Advertise on podcast: Tax in Action: Practical Strategies for Tax Pros

SponsorsThomson Reuters - http://taxshow.promo/taxautomation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy unpacks the "no tax on overtime" deduction created by the One Big Beautiful Bill Act, explaining why the name is misleading since qualified overtime compensation is still taxable income subject to withholding, FICA, and (in most states) state tax. He walks through how to isolate the FLSA overtime premium from gross overtime pay, calculate the deduction on the new Schedule 1A, and apply the filing status caps and MAGI phaseouts through real client examples. He also flags the reporting changes coming in 2026, when employers must correctly report the amounts on Form W-2, Box 12, Code TT, and the relaxed 2025 transition rules disappear. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - No Tax On Overtime Intro (01:44) - What You Will Learn (03:11) - Where It Lives In The Code (07:27) - Deduction Not An Exclusion (09:25) - Caps Phaseouts And MAGI (13:09) - Defining Qualified Overtime (16:20) - Workweek Rules Under FLSA (26:30) - Exemptions And Who Qualifies (30:23) - SSN And Filing Status Limits (33:40) - 2025 Transition Relief (36:29) - 2026 Reporting Box 12 TT (41:22) - Examples And Calculations (51:37) - Schedule 1A Walkthrough (52:39) - Key Takeaways And Wrap Up Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

In part two of his series on protecting taxpayer information, Jeremy shifts from who can see client data to how firms actually have to secure it. He walks through the Gramm-Leach-Bliley Act, the FTC Safeguards Rule, and what a written information security plan needs to cover, then explains how SOC 2 reports help firms vet software vendors. He closes with the IRS Office of Professional Responsibility's new AI guidance under Circular 230, and what it means to treat AI like a junior staff member rather than an unsupervised practitioner. SponsorsThomson Reuters - http://taxshow.promo/taxautomation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy opens a two-part series on taxpayer confidentiality by breaking down IRC Sections 7216 and 6713, the rules that govern how tax professionals can use and disclose tax return information. Using a case study of a solo firm owner weighing seasonal hires, an outsourced bookkeeper, and a possible merger, he walks through what actually counts as tax return information, when taxpayer consent is required, and the exceptions that let firms share data without it. He also covers what a tax return preparer and auxiliary service actually mean under the regulations, since those definitions decide whether consent is even needed in the first place. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Client Data Privacy (03:26) - Case Study Grady (06:45) - 7216 Overview (10:24) - Key Definitions (19:37) - What Counts as Info (26:12) - Use vs Disclosure (30:18) - Consent Rules (37:44) - Firm Sharing Limits (43:33) - Other Exceptions (47:35) - Applying to Grady (53:50) - Key Takeaways (55:54) - Next Episode AI Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy closes out his partnership series by tackling outside basis, how partnership liabilities affect that basis, and what happens when a partner exits. Using a case study of two LLC members with mounting losses, he walks through abandonment, a buyout by the remaining partner, a partnership redemption, and a sale to a third party, comparing the tax results of each. He also covers Section 751 hot assets and why unrealized receivables and appreciated inventory can turn part of a capital gain into ordinary income. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Series Wrap and Big Topics (01:43) - Case Study Setup Lighthouse LLC (03:29) - Outside Basis Basics (07:39) - Tracking Basis and Proof (13:36) - Loss Limits and Suspensions (19:53) - Basis Ordering and Distributions (26:01) - Liabilities Under Section 752 (32:33) - Recourse vs Nonrecourse Debt (37:49) - Excess Distributions and Exits (40:34) - Abandonment and Hot Assets (46:56) - Jessica Exit Options Compared (55:55) - Key Takeaways and Next Series Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy breaks down how partnerships can divide profits among partners who contribute very different things — cash, property, or just time and effort — without running afoul of federal tax law. Using a hypothetical partnership as a running example, he covers what makes an allocation legitimate versus a tax dodge, and why the IRS cares so much about the difference. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Meet Lighthouse LLC (01:17) - Investor Payback Goals (04:32) - Course Roadmap (05:40) - Pass Through Basics (08:47) - Baisey Case Lesson (14:18) - Separately Stated Items (20:39) - Partner vs Partnership Tests (23:22) - Unreimbursed Expenses (27:27) - Property Contributions 721 (32:01) - 704c Built In Gain (36:37) - Capital Accounts Explained (42:04) - Substantial Economic Effect (52:05) - Drafting The Waterfall (55:55) - Key Takeaways Next Steps Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy digs into what actually makes someone a partner for federal tax purposes, tracing the definition back to the Supreme Court's Tower and Culbertson decisions and the "hypothetical liquidation" test for capital interests. From there, he unpacks the messier question of self-employment tax on partnership income: the undefined "limited partner as such" exception under IRC Section 1402(a)(13), and the current circuit split between the Tax Court's functional analysis (Renkemeyer, Soroban) and the Fifth Circuit's state-law approach in Sirius Solutions, with Denham Capital Management still pending at the First Circuit. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Partnerships Recap Goals (01:27) - LLC Members Case Study (03:17) - Are Partners Equal (05:11) - Who Counts As Partner (10:14) - Tower Case Principles (14:48) - Culbertson Intent Test (17:30) - Congress Defines Capital Interest (26:26) - Capital Interest Explained (28:47) - General Versus Limited Partners (30:18) - Self Employment Tax Basics (33:19) - Limited Partner Definition Fight (36:06) - Key Court Cases Split (48:47) - New Cases Jurisdiction Issues (52:12) - Back To LLC Example (55:02) - Takeaways Next Episode Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

