A TAX-SMART WAY TO DEVELOP AND SELL APPRECIATED LAND

Let’s say you own highly appreciated land that’s now ripe for development. If you subdivide it, develop the resulting parcels and sell them off for a hefty profit, it could trigger a large tax bill.

In this scenario, the tax rules generally treat you as a real estate dealer. That means your entire profit — including the portion from pre-development appreciation in the value of the land — will be treated as high-taxed ordinary income subject to a federal rate of up to 37%. You may also owe the 3.8% net investment income tax (NIIT) for a combined federal rate of up to 40.8%. And you may owe state income tax too.

CORPORATE OFFICERS OR SHAREHOLDERS:

HOW SHOULD YOU TREAT EXPENSES PAID PERSONALLY?

If you play a major role in a closely held corporation, you may sometimes spend money on corporate expenses personally. These costs may end up being nondeductible both by an officer and the corporation unless the correct steps are taken. This issue is more likely to happen with a financially troubled corporation.

OVERCOMING ACCOUNTING ERRORS:

KEY TO UNLOCKING YOUR BUSINESS GROWTH

As a business owner, your goal is to ensure your venture thrives and prospers. An essential aspect of this journey involves maintaining a clear, accurate financial perspective that allows you to make informed decisions. But what happens when accounting errors creep into this clear vision? These unintentional mistakes can significantly hinder your business’s growth and profitability.