Tax in Action: Practical Strategies for Tax Pros

The S Corp's Three Ledgers: Retained Earnings, AAA, and Stock Basis

Jeremy Wells, EA, CPA — Wed, 13 May 2026 07:00:00 -0700

S corporations maintain three separate ledgers — retained earnings, AAA, and shareholder stock basis — and each one answers a different question about the entity and its owners. Understanding why they diverge, and which one actually governs whether a distribution is taxable or a loss is deductible, is where a lot of tax professionals run into trouble. Jeremy walks through the mechanics of all three, including Form 7203, the order-of-operations rules for calculating stock basis, and what's really going on when a practitioner misclassifies distributions in excess of basis as shareholder loans.

(00:00) - Why S Corps Are Hybrid

(02:20) - Three Key Ledgers

(06:35) - Retained Earnings Basics

(10:52) - IRS Scrutiny of Retained Earnings

(15:13) - AAA Explained and Origins

(21:43) - AAA vs Retained Earnings

(27:29) - Stock Basis and Common Mistakes

(36:23) - Capital Contributions and Form 7203

(43:37) - Basis Ordering Rules and Elections

(48:55) - Worked Example and Wrap Up

Jeremy's Article on S Corp Ledgers
https://www.jwells.tax/p/the-three-ledgers-of-an-s-corporation

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Your Business Doesn't Need to Own Your Car

Jeremy Wells, EA, CPA — Wed, 29 Apr 2026 07:00:00 -0700

Buying a vehicle through your business sounds like a clean tax win, but the rules around ownership, usage, and substantiation make it far more complicated — and far riskier — than most owners realize. Jeremy breaks down what actually determines whether a vehicle expense is deductible, why mileage logs are full of trips the IRS won't allow, and how a shift in business use percentage can trigger depreciation recapture that wipes out years of deductions.

(00:00) - Influencer Tax Myths

(03:32) - Core Tax Authority

(07:25) - Business Trips vs Commutes

(14:25) - Home Office Exception

(19:09) - Strict Substantiation Rules

(26:33) - Mileage Logs That Win

(31:49) - Fringe Benefits and Accountable Plans

(36:08) - Depreciation Limits and Recapture

(43:51) - Standard Mileage Rate Option

(45:54) - Three Question Framework

(47:52) - Scenario Walkthroughs

(55:58) - Key Takeaways and Wrap Up

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Section 199A: Simple Below the Threshold… Complicated Above It

Jeremy Wells, EA, CPA — Wed, 15 Apr 2026 07:00:00 -0700

The Section 199A qualified business income deduction can put serious tax savings on the table for small business owners — but only if you understand how it actually works. Jeremy walks through who qualifies, how taxable income thresholds and specified service trade or business rules affect the deduction, and how wage and property limitations come into play for higher earners. He also covers the new $400 minimum QBI deduction introduced by the One Big Beautiful Bill Act, effective for tax year 2026.

(00:00) - Why QBI Exists

(02:22) - Episode Roadmap

(03:16) - Qualified Trade or Business

(05:21) - Base Deduction Basics

(06:23) - New 2026 Minimum Deduction

(07:50) - Defining Qualified Business Income

(11:23) - What Income Is Excluded

(16:46) - Taxable Income Thresholds

(20:30) - Wage and Property Limits

(24:22) - Planning With S Corp Wages

(28:44) - Wage Limit Court Case

(31:48) - Worked Example Jessica

(34:16) - Aggregation Election Rules

(36:03) - Specified Service Businesses

(41:01) - SSTB Phaseout Example

(43:27) - De Minimis and Anti Abuse

(46:32) - Rental Real Estate Safe Harbor

(52:16) - Key Takeaways and Wrap Up

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Worker Classification, Part 2: Statutory Workers and Misclassification Relief

Jeremy Wells, EA, CPA — Wed, 01 Apr 2026 07:00:00 -0700

Part two of worker classification moves beyond the common law control test to cover the specific worker categories defined in the tax code — statutory employees, statutory non-employees, and the rare but real dual-status worker. Jeremy also walks through the relief options available to both employers and workers when a classification goes wrong, including Section 3509, Section 530, and Form SS-8.