Two friends sharing a short-term rental, a married couple flipping houses, siblings splitting the income from a property they own together: any of these could be a partnership for federal tax purposes, often without the owners realizing it. This episode works through how federal tax law defines a partnership, when one actually forms, and why mere co-ownership does not automatically create one, drawing on Subchapter K, the regulations, and foundational cases like Tower and Culbertson. It also separates two regimes that frequently get conflated, the qualified joint venture under Section 761 and the community property LLC exception under Revenue Procedure 2002-69, and closes with a framework for making the call. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Rental Friends Scenario (01:36) - Why Partnership Status Matters (02:28) - Aggregate Versus Entity (04:22) - Goals For This Episode (05:51) - IRS Partnership Definition (09:12) - Mere Co Ownership Tests (14:10) - LLCs And Entity Rules (17:20) - When A Partnership Forms (23:22) - Supreme Court Guidance (27:45) - Court Factors Checklist (33:50) - Electing Out Of Subchapter K (39:41) - Spouse Exceptions Explained (49:08) - Two Step Decision Framework (54:31) - Case Study Short Term Rental (57:01) - Key Takeaways And Wrap Up Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

A buyer who wants a business but not its liabilities will often buy the assets instead of the stock, and that one decision reshapes how the entire deal gets reported. This episode breaks down the S corporation asset sale from the ground up: allocating the purchase price across seven asset classes using the residual method under Section 1060, reporting it on Form 8594, and handling goodwill and other Section 197 intangibles. It also covers why each asset's character drives the gain that passes through to shareholders, and what documentation has to be locked down before you prepare a single return. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (00:00) - Stock vs Asset Sales (03:32) - Course Goals Overview (06:04) - Lighthouse Example Setup (13:16) - Why Buyers Prefer Assets (16:29) - Section 1060 Basics (25:36) - Residual Method Classes (32:17) - Goodwill and Going Concern (40:45) - Personal Goodwill Cases (42:57) - Form 8594 Reporting (47:53) - Elections 338 and 336 (50:08) - Due Diligence Checklist (53:18) - Workflow and Wrap Up Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

When ownership in an S corporation changes hands, the tax consequences routinely catch both clients and their advisors off guard. Jeremy walks through the two critical questions that drive correct reporting — who or what acquired the stock, and when did the transfer actually occur for tax purposes — and explains how the answers determine whether a transaction is treated as a capital sale, a stock redemption, or a distribution. He also covers the two close-the-books elections available under IRC Section 1377(a)(2) and Reg. 1.1368-1(g), and why locking in those elections before filing — ideally before the transaction closes — can make a significant difference in how income gets allocated between outgoing and incoming shareholders. SponsorsThomson Reuters - http://taxshow.promo/taxautomation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

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. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (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 Ledgershttps://www.jwells.tax/p/the-three-ledgers-of-an-s-corporation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

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. SponsorsThomson Reuters - http://taxshow.promo/taxautomation (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 Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

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.SponsorsThomson Reuters - http://taxshow.promo/taxautomation (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 Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

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. SponsorsThomson Reuters - http://taxshow.promo/taxautomation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media

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. SponsorsThomson Reuters - http://taxshow.promo/taxautomation Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.com Subscribe on YouTubehttps://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcasthttps://www.earmark.app/ This podcast is a production of Earmark Media