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Deductions and Write-Offs

New Car Deduction

Hello, I was wondering if I can deduct a portion of the cost of a new car purchase under section 179 if I have a sole proprietorship and will be using the car 60% of the time for business meetings, site visits, and client meetings?

Quick Answer:

No, you cannot deduct a portion of the cost of a new car under Section 179. Section 179 allows for the immediate expensing of certain *property*, but passenger automobiles are subject to limitations. While you can deduct depreciation, the amount is limited and calculated using a complex formula involving the car's cost and business use percentage. The 60% business use will affect your depreciation calculation, but not eligibility for Section 179 expensing. You should consult IRS Publication 946 for details on depreciation of automobiles.

This answer is provided for convenience only and is not tax advice. It is important that you speak to a CPA about your individual tax situation.

Asked onTuesday, August 12, 2025 by Mary Sue
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Investment and Finance

Interest income from a CD - Cash or Accrual accounting?

If I open a standard 1 year bank CD on 8/20/2025, and it matures on 8/19/2026, with interest paid *only* at maturity. The bank however compunds the interest monthly and "credits" it to the balance every month. But I will not actually receive any interest in hand until maturity. Contract is clear - if I close the CD on 5/8/2026, zero interest will be paid, and I'll only get principal back. So is income tax due on 4 mths of interest "credited" in 2025? Or is all 12 mth of interest taxed in 2026?

Quick Answer:

Under U.S. tax law, interest income from a CD is taxable in the year it is earned, regardless of when it's received. Even though you don't receive the interest until maturity, the interest is considered earned and credited to your account monthly. Therefore, you'll need to report the interest earned during 2025 (four months' worth) on your 2025 tax return, and the remaining interest earned in 2026 on your 2026 tax return. The bank's 1099-INT will reflect the interest earned in each year.

This answer is provided for convenience only and is not tax advice. It is important that you speak to a CPA about your individual tax situation.

Asked onTuesday, August 12, 2025 by San
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Business Formation

LLC, Corporation, or SCorp

Im running a small home business. I make crafts to sell on etsy and am making about 15K per year in additional income. My question is at this volume, does it make any sense to form an LLC, Corporation, or Scorp for my side hussle?

Quick Answer:

At $15,000 annual income, forming an LLC, corporation, or S corp for your Etsy business likely offers minimal tax advantages and adds complexity. The self-employment tax on your $15,000 profit will be significant regardless of your business structure. An LLC offers liability protection, but doesn't change how your business is taxed (likely as a sole proprietorship or disregarded entity for federal tax purposes). Corporations and S corps have more stringent compliance requirements, including corporate filings and potentially higher accounting costs. These costs may outweigh any potential tax savings at this income level. Consult with a tax professional to assess your specific situation, but at this income level, the additional costs and complexities generally outweigh the benefits.

This answer is provided for convenience only and is not tax advice. It is important that you speak to a CPA about your individual tax situation.

Asked onFriday, August 08, 2025 by Eric
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Business Formation

LLC EIN Question

Hello, I already operate a sole prop business, and I am looking to either open a new LLC or turn this into LCC. Will I be getting a new EIN for the new LLC? It will be single member LCC. Sincerely,

Asked onSaturday, August 02, 2025 by Jiwon
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Tax Filing Tips

LLC is active but won't generate revenue. Do I file for taxes?

I'm a Canadian resident. I registered an LLC last year in Washington. The LLC is in active status but does not operate and won't generate any revenue. Do I still need to file with IRS?

Asked onWednesday, June 11, 2025 by Mona
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Family Issues

Tax-Free Gift

How can I transfer the title to a second home to my child tax-free? It is valued around $200,000 and no other large gift has ever been given. The property is in Texas.

Asked onSaturday, May 24, 2025 by Rus
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Retirement

Rule of 55

Do I need to wait until my 55th birthday to use the Rule of 55? Is it required to pull money out of the 401k, even if I don't need it?

Asked onMonday, May 12, 2025 by Linda
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Tax Forms

Foreign owned US based LLC funding

Our LLC is incorporated in the state of Wyoming and the members are based in India. The members are transferring funds to the LLC, however, it expected 2-3 months for the process to complete. As a supplier payment is coming up, I want to check if a US-based relative of the members can pay the supplier using their credit card? Members are ok to record this as a gift and the donor does not expect the funds to be returned to them. I wanted to understand what are the tax and book-keeping considerations and if this would be a recommended approach?

Asked onTuesday, May 06, 2025 by Nishant
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Business Formation

LLC

Hello, I was gathering information about forming an LLC and I read that for tax propose is better to have it in Delaware or Wyoming but I live in Massachusetts and I want to make sure that I will not be taxed twice. I will have an 100% online business selling classes for the state in different states with no US employees or physical location so its just me working from home. Is it convenient for me to have my LLC in Delaware or Wyoming ? I'm trying to make sure I don't make any mistake before register my LLC. Looking forward to hear from you soon. Thank you very much!

Asked onWednesday, April 23, 2025 by Yinet
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Business Formation

What LLC would be best for me

I’m a day trader who trades BTC in the market. It’s only me who operates the trading orders. What LLC would suite me best. Regular LLC, DAO LLC, S-corp

Asked onWednesday, April 23, 2025 by Oliver
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