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Employee or Independent Contractor? How the IRS Actually Decides

Jeremy Wells, EA, CPA — Wed, 18 Mar 2026 07:00:00 -0700

Worker classification has never been more complicated—and the stakes for getting it wrong fall on both employers and workers. Jeremy breaks down how federal tax law defines "employee" using the common law control standard, walking through the three categories of evidence the IRS uses to evaluate any working relationship. This is part one of a two-part series on worker classification and misclassification.

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S Corp Elections: The Rules, the Risks, and the Right Call

Jeremy Wells, EA, CPA — Wed, 04 Mar 2026 07:00:00 -0800

Electing S corporation status can be a powerful tax move — but only when it's the right move. Jeremy walks through the technical requirements of Form 2553, how to pursue relief for a late S election under Rev Proc 2013-30, and the ownership, balance sheet, and state tax factors that too many practitioners overlook before recommending the election. If you or your clients have been tempted by an overly simple "just elect S" rule of thumb, this episode is required listening.

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Most Small Business Returns Are Getting Cost of Goods Sold Wrong

Jeremy Wells, EA, CPA — Wed, 18 Feb 2026 07:00:00 -0800

Cost of goods sold isn't just a special category of expenses — for tax purposes, it's actually part of the definition of gross income, and only manufacturing, merchandising, and mining businesses qualify to report it. Jeremy breaks down what Treasury Regulation 1.61-3 actually says, why service businesses shouldn't have COGS on their returns even when the financial statements show it, and why getting this wrong can be catastrophic for cannabis businesses operating under IRC Section 280E.

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You Can't Delegate Filing Deadlines

Jeremy Wells, EA, CPA — Wed, 04 Feb 2026 07:00:00 -0800

Jeremy walks through the case of a Florida surgeon who lost a $288,000 refund after his CPA failed to file three years of returns, exploring how the failure to file and failure to pay penalties work and why they matter so much. He breaks down the critical differences between these two penalties, explains why an extension to file is never an extension to pay, and covers the Supreme Court's position on taxpayer responsibility even when relying on professionals. The episode also details how first time abatement works, what qualifies as reasonable cause for penalty relief, and why the IRS applies its own administrative waivers before considering statutory reasonable cause exceptions.

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Non-Cash Donations Gone Wrong: The Besaw Case and Form 8283 Requirements

Jeremy Wells, EA, CPA — Wed, 21 Jan 2026 07:00:00 -0800

Jeremy breaks down the 2025 Besaw v. Commissioner tax court case, where a taxpayer lost a $6,760 charitable deduction despite everyone agreeing the donation actually happened. The case reveals why blank Goodwill receipts aren't sufficient, what "contemporaneous written acknowledgement" really means under IRC Section 170, and exactly what documentation taxpayers must maintain—whether they're filing Form 8283 or not. Learn the substantiation requirements for non-cash donations under $250, over $250, and over $5,000, plus how to properly value donated household goods and clothing using fair market value standards.

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Tax-Free Employee Benefits Part 3: Transportation, Moving, Retirement Planning & Athletic Facilities

Jeremy Wells, EA, CPA — Wed, 07 Jan 2026 07:00:00 -0800

Jeremy concludes the three-part series by examining the remaining four fringe benefits from IRC Section 132—qualified transportation, moving expense reimbursements, retirement planning services, and military base realignment benefits—many of which have been significantly limited by recent tax legislation. He also covers achievement awards, athletic facility exclusions, and provides essential guidance on accountable plans, explaining the three critical requirements employers must follow to ensure expense reimbursements remain tax-free for employees while maintaining deductibility for the business.

