Month: December 2025

If you operate multiple corporations, you might assume each one entitles you to its own set of tax benefits—separate Section 179 limits, additional credits, or even expanded retirement plan flexibility. 

Unfortunately, the tax code doesn’t see it that way. Hidden within IRC Section 1563 are rules that can quietly collapse your corporations into a single “controlled group,” dramatically limiting the deductions and credits you thought you were multiplying.

Here’s what you need to know.

The Hidden “One Taxpayer” Rule

Under Section 1563, the IRS evaluates who owns and controls your corporations. If the ownership structure meets certain thresholds—either directly or through attribution among family members, entities, or even stock options—the IRS treats all related corporations as one economic unit. This combined unit, known as a “controlled group,” receives only one set of key tax benefits, no matter how many corporations exist on paper.

This can reduce or eliminate tax advantages you expected. For example, businesses within a controlled group must share one Section 179 deduction limit, one accumulated earnings credit, and one pool of R&D tax credits. Employee benefit plans must meet coverage rules across the entire group. And while each corporation still files its own return, the controlled group must coordinate to allocate benefits properly—otherwise, the IRS will make the allocation for you.

How Controlled Groups Are Triggered

Controlled group status is based purely on ownership, not on business operations. The rules generally fall into three categories:

1. Parent-subsidiary groups, where one corporation owns at least 80 percent of another
2. Brother-sister groups, where five or fewer common owners control multiple corporations and share more than 50 percent identical ownership
3. Combined groups, which blend the two

Complicating matters further, attribution rules may treat you as owning stock held by your spouse, children, parents, certain trusts, or entities you own—sometimes pulling corporations together unexpectedly.

What You Can Do

The good news: with advance planning, you can often avoid or unwind a controlled group legally and safely. Strategies may include adjusting ownership percentages, adding new owners, restructuring voting rights, or using non-corporate entities such as LLCs for new ventures. And if a controlled group is unavoidable, proactive allocation of deductions ensures you—not the IRS—decide where your tax benefits go.

If you want to discuss the controlled group rules, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• December 19, 2025

I want to alert you to a tax credit that is set to expire soon. You can claim a federal income tax credit for installing electric vehicle chargers or other alternative-fuel refueling equipment, but the credit disappears for anything you place in service after June 30, 2026. 

You still have time to benefit, but you must act quickly.

The credit generally equals 30 percent of the cost of qualifying equipment. If you install equipment at your principal residence for personal use, you can claim a credit up to $1,000, provided your home sits in an eligible census tract. 

If you install equipment for business use, you can claim much larger credits—up to $100,000 per item—and you can increase the credit rate from 6 percent to 30 percent when you meet specific wage and apprenticeship rules.

Strict location rules now block many taxpayers from qualifying, so I encourage you to check your proposed installation site before you move forward. To claim the credit, you must place the equipment in a low-income or non-urban census tract—an area that covers roughly 97 percent of the U.S. land mass.

You also must start as the original user of the equipment and install components that function together as an integrated refueling or charging system.

When equipment is used for both personal and business purposes, you must split the credit based on your actual use percentages. Businesses with fleets or multiple charging ports can secure substantial credits by properly allocating all associated costs, including chargers, pedestals, electrical panels, wiring, and smart-charge management systems.

You claim the credit on IRS Form 8911. Business credits flow to Form 3800, and personal credits flow to Schedule 3 of Form 1040. You must also reduce the equipment’s basis by the amount of the credit and follow recapture rules if the equipment stops qualifying.

If you plan to install charging equipment at your home or business, I recommend evaluating your project now so you don’t miss this valuable tax benefit. I can help you confirm eligibility, estimate your credit, and structure your installation to maximize savings.

If you want to discuss this tax credit, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• December 16, 2025

After four years of work, the IRS has finalized its cryptocurrency regulations, and crypto tax reporting now begins. Starting with the 2025 tax year, custodial crypto platforms must report taxable crypto transactions directly to the IRS.

“Digital asset brokers” must handle this reporting when they take custody of the digital assets their customers sell or exchange. These brokers include

• operators of centralized trading platforms such as Coinbase, Kraken, and Binance; and
• hosted wallet providers (also called “custodial wallets”).

Most crypto transactions run through these brokers.

Brokers must file the new IRS Form 1099-DA, Digital Asset Proceeds From Broker Transactions. This form reports the following:

• Customer’s name, address, and taxpayer identification number
• Name and quantity of the digital asset sold
• Sale date
• Gross proceeds amount

Brokers must file the first Forms 1099-DA for the 2025 tax year by March 31, 2026.

For 2025 only, brokers must report gross proceeds from sales or other transfers. Gross proceeds represent the total amount you receive when you sell or exchange crypto, before any fees or other costs. Beginning in 2026, brokers must also report the customer’s cost basis—the original value of the crypto at acquisition plus any associated costs.

With Form 1099-DA in place, you will find it easier to calculate your crypto gains and losses when you file your return.

The regulations also establish rules for how crypto owners determine the basis of their crypto units. FIFO (first in, first out) serves as the default method. During periods of rising prices, FIFO typically produces the largest taxable gains because it uses your earliest—and often lowest-basis—units first.

If you want to reduce tax on crypto transfers, you can use the specific identification method instead. This method allows you to identify the exact units you transfer. Transitional rules for 2025 allow you to use specific identification in your own records without notifying your broker.

The final regulations also require crypto owners to track basis on a wallet-by-wallet basis when they hold crypto across multiple wallets or exchanges. You may no longer treat all your crypto as if it sits in a single wallet or account. If you had crypto in multiple wallets or exchanges on January 1, 2025, you must allocate your unused basis to the specific accounts where you hold each asset.

If you want to discuss cryptocurrency, please call me on my direct line at xxx-xxx-xxxx.

• By Leon Clinton
• December 12, 2025