Author: Leon Clinton

If you own rental property, you may have heard that you’re not required to file Form 1099-NEC for contractors, such as plumbers or handymen. While that’s often true, choosing not to file could be costing you valuable tax savings.

Filing 1099s helps position your rental activity as a trade or business—a critical step if you want to claim the 20 percent Section 199A deduction or deduct repairs under the de minimis safe harbor.

Here’s how it works:

• Section 199A allows a 20 percent deduction on net rental income—but only if your rental qualifies as a business. Filing 1099s supports that claim, and it can be worthwhile. For example, $20,000 in rental income could mean $4,000 in deductions—saving you nearly $1,000 at a 24 percent tax rate.
• The de minimis safe harbor allows you to deduct repair and maintenance costs (up to $2,500 per item) immediately rather than depreciating them over several years. But again, this applies only if the tax code treats your rental activity as a business.

The IRS has made clear that failing to file 1099s may weaken your ability to claim these benefits. Fortunately, this is something you can address proactively.

We can help you evaluate your rentals, determine whether you qualify, and handle the necessary filings and documentation. It’s a small step that could lead to decent savings.

If you want to discuss your rentals, please call me directly at 408-778-9651.

• By Leon Clinton
• June 24, 2025

If you’ve used your personal vehicle for business—whether you’re a sole proprietor or you received mileage reimbursement from your S or C corporation—there may be a valuable tax deduction waiting for you.

When you use the IRS standard mileage rate (or when your corporation uses it to reimburse you), the mileage rate is not just a substitute for gas and maintenance. You’re also claiming “embedded depreciation”—a hidden deduction built into the mileage rate.

Here’s where the surprise comes in: when you sell or trade in that vehicle, you could be eligible for a significant additional deduction tied to that depreciation.

Let’s say you bought a $50,000 vehicle in 2021 and used it 80 percent for business. Over the past 4.5 years, you have accumulated nearly 40,000 business miles and deducted or been reimbursed based on the IRS mileage rate. You then sell the vehicle for $20,000. 

By calculating the business-use portion of the sale and subtracting your embedded depreciation, you might unlock a $12,937 ordinary loss—fully deductible against your other income, under Section 1231 of the tax code.

This isn’t a tax loophole—it’s standard tax law, but it’s often overlooked. And it only applies if your vehicle was

• deducted or reimbursed using the standard mileage rate,
• used at least partially for business, and
• sold or traded in after accumulating depreciation.

If you would like to discuss using your personal vehicle for business, please call me directly at 408-778-9651.

• By Leon Clinton
• June 20, 2025

If your S or C corporation owns a vehicle that you also use personally, there are important tax rules you need to follow—and smart planning can help you save significantly.

Let’s say you use a corporate vehicle 80 percent for business and 20 percent for personal use. The IRS doesn’t allow “free” personal use. You either

• include the value as W-2 income, which increases your tax burden; or
• reimburse the corporation, which often results in lower taxes and no payroll tax implications.

Here’s why this matters: if structured correctly, your corporation can deduct 100 percent of the vehicle’s costs, including depreciation, fuel, insurance, and maintenance—even with some personal use. But there are conditions.

If business use falls below 50 percent, your corporation loses access to accelerated depreciation methods such as Section 179 and bonus depreciation and must use straight-line depreciation instead.

To value your personal use on vehicles that cost more than $61,200, your corporation must use either the IRS’s lease valuation table or a fair-market lease equivalent—plus the actual cost of fuel.

Failing to handle this properly—especially if you wait until after year-end—can create tax headaches, including amended W-2s or non-deductible dividends.

The good news? We can help you get this right. From computing personal use to setting up year-end reimbursements and ensuring full corporate deductions, we’ll make sure your vehicle is a tax asset—not a liability.

If you want to discuss your personal use of your corporation’s vehicle, please call me directly at 408-778-9651.

• By Leon Clinton
• June 17, 2025