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Tax-Free Employee Benefits Part 2: Company Vehicles, Cell Phones, and Office Snacks

Jeremy Wells, EA, CPA — Wed, 24 Dec 2025 07:00:00 -0800

Jeremy continues his series on IRC Section 132 fringe benefits, focusing on working condition fringes and de minimis benefits—two categories that help employees be more productive or boost workplace morale. From company vehicle mileage tracking and employer-provided cell phones to why office snacks are excludable but gift cards never are, this episode clarifies which everyday workplace benefits can legally avoid taxation. Jeremy emphasizes the critical importance of documentation and explains the strict substantiation requirements that apply to many of these benefits.

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Tax-Free Employee Benefits Part 1: No-Cost Services and Employee Discounts

Jeremy Wells, EA, CPA — Wed, 10 Dec 2025 07:00:00 -0800

Section 132 allows employers to provide certain fringe benefits tax-free, but only if they follow specific rules. Jeremy breaks down no additional cost services, like airline employees flying on empty seats, and qualified employee discounts, explaining the 20% cap on services and the gross profit limitation on products. He covers the critical "line of business" requirement, who qualifies as an employee beyond current workers, and why highly compensated employees face stricter rules.

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The Hobby Loss Rule: How to Defend Your Business Against the IRS

Jeremy Wells, EA, CPA — Wed, 26 Nov 2025 15:34:16 -0800

Jeremy explores the hobby loss rule through the landmark case of artist Susan Crile, who successfully defended her art business against IRS claims despite reporting losses in nearly all of 25 years. The episode breaks down the nine-factor test used to determine whether an activity has a genuine profit motive, examining how professional conduct, record-keeping, and business decisions matter more than consistent profitability. This case offers crucial lessons for practitioners working with creative professionals, startups, and any clients going through extended periods without turning a profit.

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Breaking Up with Your S-Corp Part 2

Jeremy Wells, EA, CPA — Wed, 12 Nov 2025 07:00:00 -0800

Jeremy wraps up his two-part series on S corporation terminations by diving into what happens after an election ends, whether intentional or inadvertent. He explains the IRS's relief procedures for common mistakes like violating the one-class-of-stock rule, the crucial five-year waiting period before re-electing, and why a terminated S corp doesn't just revert back to an LLC but becomes a C corporation instead. The discussion includes real tax court cases and the specific steps needed to clean up termination issues before the IRS discovers them.

(00:00) - Introduction and Recap of Part One

(01:40) - Three Ways to Terminate an S Election

(03:30) - Administrative Dissolutions at the State Level

(08:00) - What Happens After S Election Termination

(13:10) - Inadvertent Terminations Explained

(17:00) - The One Class of Stock Rule

(21:30) - Maggard v. Commissioner Tax Court Case

(26:20) - Profit Interests and Phantom Equity Problems

(29:40) - IRS Relief for Inadvertent Terminations

(34:30) - Revenue Procedure 2022-19

(39:20) - Missing S Election Acceptance Letters

(42:00) - Filing the Wrong Return Type

(44:10) - Six Areas of Relief Without a PLR

(47:10) - Short Year Returns and Pro Rata Allocation

(51:30) - The Five-Year Rule Explained

(54:20) - Reverting from C Corp Back to LLC Status

(56:50) - Final Thoughts and Episode Wrap-Up

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Breaking Up with Your S-Corp

Jeremy Wells, EA, CPA — Wed, 29 Oct 2025 12:00:00 -0700

Jeremy breaks down the three ways an S-corporation election can terminate: voluntary revocation (including the lesser-known withdrawal option from the IRM), ceasing to qualify as a small business corporation, and excessive passive investment income. He walks through the specific mechanics of each termination method, from shareholder consent requirements to the 100-shareholder limit and the one-class-of-stock rule.

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The Legal Case for Better Books: Why Recordkeeping Isn't Optional

Jeremy Wells, EA, CPA — Wed, 15 Oct 2025 07:00:00 -0700

Jeremy dives into the often-overlooked legal requirements for taxpayer recordkeeping under IRC Section 6001, explaining why accurate books aren't just nice to have: they're mandatory. He breaks down the Cohan rule (and why it's widely misunderstood), explores how good recordkeeping can shift the burden of proof to the IRS under Section 7491, and offers practical ways tax professionals can encourage better client recordkeeping without becoming bookkeepers themselves.

