Jeremy dives deep into the critical red flags that should make tax professionals pump the brakes on S-corporation elections. From balance sheet debt ratios that could trigger unexpected taxable events to operating agreement provisions that can inadvertently terminate S-elections, this episode challenges the "default to S-corp" mentality that's become prevalent in tax advisory circles. Jeremy breaks down the specific scenarios where partnerships or sole proprietorships actually serve business owners better than the often-hyped S-corporation structure.

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The R&D tax credit offers significant tax-saving potential, yet remains misunderstood by many small business owners and their advisors. Jeremy breaks down the key components of the Section 41 credit, explaining qualified research activities, eligible expenses, and calculation methods. Small service-based businesses might qualify more often than they realize, especially when research activities relate to technological innovation, computer science, or engineering processes.

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• (00:00) - Introduction to the R&D Credit
• (03:00) - Components of the R&D Credit
• (06:00) - Defining Qualified Research
• (13:00) - Business Components and the Shrinking Back Rule
• (22:06) - Non-Qualifying Research Activities
• (26:06) - Internal Software and the High Threshold of Innovation Test
• (31:06) - Calculating the R&D Credit
• (34:06) - Qualifying Wages and Expenses
• (40:06) - Contract Research Expenses
• (45:06) - Credit Calculation Methods
• (51:06) - Payroll Tax Election for Startups
• (53:06) - Interaction with IRC Section 174
• (55:06) - Special Rules for Partnerships
• (58:06) - Common Myths and Final Thoughts

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Solar installations create valuable tax benefits, but determining eligible expenses requires careful analysis. Jeremy Wells breaks down the Residential Clean Energy Credit under IRC Section 25D, explaining which costs qualify, how to handle roof modifications, and when the credit can be claimed. The episode provides essential guidance for tax professionals encountering clean energy improvements on client properties.

• (00:00) - Welcome to Tax in Action
• (00:24) - Client's Solar Panel Installation Scenario
• (01:54) - Understanding the Solar Tax Credit
• (05:22) - Qualifying Properties and Expenses
• (12:43) - Business Use and Allocation at Residence
• (15:13) - Calculating Qualifying Expenditures
• (36:43) - Timing and Reporting the Credit
• (42:23) - Summary and Final Thoughts
• (50:36) - Conclusion and Next Steps

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This podcast is a production of the Earmark Media