Month: February 2026

Big Beautiful Bill Act (OBBBA) permanently eliminated the qualified bicycle commuting reimbursement, ending a small but symbolic incentive for employees who bike to work.

Congress created the benefit in 2009 to encourage bicycle commuting. Employers could reimburse employees for bicycle purchases, repairs, improvements, and storage when employees regularly rode a bicycle between home and work. 

The benefit applied only to personal, pedal-powered bicycles. It excluded e-bikes and bike-share programs. Employees also had to rely on biking for a substantial portion of their commute, a standard the law never clearly defined.

The rules limited the benefit’s reach. Employers could not offer bicycle reimbursement alongside other transportation fringe benefits, such as transit passes or parking. The reimbursement capped out at $20 per month, or $240 per year, and Congress never adjusted that amount for inflation.

Despite its small size, the benefit delivered meaningful tax savings. Employees excluded the reimbursement from income and payroll taxes. Employers deducted the cost. That combination made the benefit attractive, even if it mainly appealed to committed cyclists only.

The Tax Cuts and Jobs Act disrupted the arrangement in 2017. From 2018 through 2025, employers could still reimburse bicycle commuting costs, but employees had to treat the payments as taxable income. Employers, however, could still deduct the reimbursements. Congress flirted with reinstating the tax-free treatment in 2020 and 2021, but those efforts went nowhere.

OBBBA finished the job. Starting in 2026, bicycle commuting reimbursements are taxable wages for employees, and employers lose the deduction entirely. Employers cannot even treat the payments as deductible compensation, which creates a rare double-tax hit.

Meanwhile, Congress left larger transportation benefits untouched. Employers may still provide tax-free transit passes and parking benefits of up to $340 per month in 2026, although they cannot deduct those costs.

If your business reimburses bicycle commuting expenses—or plans to do so—you should revisit that policy now. If you want my help, please call me on my direct line at 408-778-9651

• By Leon Clinton
• February 27, 2026

Family relationships and overlapping ownership can quietly sabotage well-intentioned tax planning. Internal Revenue Code Section 267 often causes the damage. 

This rule does not announce itself with penalties or warnings. Instead, it erases deductions, disallows losses, and delays expenses after the transaction feels complete.

Section 267 targets transactions between related parties. The law focuses on who the parties are, not on whether the deal looks fair. When you sell property to a related person or entity at a loss, the IRS disallows the loss even if you used fair market value and arm’s-length terms. 

For example, if you sell stock to a sibling at a loss, you lose the deduction simply because of the family connection.

Section 267 also disrupts expense deductions. If you use the accrual method and owe expenses or interest to a related party who uses the cash method, you cannot deduct the expense until the other party reports the income. This timing mismatch often surprises taxpayers after year-end.

The real trap lies in the attribution rules. These rules treat you as owning interests held by family members, trusts, partnerships, or corporations. As a result, transactions that appear unrelated on paper can suddenly cross the 50 percent ownership threshold, triggering related-party treatment.

Good planning avoids these outcomes. Identify related parties before you act. Review family ownership, trust interests, and entity structures together. Sell loss assets to unrelated buyers. Structure ownership to stay below control thresholds. Coordinate expense deductions with the other party’s income recognition.

Section 267 rewards foresight and punishes assumptions.

If you want to discuss Section 267 attribution rules, please call me directly at 408-778-9651

• By Leon Clinton
• February 24, 2026

Many charitably minded individual retirement account (IRA) owners use qualified charitable distributions (QCDs) to satisfy required minimum distributions while avoiding income tax. One simple mistake, however, can turn an otherwise tax-free QCD into fully taxable income.

After age 70 1/2, you may direct up to $111,000 in 2026 from your traditional IRA to a qualified charity; for married couples, each spouse may give that amount from their own IRA. 

The QCD can count toward your RMD once you reach age 73, and the QCD stays out of your adjusted gross income. Lower adjusted gross income can help you avoid higher tax brackets, higher Medicare premiums, and taxation of Social Security benefits.

The trouble arises under the strict no-benefit rule. 

You must send a QCD directly to a Section 501(c)(3) charity, not to a donor-advised fund. More important, you must not receive anything of value in return. If you do, the IRS treats the entire distribution as taxable. Even a small benefit can spoil the result. For example, a $250 ticket to a charity dinner will cause a $5,000 QCD to become fully taxable.

Charities must provide written acknowledgements for QCDs of $250 or more. If that acknowledgement lists goods or services received, the tax-free treatment disappears.

The IRS allows limited exceptions. You may receive insubstantial benefits without harming a QCD, such as low-value items or token merchandise, generally capped at $139 in 2026 ($136 in 2025) and subject to percentage limits. Intangible religious benefits from churches also remain acceptable.

Before you authorize a QCD, confirm that you will receive nothing of value beyond these exceptions. Careful planning protects the tax advantages QCDs can provide.

If you want to discuss QCDs, call me directly at 408-778-9651

• By Leon Clinton
• February 20, 2026