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(00:00) - Introduction: The Struggles of Accounting Firms

(01:06) - Challenges with PBC Data

(01:56) - Balancing Bookkeeping and Tax Services

(04:03) - Legal Requirements for Bookkeeping

(04:43) - The Cohan Rule Explained

(10:23) - Penalties for Inadequate Record Keeping

(25:01) - When Cohan Doesn't Apply

(30:06) - Ethical Considerations for Tax Practitioners

(34:39) - Encouraging Better Bookkeeping Practices

(44:12) - Leveraging Technology for Record Keeping

(47:08) - Offering Bookkeeping Review Services

(53:06) - Building a Network of Preferred Partners

(55:52) - Pricing and Providing Additional Services

(01:02:37) - Conclusion: Adding Value Without Extra Work

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The Aftermath: Tax Rules for Replacing Involuntarily Converted Property

Jeremy Wells, EA, CPA — Wed, 01 Oct 2025 07:00:00 -0700

Jeremy concludes his three-part series on losses by examining IRC Section 1033, the tax code's provision for what happens after you replace property lost to casualty, theft, or government condemnation. When clients receive insurance payouts or condemnation proceeds, they face a critical decision: recognize the gain immediately or defer it by purchasing qualifying replacement property within specific timeframes. Jeremy breaks down the "similar use" requirements, the two to four year replacement periods depending on property type, and how basis carries over to help clients avoid unexpected tax bills when bad things force them to start over.

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(00:00) - Welcome to Tax in Action
(00:19) - Recap of Previous Episodes
(00:53) - Involuntary Conversions Explained
(04:06) - Case Study: Jessica's Print Shop
(05:41) - Defining Involuntary Conversions
(07:01) - Government Seizures and Condemnations
(07:36) - Court Cases and Legal Precedents
(20:27) - Replacement Property Rules
(35:10) - Special Rules for Principal Residences
(50:11) - State Tax Law Considerations
(54:09) - Conclusion and Final Thoughts

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From Discovery to Deduction: Modern Theft Loss Rules Explained

Jeremy Wells, EA, CPA — Wed, 17 Sep 2025 07:00:00 -0700

Jeremy explores the complex world of theft loss deductions, examining how digital asset scams have renewed interest in these tax provisions under the Tax Cuts and Jobs Act. The episode breaks down the three key criteria for claiming theft losses, explains why timing of discovery matters more than when the theft occurred, and analyzes five modern scam scenarios from IRS Chief Counsel guidance including pig butchering schemes and romance scams. Jeremy concludes with a fascinating 1984 court case involving Civil War veterans' land rights that shows even tax court judges can disagree on fundamental questions of tax law.

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(00:00) - Introduction: Digital assets spark new interest in theft losses
(03:00) - The three types of losses under IRC Section 165
(08:00) - Three criteria for claiming a theft loss deduction
(13:00) - When discovery matters more than when theft occurred
(19:00) - State law defines theft for federal tax purposes
(25:35) - Simple disappearance is not theft
(28:35) - Casualty losses vs theft losses: Key differences
(30:35) - Stock declines don't qualify as theft losses
(34:35) - Ponzi schemes get special safe harbor treatment
(42:35) - Five modern scam scenarios from IRS Chief Counsel
(54:35) - Reporting theft losses on Form 4684
(57:35) - The Booth case: When smart judges disagree
(01:03:35) - Wrap-up and final thoughts

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When Disaster Strikes: Navigating Casualty Loss Deductions

Jeremy Wells, EA, CPA — Wed, 03 Sep 2025 07:00:00 -0700

Natural disasters, accidents, and sudden destructive events can create significant financial hardship, but the tax code provides some relief through casualty loss deductions. This episode breaks down the complex rules governing what qualifies as a deductible casualty loss, including the critical distinction between personal and business losses under the Tax Cuts and Jobs Act. Jeremy walks through the three-part test for casualty losses, calculation methods using fair market value changes, and the reporting requirements on Form 4684, using a real-world hurricane damage scenario to illustrate these concepts.

