Ask a CPA

Deductions and Write-Offs

Capitalized or treated as startup/acquisition costs

Asked Tuesday, October 06, 2026 by Paul

My company Legacy Ridge is a single-member LLC taxed as a disregarded entity. It has no revenue yet and is actively sourcing business acquisitions. If I employ my wife and my children, ages 18 and 16, to perform legitimate administrative, acquisition sourcing, research and business-development work from October through December 2026, are their W-2 wages currently deductible on Schedule C in 2026, or should some or all of those wages be capitalized or treated as startup/acquisition costs?

Small Business

Could I claim this as a donation?

Asked Tuesday, October 06, 2026 by C

A lease just ended. On it, tenant was responsible for replacing the HVAC, which stopped functioning within the time they were renting it. Before they vacated the property, they didn't replace the HVAC. Could I claim the loss as a donation on my tax return (LLC entity) rather than sue them?

Personal Taxes

Missed RMD & potential liquidation of smaller ira

Asked Wednesday, September 23, 2026 by Adrienne

RMD wasn’t taken for 2022-24. Was taken in 2025. Will I be require to pull out back rmd (combined with this yr +/-$40k). Additionally, there is a different IRA of $40k I want to use to pay 1/2 the house off. It’s currently losing $. For other reasons it has to be now or never & if not the $203/m rmd can’t be used to pay down the home. Annual income is +/- $79k. I know I’d potentially be doubling my tax base for a year but I feel like if it’s losing $ + rmd + mortg interest it’d be worth it. 83yo

Payments and Penalties

Roth conversion. How to pay taxes not from the account being converted.

Asked Friday, September 18, 2026 by William

I am a 57-year-old single retiree. I am looking to convert a fairly sizeable IRA to a Roth probably filling the 24% bracket. I am concerned about getting a large tax bill next April and possibly underpayment penalties and fees. My IRA custodian can take taxes out from the IRA being converted, but I want to pay the taxes with non-IRA money. Can I make a one-time estimated tax payment (fed/PA) at roughly the same time I do the conversion. Can I do this online, or is there a form I would need?

Retirement

Help to file taxes

Asked Tuesday, September 15, 2026 by June

Personal trust and simple 1040 taxes need to be filed.

Bookkeeping & Write-up

Would the income loss on a K-1 affect this business's share value?

Asked Monday, September 14, 2026 by Lisa

I have a partnership who has an investment in another partnership. They own 1 share of a private company. According to the K-1 they received, there was an income loss of -$17465 which, when added to their already negative capital account, puts their capital account ending balance at just over -$18,000. They had investment interest income of $876, but I cannot see any other factors affecting their income with this company. How do I figure out the affect of their share value, including tax basis?

Miscellaneous

IRS Representation for Theft Loss

Asked Wednesday, September 09, 2026 by Bassam

I am reaching out to inquire about your firm’s expertise in handling investment theft loss claims and IRS representation. In 2025, I experienced significant financial losses due to an overseas investment theft scheme. I am seeking experienced representation to assist with casualty and theft loss deduction with the IRS. Do you handle these issues, or do you know someone who can help ? deduction under IRC § 165(c)(2), IRS Publication 547

Family Issues

Tax Treatment of $50,000 Estate Settlement

Asked Wednesday, September 09, 2026 by Richard

I would like your advice regarding the federal tax treatment of a 50K legal settlement I recently received. The settlement arose from a lawsuit involving my sister and my late mother’s estate. I was asserting my legal right to receive my share of my mother’s estate. The matter was ultimately settled, and I received $50K under the settlement agreement. My main question is whether this 50K should be treated as an inheritance/distribution of my share of my mother’s estate or income

Investment and Finance

Nonprofit category for a deposit

Asked Tuesday, September 08, 2026 by Tamela

We have an investment account and at this point in the year don't want to add the whole account into our QB and go back and do all that (we'll do that at the start of the year.) The problem is we had a $100,000 moved from our investment account into our main operating account earlier in the year. What do I categorize that investment deposit as? We are going through an audit for our insurance review and our accountant has been non-responsive.

Tax Forms

Does Form 5472 Apply to My Foreign-Owned Delaware LLC?

Asked Wednesday, September 02, 2026 by AMR

Hello, I'd like to ask whether Form 5472 (along with the pro forma Form 1120) applies to my company, PMLEAD Consulting LLC, based on the following facts: - I am a non-US citizen and the sole (100%) owner of the LLC. - The LLC was formed in Delaware in 2019 and is a single-member LLC, treated by default as a disregarded entity for federal tax purposes. - No Form 5472 has ever been filed, and an EIN has not yet been issued for the LLC. - The LLC has had no US business activity, revenue, or effecti