Landscape Management, November 2016

business insider Is the Trump deduction available to you D uring the presidential election taxes but as a CPA I can come up with a scenario where it would be perfectly legal if he didnt Trump might have Im not sure you can employ all the strategies Trump has used but you can use some of them As a real estate professional hes accorded special rules for deductions under the tax code Many of these rules are designed to promote the development with maintaining a healthy economy of Trumps 1995 tax return that was obtained and released by The New York Times many pundits said Trumps use of tax loopholes were scandalous tactics created for the rich by the rich The Times article suggested that rich folks use partnerships limited liability companies and S corporations to minimize taxes and to limit liability This is true Rich businesspeople use pass through entities but so do ordinary are open to everyone and are used at one point or another by most prudent businesspeople Trump employed is the net operating is a loss Plain and simple expenses exceed revenues for a period If you have a real economic loss perhaps a rough year using an NOL may be beneficial If an NOL is incurred the government will allow a taxpayer to offset it against taxable income in a 52 by Daniel GorDon The author is a CPA who caters to landscape and lawn care firms Reach him at dan@ turfbooks com business basics nuMbers PhoTo isToCk Com eskAylim season one issue that came up was whether or not Donald Trump paid any taxes I have no insider information on his Can a landscape or lawn care business owner avoid taxes the same way of real estate which is consistent In reaction to the small portion businesspeople These strategies The most talked about strategy loss NOL deduction An NOL different period The rationale is that when taxpayers are making money they pay their annual taxes So when they lose money they should be able to get some relief Instead of each tax year standing alone the NOL rules consider multiple periods as a taxpayers business progresses The good news is that if you lose money you can use the NOL to get a tax break The bad news is that you lost money Here are answers to a few other questions As with any tax or legal strategy you should do your research and speak to a CPA or tax attorney to determine whats appropriate for you Who is eligible to claim an nol Individuals You dont need to be a business to claim an NOL From what I can tell Trumps NOL was on his personal return Owners of sole proprietorships Owners of pass through entity interests such as partners in partnerships members of limited liability companies or S corporation shareholders and C corporations The most common causes of individual NOLs are business losses casualty and theft losses and losses from pass through entities hoW do you knoW if you have an nol On your individual tax return follow LANDSCAPEMANAGEMENT NET November 2016 these steps to determine if you have an NOL and what you need to do 1 Compete your 1040 individual tax return and look at line 41 the line that subtracts itemized deductions from adjusted gross income If this number is negative you may have an NOL 2 If line 41 is negative complete IRS form 1045 application for tentative refund which after doing some calculations will determine if you have an NOL and how much it is 3 Prepare and file a 1040X individual amended tax return to claim your refund 4 If the NOL is not used up by the two preceding years carry it forward against future income up to 20 years A C corporation is not a passthrough entity Therefore when there are losses the C corporation generates its own NOL thereby reducing taxes for the carry back carry forward periods at the corporate level rather than passing to shareholders The NOL is calculated on the corporate tax return and is maintained there each year with a supporting schedule showing any amounts used to offset tax liabilities using an nol to reduce taxes An NOL can be carried back two years and or carried forward to be netted against future income for up to 20 years In carrying it back two years you need to amend those two previous tax returns Why would you want to carry it back It seems like a lot of work Well if you paid taxes in either of those two years you can claim the NOL on your amended return and get an immediate refund rather than waiting until the future to offset against future income In other words you can get immediate cash