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(00:00) - Introduction to the Series

(01:08) - Understanding Casualty Losses

(02:57) - Case Study: Jessica's Print Shop

(05:16) - Types of Casualty Losses

(06:57) - Tax Cuts and Jobs Act Impact

(12:22) - Determining Deductible Casualty Losses

(18:36) - An Identifiable Event

(27:09) - Determining Casualty Loses or Gains

(32:04) - Filing an Insurance Claim

(41:19) - Reporting Casualty Losses

(50:51) - What to Do For Casualty Gain

(57:21) - Conclusion and Recap

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Section 121: The $500k Exclusion Explained

Jeremy Wells, EA, CPA — Wed, 20 Aug 2025 07:00:00 -0700

Jeremy breaks down the complex rules surrounding Section 121's capital gains exclusion for home sales, using the Weber v. Commissioner tax court case to illustrate how taxpayers can lose out on excluding up to $500,000 in gains. The episode covers the critical two-out-of-five year ownership and use tests, explains how rental conversions can disqualify you from the exclusion, and details the partial exclusion exceptions for employment changes, health issues, and unforeseen circumstances. Understanding these nuances is essential since home sales often represent the largest financial transactions in taxpayers' lives.

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(00:00) - Section 121

(01:05) - Capital Gain Exclusion Introduction

(03:21) - Case Study: Webert vs Commissioner

(05:51) - Defining Principal Residence

(15:58) - Ownership and Use Tests

(27:43) - Understanding Spousal Eligibility for Exclusion

(28:51) - Principal Residence Usage Requirements

(30:52) - Counting Days and Periods of Absence

(32:36) - Special Considerations for Older Taxpayers

(33:57) - Ownership Through Trusts and LLCs

(36:57) - The Once Every Two Years Rule

(41:10) - Non-Qualified Use Explained

(47:06) - Case Study: The Webers' Tax Court Case

(48:12) - Partial Exclusions and Safe Harbors

(56:51) - Conclusion and Key Takeaways

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Repair vs. Improvement: When Can You Deduct It?

Jeremy Wells, EA, CPA — Wed, 06 Aug 2025 07:00:00 -0700

A rental property owner faces a $27,000 repair bill after a plumbing leak forces a complete bathroom renovation, water heater replacement, and structural repairs. Jeremy breaks down Treasury Decision 9636's framework for distinguishing between deductible repairs and capitalized improvements, using the three-part test of betterment, restoration, and adaptation. He also explains three valuable safe harbors including the de minimis election and routine maintenance provisions that can help property owners expense more costs immediately rather than depreciating them over time.

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(00:00) - Introduction to Repairs vs. Improvements

(00:44) - Understanding the Basics of Repairs and Improvements

(01:42) - Real Estate and Vehicle Examples

(04:30) - IRS Guidelines and Treasury Decision 96-36

(06:53) - Case Study: Rental Property Repairs

(18:39) - Determining Repairs vs. Improvements

(39:05) - Safe Harbors for Taxpayers

(55:57) - Conclusion and Key Takeaways

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The Knowledge Economy Tax Trap: When Education Costs Aren't Deductible

Jeremy Wells, EA, CPA — Wed, 23 Jul 2025 07:00:00 -0700

Jeremy breaks down the complex world of work-related education tax benefits, revealing why most educational expenses aren't as deductible as business owners think. He explains the stark difference between limited educational assistance programs that cap benefits at $5,250 annually and business expense deductions that often get rejected by the IRS for qualifying taxpayers for "new trades or businesses." Through real tax court cases involving everyone from IRS agents trying to deduct law school to nurses upgrading their licenses, this episode exposes the narrow window where education costs actually qualify as legitimate business deductions.

