Tax in Action: Practical Strategies for Tax Pros

S Corp Ownership Changes: What Every Tax Advisor Needs to Know

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. Connect with Jeremy https://www.linkedin.com/in/jwellstax [https://www.linkedin.com/in/jwellstax] https://www.steadfastbookkeeping.com [https://www.steadfastbookkeeping.com/] Subscribe on YouTube https://www.youtube.com/@TaxinAction [https://www.youtube.com/@TaxinAction] Earn CPE for Listening to This Podcast https://www.earmark.app/ [https://www.earmark.app/] This podcast is a production of Earmark Media [http://earmark.me/]

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

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 [https://www.jwells.tax/p/the-three-ledgers-of-an-s-corporation] Connect with Jeremy https://www.linkedin.com/in/jwellstax [https://www.linkedin.com/in/jwellstax] https://www.steadfastbookkeeping.com [https://www.steadfastbookkeeping.com/] Subscribe on YouTube https://www.youtube.com/@TaxinAction [https://www.youtube.com/@TaxinAction] Earn CPE for Listening to This Podcast https://www.earmark.app/ [https://www.earmark.app/] This podcast is a production of Earmark Media [http://earmark.me/]

Your Business Doesn't Need to Own Your Car

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 Connect with Jeremy https://www.linkedin.com/in/jwellstax [https://www.linkedin.com/in/jwellstax] https://www.steadfastbookkeeping.com [https://www.steadfastbookkeeping.com/] Subscribe on YouTube https://www.youtube.com/@TaxinAction [https://www.youtube.com/@TaxinAction] Earn CPE for Listening to This Podcast https://www.earmark.app/ [https://www.earmark.app/] This podcast is a production of Earmark Media [http://earmark.me/]

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

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 Connect with Jeremy https://www.linkedin.com/in/jwellstax [https://www.linkedin.com/in/jwellstax] https://www.steadfastbookkeeping.com [https://www.steadfastbookkeeping.com/] Subscribe on YouTube https://www.youtube.com/@TaxinAction [https://www.youtube.com/@TaxinAction] Earn CPE for Listening to This Podcast https://www.earmark.app/ [https://www.earmark.app/] This podcast is a production of Earmark Media [http://earmark.me/]

Worker Classification, Part 2: Statutory Workers and Misclassification Relief

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. Connect with Jeremy https://www.linkedin.com/in/jwellstax [https://www.linkedin.com/in/jwellstax] https://www.steadfastbookkeeping.com [https://www.steadfastbookkeeping.com/] Subscribe on YouTube https://www.youtube.com/@TaxinAction [https://www.youtube.com/@TaxinAction] Earn CPE for Listening to This Podcast https://www.earmark.app/ [https://www.earmark.app/] This podcast is a production of Earmark Media [http://earmark.me/]