Lower Your Taxes - BIG TIME! 2023-2024: Small Business Wealth Building and Tax Reduction Secrets from an IRS Insider

353 Pages·2022·9.252 MB·English

by  Sandy Botkin

Small Business Wealth Building
and Tax Reduction Secrets
from an IRS Insider
Sandy Botkin, CPA, Esq.
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Copyright © 2023 by Sandy Botkin. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no
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Contents
Introduction: Rich or Poor—Your Choice ix
Part 1. Wealth-Building Tax Secrets for Small
and Home-Based Business Owners 1
Chapter 1. Why You Would Be Brain Dead Not
to Start a Home-Based Business
(If You Don’t Already Have One) 3
This chapter explains why everyone who is employed should have
some kind of business, preferably a home-based business. If you
don’t have one, you are losing thousands each year.
Chapter 2. How to Deduct Your Meals and
Some Employee Outings 8
How to deduct your meals during business and sales
presentations—and audit-proof all these deductions. You will
learn some IRS inside secrets and find out about the great $75
exception to keeping receipts, as well as exceptions for
entertaining employees and for employee parties. You will be
having twice as much fun if you know it’s deductible!
Chapter 3. How to Turn Your Vacation into
a Tax-Deductible Write-Off 21
This chapter deals with how to deduct your travel and vacation
expenses. It will put thousands of dollars in your pocket.
iii
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iv Contents
Chapter 4. Income Shifting and Income Splitting:
One of the Greatest Single Wealth-Building Secrets 37
How would you like to completely deduct the equivalent of your
kids’ college education, room and board at college, and their
weddings? You can, with income shifting. This chapter also deals
with a great tax planning technique called the gift-sale technique
and the “Botkin Trust,” which allows a double deduction for
equipment—and has been approved in numerous Supreme Court
cases. I love this chapter!
Chapter 5. How to Turn Your Car into a
Tax-Deductible Goldmine 53
Learn the five methods of IRS-bulletproofing your automobile
deductions. This is a must if you use your car for business. With
the passage of the Tax Cuts and Jobs law for 2018 and thereafter,
certain vehicles can become big winners that can save you
hundreds of thousands of dollars over your business career.
Chapter 6. Home Office: The Misunderstood
Key to Saving $15,000 Every Five Years 78
This chapter explains how to convert your home into a tax-
deductible money machine, using little-known audit-proofing
strategies. One of my students told me that this chapter reduced
her taxable income by $100,000. This chapter also covers the
methods used to get around the property tax and debt limits
imposed by the latest changes in tax law.
Chapter 7. Beating the Dreaded IRS Audit 98
What do you do when you get a letter from the IRS “inviting you
in for a chat”? This chapter covers what your chances are of being
audited, your audit rights, how to reduce your chances of being
audited, what to do if you don’t have the money to pay the IRS, and
much more. This is a great chapter and you should read it carefully.
Chapter 8. How to Shield Yourself from the IRS Weapon of
Classifying a Business as a Hobby 112
This chapter illustrates the practical steps necessary to withstand
any “hobby attack” by the IRS. I have been so successful with clients
who have used this information that many accountants have asked
me for copies of this book because of this chapter alone. If you
are running a business out of your home, this chapter could save
you a bundle and prevent lots of IRS problems. This problem
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Contents v
becomes particularly acute as a result of the new tax reform law.
Every small business and home based business will need to both
understand and apply the tips found in this chapter.
Part 2. How to Incorporate to Shelter Your Wealth 123
Chapter 9. Finding the Best Corporate Entity
for Your Business 125
Here’s a great overview of the pros and cons of incorporating vs.
being a sole proprietor or being a limited liability company. In
addition, with the new tax rate changes for corporations introduced
in the 2017 Tax Cuts and Jobs Act, many small businesses will need
to reevaluate the entity used to run their business.
Chapter 10. Forming a Nevada Corporation or
a Limited-Liability Corporation in Nevada 150
Many well-known wealthy personalities (and many con artists)
incorporate in Nevada. You will learn exactly why. This has been
a well-kept secret—until now!
Chapter 11. How to Eliminate up to 40 Percent of Your
Social Security and Medicare Tax with an S Corporation 155
This technique works especially well for Middle America businesses.
Chapter 12. How to Get Assets and Money
into a Corporation Tax-Free 159
This chapter explains what should and what should not be