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(00:00) - Introduction: The Knowledge Economy

(01:00) - General Education Tax Benefits

(04:20) - Business Owner Education Questions

(05:20) - Two Main Approaches for Business Education Benefits

(08:20) - Educational Assistance Programs Deep Dive

(14:20) - Program Limitations and Restrictions

(23:55) - What Educational Assistance Programs Cover

(28:15) - Substantiation and Double Benefit Rules

(31:55) - Business Expense Deduction Alternative

(34:35) - Qualifying Education Expenses

(39:15) - Non-Deductible Education: Two Key Exceptions

(42:35) - Established in Trade or Business Requirement

(45:55) - Law Degrees and New Trade or Business

(49:35) - Professional Certifications as New Trade or Business

(51:15) - MBA Programs: Split Tax Court Decisions

(54:15) - Final Warnings and Best Practices

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The Refund Statute of Limitations: When Time Runs Out

Jeremy Wells, EA, CPA — Wed, 09 Jul 2025 07:00:00 -0700

Understanding the refund statute of limitations can mean the difference between claiming a refund and losing that money forever. This episode breaks down the complex rules around when taxpayers can file refund claims and how much they can recover, using the recent Hamilton v. US case as a cautionary tale. Whether you're dealing with late-filed returns, amended returns, or clients who've fallen behind on their taxes, these statute of limitations rules will determine what's possible and what's permanently lost.

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(00:00) - Welcome to Tax in Action

(01:50) - Understanding Finality in Tax Code

(03:28) - Assessment vs. Refund Statute of Limitations

(04:11) - Challenges and Misunderstandings

(07:37) - Case Study: Hamilton v. US

(13:09) - Key Tax Code Sections

(17:21) - When Can a Taxpayer Claim a Refund

(33:21) - Estimated Payments

(34:52) - Special Considerations and Exceptions

(54:17) - Conclusion and Key Takeaways

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Joint vs Separate: Marriage Filing Fundamentals

Jeremy Wells, EA, CPA — Wed, 25 Jun 2025 07:00:00 -0700

Most tax professionals assume joint filing is the default for married couples, but the tax code actually says the opposite. Jeremy Wells explores the surprising reality that married filing separately is technically the default status, requiring both spouses to elect joint filing under IRC Section 6013. He breaks down the key disadvantages of separate returns—from reduced credits to income limitations—while explaining legitimate scenarios where paying extra tax through separate filing can lead to better overall financial outcomes, particularly with student loan repayment strategies.

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(00:00) - Welcome to Tax in Action

(01:03) - Default Filing Status for Married Couples

(02:42) - Misinterpretations of Joint Filing

(06:30) - Exceptions and Special Cases

(11:00) - Why Joint Returns Have Become the Default for Married Couples

(22:43) - Disadvantages of Filing Separately

(32:04) - Loss of Available Credits

(46:22) - Reasons to Consider Filing Separately

(54:55) - Common Myths and Misunderstandings

(57:49) - Exceptions to Irrevocable Joint Filing

(01:01:24) - Conclusion and Final Thoughts

Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com

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This podcast is a production of the Earmark Media

The 1031 Exchange Basics

Jeremy Wells, EA, CPA — Wed, 11 Jun 2025 07:00:00 -0700

Jeremy Wells breaks down the fundamentals of Section 1031 exchanges, explaining how real estate investors can defer capital gains taxes by swapping properties rather than selling and buying separately. He clarifies common misconceptions about these transactions, walks through the strict timing requirements including the 45-day identification and 180-day completion rules, and examines court cases that reveal when the IRS challenges whether replacement properties were truly intended for investment purposes. The discussion covers qualifying property types, disqualified persons, and the practical mechanics of using qualified intermediaries to facilitate these tax-advantaged exchanges.

