Essential insights into Generally Accepted Accounting Principles (GAAP), financial statement preparation, and professional bookkeeping. Discover guides for maintaining financial transparency and business health.
What is California’s PTE elective tax, and what changed for 2026? The pass-through entity (PTE) elective tax lets a qualifying partnership or S corporation elect to pay a 9.3% entity-level California tax on its owners’ shares of income — and the owners then claim a personal income tax credit for the tax paid on their…
Can you use 401(k) money to pay long-term care insurance premiums without the 10% penalty? Yes — within limits. Under SECURE 2.0 Act §334 (effective for distributions after December 29, 2025), a defined contribution plan may permit “qualified long-term care distributions” under new IRC §401(a)(39). The annual cap is the LEAST of: (1) the amount…
How does FASB ASU 2026-01 change the accounting for PIK dividends on preferred stock? In April 2026, the FASB issued Accounting Standards Update No. 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock. It fills a gap in U.S. GAAP that had produced diversity in practice. The new rule: an issuer…
What is the California LLC fee, and how do you avoid the 10% penalty? Separate from the $800 annual minimum franchise tax, California imposes a second, income-based “LLC fee” (Revenue & Taxation Code §17942) on every LLC organized, doing business, or registered in California with total California-source income of at least $250,000. The fee is…
Is your side activity a business or a hobby — and why does it matter to the IRS? Under Internal Revenue Code §183 (the “hobby loss” rule), if an activity is NOT engaged in for profit, you cannot deduct its losses against your other income. A real business reports on Schedule C and can deduct…
How did OBBBA expand the §4960 excise tax on nonprofit executive compensation? Internal Revenue Code §4960 imposes a 21% excise tax on a tax-exempt organization’s “excess remuneration” — compensation over $1 million paid to a covered employee — plus certain excess parachute (separation) payments. Under the One, Big, Beautiful Bill Act, beginning with tax years…
What are the most important federal tax developments from late May 2026? Four stand out. (1) The Joint Committee on Taxation released a 341-page provision-by-provision report on the One, Big, Beautiful Bill Act (OBBBA, P.L. 119-21) and flagged 10 provisions that may need technical correction. (2) Treasury and the IRS issued new guidance — final…
How did OBBBA change federal student loans for graduate and professional students? The One, Big, Beautiful Bill Act (OBBBA, Pub. L. No. 119-21) placed new caps on federal student loans and directed the U.S. Department of Education (DOE) to define which “professional degree” programs qualify for higher borrowing limits. Under the DOE’s final rule, only…
What is the generation-skipping transfer (GST) tax, and why do ILITs so often get it wrong? The GST tax (Internal Revenue Code Chapter 13) is a flat 40% tax imposed — on top of gift or estate tax — on transfers that “skip” a generation, such as gifts to grandchildren or to a dynasty trust….
What home expenses can you actually deduct in 2026 — and what’s the new SALT cap? To deduct homeownership expenses you must ITEMIZE. The two main deductible items are (1) state and local real estate taxes — now subject to a $40,000 limit ($20,000 if married filing separately) under the increased SALT deduction cap —…