transferred to a corporation. It also covers a crucial topic that has
killed many businesses: dealing with co-owners and partners. Finally,
if you terminate your corporation at a loss, it explains a method that
will give you an ordinary loss rather than a less-valuable capital loss.
Part 3. Fringe Benefits Available to Small and
Home-Based Businesses 165
Chapter 13. Fringe Benefits You Will Love, Part 1 171
This chapter deals with most of the wonderful tax-free fringe
benefits that you can have in almost any small business that
are not covered in other chapters. I will discuss such perks as
payment for parking, transportation, exercise equipment,
employee achievement awards, and much more.
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Chapter 14. Fringe Benefits You Will Love, Part 2 199
This chapter continues the discussion of tax-free fringe benefits
from Chapter 13, with parking, transit passes, cafeteria plans,
qualified profit-sharing plans, SEPs, SIMPLE IRAs,
and more.
Part 4. Miscellaneous Tax Strategies 219
Chapter 15. The Four Most Overlooked Real Estate
Tax Deductions in America 221
Here are the big four: (1) the large deduction for mortgage
points, (2) choosing to make “repairs” vs. “improvements” on
your property, (3) the new universal exclusion that will allow
you to avoid up to $500,000 of gain on your properties every two
years, (4) one of the biggest tax deduction mistakes in divorce
situations. In fact, do not get divorced without reading
this chapter!
Chapter 16. Making Colleges Less Expensive with
Tax Planning 235
This chapter highlights qualified tuition plans for your kids’
future education,which will enable you to pay for college with
tax-free savings. This chapter also explains the benefits of
both the Lifetime Learning Credit and the Opportunity Tax
Credit, both of which result in a dollar-for-dollar reduction in
your taxes. The chapter also covers the rules of deducting
student loan interest.
Chapter 17. Tax Planning for Stock and Bond Investments 247
This chapter deals with many of the most important tax issues for
investors so that they can substantially reduce their taxes on these
investments.
Chapter 18. Trader versus Investor: The Best-Kept
Secret Around 260
This chapter will discuss the little known benefit of being a stock
and commodities trader.
Chapter 19. Tax Scams and Other Shams 272
This chapter deals with some of the latest tax and other scams
that are being perpetrated today.
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Contents vii
Chapter 20. Highlights of the New Tax Cuts and
Jobs Act Legislation (Updated) 289
This chapter will give an overview of the changes as a result of the
2017 TCJA, and most importantly, how to plan for the changes.
This discussion will also include an analysis of the 20 percent
pass-through deduction introduced by the law.
Chapter 21. The Top 10 Tax Questions 309
This is one chapter you don’t want to miss.
Appendix A: 2022 Tax Rates 318
Appendix B: How to Find a Good Accountant 319
Appendix C: Health Savings Account 322
Index 324
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Introduction
Rich or Poor—Your Choice
When a person with money meets a person with experience, the person with expe-
rience will get some money and the person with money will get some experience.
—Harvey MacKay,
How to Swim with Sharks Without Being Eaten Alive
T his is not a financial planning book or a book about money. However, it will
probably put more money in your pocket each year than any other book
you’ve read. This is also not a book about investing or wealth building.
However, the information contained here could probably create more wealthy people
than any wealth-building book. Finally, this is also not a book that will show you how
to do your own taxes. In fact, there are no tax forms in this book. However, it will
probably help you reduce your taxes more than any idea that an accountant has given
you and more than any idea that you may have read about in any other book.
Lower Your Taxes—Big Time! is a practical book on tax strategies and IRS audit-
proofing techniques. You will not only learn to significantly reduce your taxes with
proven strategies developed over many years, you will, at the same time, lower your
chances of being audited and make your tax return “IRS-bulletproof.” This sounds
contradictory, but I promise you that these statements are true.
Read the quote at the beginning of this chapter again. I intend to give you the experi-
ence you need so you can become both “a person with money” and “a person with expe-
rience.” There are costly ways to gain experience, as anyone who has been thoroughly
audited will tell you, and not-so-costly ways. This book is the not-so-costly way for you.
The idea for this book began to develop when I was a trainer of IRS attorneys.
While working at the IRS, I realized that many people were overpaying their taxes
ix
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