Month: August 2026

If you own more than one business, you may be missing out on a larger Section 199A deduction without even realizing it.

The Section 199A deduction allows many owners of sole proprietorships, partnerships, and S corporations to deduct up to 20 percent of their qualified business income. Even better, Congress has now made this deduction permanent, which means proper planning is more valuable than ever.

When you own multiple businesses, the calculation becomes much more complicated. Depending on your taxable income, you may have the opportunity to combine, or “aggregate,” certain businesses for purposes of computing the deduction. In the right circumstances, aggregation can substantially increase your tax savings.

Taxpayers with higher incomes can enhance the deduction by the amount of W-2 wages paid or business property owned. One business may have plenty of wages but little income, while another has strong profits but few wages. If the businesses qualify for aggregation, combining them can produce a significantly larger deduction than what results from calculating each business separately.

Businesses that generate losses require special attention as well. A loss from one business can reduce the deduction available from your profitable businesses, making accurate calculations especially important.

The rules governing aggregation are highly technical, and not every business qualifies. In addition, if you elect to aggregate, you generally must continue using that approach in future years unless the facts change.

If you want to discuss how the Section 199A deduction works with multiple businesses, please call me directly at 408-778-9651

• By Leon Clinton
• August 11, 2026

If you’re planning to sell highly appreciated real estate, a closely held business, or private company stock, don’t let the tax consequences become an afterthought. There may be a way to defer the capital gains tax for years—even decades—but only if you plan before the sale.

One strategy worth considering is a deferred sales trust. Instead of selling your asset directly to the buyer, you first sell it to an independent trust in exchange for an installment note. The trust then completes the sale to the buyer. Because you receive payments over time rather than all at once, you generally pay the capital gains tax as those payments are received.

The biggest advantage is that the full pre-tax sale proceeds can remain invested instead of immediately being reduced by taxes. That allows more money to compound over time and may provide a steady stream of retirement income.

Unlike a Section 1031 exchange, a deferred sales trust does not require you to purchase replacement real estate within strict deadlines. It can also provide greater investment flexibility if you’re ready to move beyond real estate.

This strategy, however, is not for everyone. Because the IRS scrutinizes these transactions, they require careful planning before you sign a binding sales agreement, and the trust must be genuinely independent. In addition, unlike a 1031 exchange, a deferred sales trust generally does not preserve the step-up in basis that heirs may receive when appreciated real estate is held until death.

If you want to discuss the deferred sales trust, please call me directly at 408-778-9651.

• By Leon Clinton
• August 9, 2026

If you received an Employee Retention Credit (ERC) refund in 2026 for wages paid in 2020 or 2021, you may have an opportunity to recover the tax you pay on that refund.

The IRS currently says that if you failed to reduce your wage deductions in the original years, you should report the receipt of an ERC refund in 2026 as taxable income in 2026. We have previously recommended following that guidance and filing a protective refund claim to preserve your rights while the legal issues are resolved.

A recent court case, Twitchco, gives that strategy additional support.

In Twitchco, a federal court ruled that the IRS could not use the “tax benefit rule” to tax an improper deduction from a tax year that was already closed by the statute of limitations. That reasoning may apply to many ERC recipients because the wage deductions became improper in 2020 or 2021—not when the refund check arrived in 2026.

This does not mean every taxpayer will win their ERC protective refund claim. The legal authority is limited; other courts have reached different conclusions, and the IRS is expected to defend its position aggressively. Your filing dates, the jurisdiction you live in, and the specific facts of your ERC claim can all affect the strength of your case.

For that reason, the protective refund claim remains the most prudent strategy for most taxpayers. It allows you to comply with current IRS guidance while preserving your right to a refund if the courts ultimately reject the IRS’s position.

If you want to discuss your ERC refund, please call me directly at xxx-xxx-xxxx.

• By Leon Clinton
• August 6, 2026