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(00:00) - Introduction to 1031 Exchanges
(02:06) - Understanding the Basics of 1031 Exchanges
(04:15) - Mechanics of a 1031 Exchange
(08:22) - Qualifying Property for 1031 Exchanges
(19:24) - Case Studies: Real-Life 1031 Exchange Scenarios
(29:17) - Taxpayer's Genuine Effort to Rent Property
(30:47) - Disqualified Persons in Section 1031 Exchanges
(34:03) - Understanding Like-Kind Property
(43:55) - Deferred Like-Kind Exchanges
(51:48) - Reporting Like-Kind Exchanges on Form 8824
(56:26) - Conclusion and Final Thoughts

Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com

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This podcast is a production of the Earmark Media

S-Corporation Reality Check

Jeremy Wells, EA, CPA — Wed, 28 May 2025 10:00:00 -0700

Jeremy dives deep into the critical red flags that should make tax professionals pump the brakes on S-corporation elections. From balance sheet debt ratios that could trigger unexpected taxable events to operating agreement provisions that can inadvertently terminate S-elections, this episode challenges the "default to S-corp" mentality that's become prevalent in tax advisory circles. Jeremy breaks down the specific scenarios where partnerships or sole proprietorships actually serve business owners better than the often-hyped S-corporation structure.

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Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com

Subscribe on YouTube
https://www.youtube.com/@TaxinAction

Earn CPE for Listening to This Podcast
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This podcast is a production of the Earmark Media

Cracking the R&D Tax Credit Code: Section 41 Explained

Jeremy Wells, EA, CPA — Wed, 21 May 2025 07:00:00 -0700

The R&D tax credit offers significant tax-saving potential, yet remains misunderstood by many small business owners and their advisors. Jeremy breaks down the key components of the Section 41 credit, explaining qualified research activities, eligible expenses, and calculation methods. Small service-based businesses might qualify more often than they realize, especially when research activities relate to technological innovation, computer science, or engineering processes.

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(00:00) - Introduction to the R&D Credit
(03:00) - Components of the R&D Credit
(06:00) - Defining Qualified Research
(13:00) - Business Components and the Shrinking Back Rule
(21:35) - Non-Qualifying Research Activities
(25:35) - Internal Software and the High Threshold of Innovation Test
(30:35) - Calculating the R&D Credit
(33:35) - Qualifying Wages and Expenses
(39:35) - Contract Research Expenses
(44:35) - Credit Calculation Methods
(50:35) - Payroll Tax Election for Startups
(52:35) - Interaction with IRC Section 174
(54:35) - Special Rules for Partnerships
(57:35) - Common Myths and Final Thoughts

Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com

Subscribe on YouTube
https://www.youtube.com/@TaxinAction

Earn CPE for Listening to This Podcast
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This podcast is a production of the Earmark Media

Clean Energy Tax Credits: What Qualifies and What Doesn't

Jeremy Wells, EA, CPA — Wed, 14 May 2025 07:00:00 -0700

Solar installations create valuable tax benefits, but determining eligible expenses requires careful analysis. Jeremy Wells breaks down the Residential Clean Energy Credit under IRC Section 25D, explaining which costs qualify, how to handle roof modifications, and when the credit can be claimed. The episode provides essential guidance for tax professionals encountering clean energy improvements on client properties.

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(00:00) - Welcome to Tax in Action
(00:24) - Client's Solar Panel Installation Scenario
(01:54) - Understanding the Solar Tax Credit
(05:22) - Qualifying Properties and Expenses
(12:43) - Business Use and Allocation at Residence
(16:48) - Calculating Qualifying Expenditures
(38:18) - Timing and Reporting the Credit
(43:58) - Summary and Final Thoughts
(52:11) - Conclusion and Next Steps

Connect with Jeremy
https://www.linkedin.com/in/jwellstax
https://www.steadfastbookkeeping.com

Subscribe on YouTube
https://www.youtube.com/@TaxinAction

Earn CPE for Listening to This Podcast
https://www.earmark.app/

This podcast is a production of the Earmark Media