Augusta Rule Explained by a Tax Attorney (and how Tax Court views the Loophole)
VloĆŸit
- Äas pĆidĂĄn 1. 01. 2024
- đ„ Want to become a client of Jasmine's? Accounting, IRS Tax Resolution, and Tax Leverage: www.taxleverage.com
đ„ Accountant looking to grow your firm? See how Jasmine can help: taxleverage.com/welcome
âŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹ
ABOUT JASMINE DILUCCI, JD, CPA, EA
Jasmine DiLucci has specialized in tax since high school when she first became licensed to represent taxpayers before the IRS.
Now as a tax attorney and CPA, she works with individuals and business owners across the nation to resolve IRS tax issues, streamline accounting, and minimize tax for business owners.
âŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹâŹ
Disclaimer: This information on this channel is for educational purposes only and does not constitute professional legal or tax advice.
# #jasminedilucci
As always impeccable exposition on this matter.
As a CPA I do have three years of law and LLM classes. I understand what youâre saying, but I have talked to many CPAs with no Law School with an MST and frankly they top-notch.
I own a small insurance agency. I just wanted to do like $700 a day based on other meeting rental places around me. Once a month, am I still at high risk? I'm a single owner but I "can" have my employees over for a training for a few hours. I also typed up a rental agreement based on a 14 day rental for $700 per day. How risky is it for me to do this? Basically $8400 a year/$700 a day for 14 days to the tenants discretion.
Iâm going to assume that what she meant is that anyone using this will throw off some kind of flag in the system since itâs usually a transaction with yourself or your own company.
As long as the amount is the fair market value and you keep very detailed records youâll likely be fine. Most of us donât know when we are audited because they donât see anything worth pursuing.
@@K7ZHK Yeah I just need some tax breaks and I don't make much at all. I was figuring $700 was what those daily meeting places cost around me on average so used that number. I have two employees, one is an in-law so I have no issue doing something work related here once a month.
@@samwill226i would look at what similar rentals to your house cost on airbnb and others for the dates used. If you think about it from a business point of view, thats how a business might rent a private residence.
The problem with using meeting halls, is your house isnt a meeting hall. I would try to appraise it based on other private residence rentals in your area.
The IRS clearly disagrees with you. Per IRS Pub 538 on accounting methods: "Related Persons:
Business expenses and interest owed to a related person
who uses the cash method of accounting are not deductible until you make the payment and the corresponding
amount is includible in the related person's gross income."
IRS Publications are not law, they are IRS favorable rephrasing or summarization of the law. The actual law, in order of authority, is statute, Treasury Regulations, and court cases. The law that your quoted publication section is attempting to summarize is IRC 267(a)(2) and it states that " *If by reason of the method of accounting of the person to whom the payment is to be made* , the amount thereof is not (unless paid) includible in the gross income of such person, and at the close of the taxable year of the taxpayer for which the amount would be deductible under this chapter,...then any deduction allowable under this chapter in respect of such amount shall be allowable as of the day as of which such amount is includible in the gross income of the person to whom the payment is made..."
The Augusta Rule rent payment is not includible in gross income by reason of statute in 280A(g), NOT "by reason of the method of accounting," therefore this statute does not prevent the deduction even if it is made between related parties.
@@taxleverage consider recording a video about what consists of tax law. Maybe title could be "How I know my sh*t" đ
However, I think your videos are excellent keep it up and I agree with you these people with their EA they come on here and start saying that they are the top experts and Tax, which is really nonsense