Month: March 2026

If you purchase health insurance through the Affordable Care Act (ACA) marketplace and receive premium tax credits, a major rule change begins in 2026—and it could create a painful surprise.

Under prior rules, if your income came in higher than expected, the amount of excess subsidy you had to repay was capped (as long as your modified adjusted gross income (MAGI) stayed under 400 percent of the federal poverty level). That safety net is now gone. Beginning in 2026, if you receive more advance premium tax credit than you qualify for, you must repay every dollar of the excess.

Even more significant: the “subsidy cliff” returns. If your household MAGI exceeds 400 percent of the federal poverty level—even slightly—you lose eligibility entirely and must repay 100 percent of the advance credit you received during the year. For many couples, that could mean writing a check for $15,000 or more at tax time.

Business owners and early retirees are especially exposed. Variable profits, year-end bonuses, Roth conversions, or capital gains can unexpectedly push income over the threshold. What once felt like a manageable reconciliation can now become a five-figure tax bill.

The key takeaway: ACA income planning must now be precise. If you rely on marketplace subsidies, you need to coordinate business income, retirement distributions, and investment decisions carefully throughout the year.

If you want to discuss ACA subsidies, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• March 24, 2026

When a five-figure commercial building expense hits your desk, the first question is simple: Can you deduct it, or must you depreciate it over 39 years?

Consider a recent example. An office building owner replaced a failed sliding glass door and frame at a total cost of $12,000, including removal and installation. The new unit was the same brand, size, and quality as the old one. No upgrades. No redesign. No expansion.

Under the tax rules, expenses must be capitalized if they result in a betterment, an adaptation to a new or different use, or a restoration—the so-called BAR tests. Replacing a door with one of the same type and quality, without improving the building overall, does not clearly meet the capitalization tests. In situations like this, the strongest technical position is often to deduct the full amount as a repair under Section 162 of the tax code.

That said, conservative taxpayers may prefer to capitalize the cost. If you take that route, you must capitalize the entire $12,000—including installation—and depreciate it over 39 years. The good news: you may also elect a partial disposition and deduct the remaining basis of the old door, which can produce a meaningful current write-off.

The key takeaway? Not every expensive building cost is a capital improvement. The tax result depends on the nature and scope of the work—not on the price tag.

If you want to discuss deductible repairs, please call me directly at 408-778-9651 

• By Leon Clinton
• March 20, 2026

With today’s $15 million federal estate and gift tax exemption ($30 million for married couples), it’s easy to believe estate tax planning is no longer a concern. But a recent Tax Court case proves otherwise—an estate lost $1.5 million simply because a portability election was not properly and timely filed.

Here’s the key issue: When the first spouse dies, any unused estate tax exemption can be transferred to the surviving spouse—but only if the executor files a timely and properly completed Form 706 and elects portability. This is true even when no estate tax is owed.

Why does this matter? Because circumstances change. A surviving spouse’s assets may grow significantly due to business success, investments, inheritance, or even future changes in the law that reduce the exemption amount.

• Without the portability election, the unused exemption is permanently lost.
• With it, the surviving spouse may preserve millions of dollars in additional tax-free protection.

The filing deadline is generally nine months after death (with a six-month extension available). Even estates below the filing threshold can use a simplified Form 706 if the sole purpose is to elect portability. But if the return is not properly filed within the allowable window, the opportunity disappears forever.

The lesson is simple: if you are married, make sure your executor understands the importance of filing Form 706 and electing portability—no matter how modest the estate may seem today.

If you want to discuss the portability election, please call me directly at 408-778-9651  

• By Leon Clinton
• March 17, 2026