Understanding the refund statute of limitations can mean the difference between claiming a refund and losing that money forever. This episode breaks down the complex rules around when taxpayers can file refund claims and how much they can recover, using the recent Hamilton v. US case as a cautionary tale. Whether you're dealing with late-filed returns, amended returns, or clients who've fallen behind on their taxes, these statute of limitations rules will determine what's possible and what's permanently lost.

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Most tax professionals assume joint filing is the default for married couples, but the tax code actually says the opposite. Jeremy Wells explores the surprising reality that married filing separately is technically the default status, requiring both spouses to elect joint filing under IRC Section 6013. He breaks down the key disadvantages of separate returns—from reduced credits to income limitations—while explaining legitimate scenarios where paying extra tax through separate filing can lead to better overall financial outcomes, particularly with student loan repayment strategies.

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Jeremy Wells breaks down the fundamentals of Section 1031 exchanges, explaining how real estate investors can defer capital gains taxes by swapping properties rather than selling and buying separately. He clarifies common misconceptions about these transactions, walks through the strict timing requirements including the 45-day identification and 180-day completion rules, and examines court cases that reveal when the IRS challenges whether replacement properties were truly intended for investment purposes. The discussion covers qualifying property types, disqualified persons, and the practical mechanics of using qualified intermediaries to facilitate these tax-advantaged exchanges.

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• (00:00) - Introduction to 1031 Exchanges
• (02:06) - Understanding the Basics of 1031 Exchanges
• (04:15) - Mechanics of a 1031 Exchange
• (08:22) - Qualifying Property for 1031 Exchanges
• (19:24) - Case Studies: Real-Life 1031 Exchange Scenarios
• (29:17) - Taxpayer's Genuine Effort to Rent Property
• (30:47) - Disqualified Persons in Section 1031 Exchanges
• (34:03) - Understanding Like-Kind Property
• (43:55) - Deferred Like-Kind Exchanges
• (51:48) - Reporting Like-Kind Exchanges on Form 8824
• (56:26) - Conclusion and Final Thoughts

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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
• (21:35) - Non-Qualifying Research Activities
• (25:35) - Internal Software and the High Threshold of Innovation Test
• (30:35) - Calculating the R&D Credit
• (33:35) - Qualifying Wages and Expenses
• (39:35) - Contract Research Expenses
• (44:35) - Credit Calculation Methods
• (50:35) - Payroll Tax Election for Startups
• (52:35) - Interaction with IRC Section 174
• (54:35) - Special Rules for Partnerships
• (57:35) - 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.

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• (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
• (16:48) - Calculating Qualifying Expenditures
• (38:18) - Timing and Reporting the Credit
• (43:58) - Summary and Final Thoughts
• (52:11) - Conclusion and Next Steps

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This podcast is a production of the Earmark Media