harbor requires 25% of employees, assets, and income in the foreign country.
VEBAs Under Section 501(c)(9): Pre-Funding Employee Benefits Without Tripping Section 419 or 4976
A Voluntary Employees' Beneficiary Association under Section 501(c)(9) lets small and mid-sized employers pre-fund retiree medical, severance, and other welfare benefits tax-free — but Section 419 deduction caps, the 100% Section 4976 excise tax on disqualified benefits, and listed-transaction rules in Notices 95-34 and 2007-83 punish mistakes. Here is how a single-employer VEBA actually works, what it can fund, and the three IRS exams it has to pass every year.
VEBAs Explained: How Employers Pre-Fund Tax-Free Welfare Benefits
A VEBA is a Section 501(c)(9) trust that lets employers pre-fund tax-free health and welfare benefits, but Sections 419 and 419A cap the deduction and Section 4976 imposes a 100% excise tax on reversions. Here is how a legitimate plan differs from an IRS-listed tax shelter.
Crummey Letters and ILITs: How High-Net-Worth Families Keep Life Insurance Out of Their Taxable Estate
A working guide to ILITs and Crummey powers — covering Section 2042 incidents of ownership, the annual gift tax exclusion, the 5-or-5 rule, hanging powers, the Section 2035 three-year lookback, and the administrative discipline that keeps life insurance death benefits estate-tax-free.
Form 706-NA: The $60,000 Trap That Can Turn a Foreign Investor's U.S. Real Estate Into a 40% Estate Tax Bill
Nonresident aliens who own U.S. real estate, U.S. corporate stock, or other situs property get only a $60,000 estate tax exemption — not the $13.99 million citizens enjoy in 2026 — and pay up to 40% on the excess. A working guide to Form 706-NA, FIRPTA withholding, treaty relief via Form 8833, transfer certificates, and the blocker-corporation structures that actually work.
Form 8858 for Foreign Disregarded Entities and Foreign Branches: A Practical Filing Guide for Expat Founders, Multinationals, and U.S. LLC Owners Abroad
Form 8858 reports foreign disregarded entities and foreign branches on a U.S. return, and missing one carries a $10,000 penalty per entity per year that can snowball to $50,000 after IRS notice. This guide covers who must file, Schedules C through M, Section 987 currency calculations, the Schedule K-2/K-3 box 11 connection for Category 6 filers, and the four paths back into compliance.
The PTET SALT Cap Workaround: How Pass-Through Owners Convert State Tax Into a Federal Deduction
How partnerships and S corporations in 36+ states use the Pass-Through Entity Tax election under IRS Notice 2020-75 to deduct state income tax at the entity level and bypass the federal SALT cap — with a worked example, resident-credit mechanics, and 2026 election deadlines.
Qualified Improvement Property Under Section 168(e)(6): How Restaurant, Retail, and Office Build-Outs Unlock 15-Year Recovery and 100% Bonus Depreciation
Qualified Improvement Property (QIP) under Section 168(e)(6) lets nonresidential interior build-outs use a 15-year recovery period and qualify for 100% bonus depreciation after the OBBBA. Covers the statutory test, three exclusions, TCJA-to-OBBBA history, a worked $540,000 restaurant example, and Form 3115 catch-up deductions.
Section 1377(a)(2) Closing-of-Books Election: How S Corporations Allocate Pass-Through Income When a Shareholder Leaves Midyear
Section 1377(a)(2) lets an S corporation split its tax year when a shareholder fully exits, allocating pass-through items to the period each owner actually held stock. This guide covers when the election is available, who must consent, the 1.1368-1(g) alternative, and the bookkeeping it demands.
Section 163(h) Mortgage Interest Deduction in 2026: $750K Cap, Grandfathered Loans, and HELOC Rules
Section 163(h) decides whether your largest Schedule A line is a $14,000 deduction or an $8,500 one. Here is how the permanent $750,000 TCJA cap, the grandfathered $1 million pre-2018 loans, the HELOC "substantial improvement" rule, and the 2026 return of the mortgage insurance premium deduction actually work — with worked examples and the records you need on audit.
Section 163(j) Interest Expense Limitation: 30% ATI, the Small Business Exemption, and the Real Property Trade Election
Section 163(j) caps the business interest deduction at 30% of adjusted taxable income, and OBBBA restored the EBITDA-style add-back for tax years beginning after December 31, 2024. This guide walks through the calculation, the small business exemption under Section 448(c), the irrevocable real property trade or business election, the partnership EBIE basis trap, and the Form 8990 reporting choreography.