Tax

Here’s an important tax planning opportunity—and caution—regarding the deduction of a motor home used for business purposes.

The Jackson case highlights that many taxpayers lose this deduction not because it is invalid, but because it is improperly structured or documented.

When this situation is handled correctly, a motor home can qualify as a business transportation vehicle, a lodging facility, or both, allowing for substantial tax deductions. The key is properly applying the tax rules and clearly establishing business use.

Tax law permits deductions for travel-related lodging when you are “away from home” on business, meaning your business-use motor home expenses qualify as deductions.

The financial benefits can be significant. For example, if you purchase a $300,000 motor home and use it 80 percent for business, you may be eligible for up to a $240,000 first-year deduction using bonus depreciation. Alternative methods, such as Section 179 or MACRS depreciation, can also provide, assuming 80 percent business use, up to $240,000 in deductions, either immediately or over time.

Success depends on proper execution:

• Your business use must exceed 50 percent to avoid recapture of deductions.
• You must maintain detailed records, including logs for business mileage and logs of business nights used for lodging.
• You need to document the business purpose for each trip and overnight stay.
• You establish your travel lodging tax position with Internal Revenue Code Section 280A(f)(4).

Without this documentation, deductions can be denied entirely—as seen in the Jackson case.

In summary, a motor home can be a powerful tax-saving tool when used and documented correctly.

If you want to discuss motor home deductions, please call me directly at 408-778-9651.

• By Leon Clinton
• June 9, 2026

Let’s turn our attention to an increasingly valuable tax planning opportunity involving qualified small business corporation (QSBC) stock, especially in light of recent law changes.

QSBCs—essentially, certain qualifying C corporations—offer powerful tax advantages. Most notably, you may be able to exclude up to 100 percent of the gain on the sale of QSBC stock if you hold it for at least five years. In addition, partial exclusions are now available for shorter holding periods (50 percent after three years and 75 percent after four years), making this strategy more flexible than ever.

There are also generous limits on the amount of gain that you can exclude. Depending on your situation, you may exclude the greater of $15 million (indexed for inflation) or 10 times your investment basis.

Another significant benefit is the ability to defer gains by reinvesting proceeds into other QSBC stock within a specified time frame.

But QSBC status applies only to C corporations—not S corporations. This raises an important question: how can you take advantage if your business currently operates as an S corporation?

There are several potential strategies:

• Revoking S corporation status to convert back to C corporation status
• Forming a new C corporation and transferring assets
• Creating a C corporation subsidiary that qualifies as a QSBC
• Using an asset “drop-down” structure to shift future growth into a QSBC entity

Each option has unique tax implications, including possible recognition of gains during restructuring. In many cases, only newly issued shares will qualify for QSBC benefits, making timing especially important.

In summary, QSBC planning can provide substantial long-term tax savings, particularly for businesses anticipating significant growth or a future sale.

If you want to discuss the QSBC tool, please call me directly at 408-778-9651.

• By Leon Clinton
• May 15, 2026

Here’s an often-overlooked tax strategy that can generate substantial family tax savings when handled correctly. If you pay a family member (or even a non-relative) for a one-time project, the tax treatment can be highly favorable—but only if you follow the proper reporting rules.

For example, paying a college-aged child $23,255 for legitimate services can produce significant benefits. In one case, this created an $8,593 tax deduction for the payor, while the student owed only $713 in tax—resulting in a net family tax savings of $7,880. And of course, the student has the $23,255.

But beware. There are three critical areas where mistakes commonly occur.

1. Form 1099 Reporting

Unlike typical contractor payments, you do not report this income on IRS Form 1099-NEC. Instead, because it is not subject to self-employment tax, you report it in box 3 of IRS Form 1099-MISC. This distinction is essential.

2. Kiddie Tax Treatment

Although many assume the kiddie tax applies, it does not in this case. The income qualifies as earned income because it is payment for actual services performed. Kiddie tax rules apply only to unearned income (such as investment income).

3. IRA Contribution Opportunity

This earned income qualifies as “compensation,” meaning the recipient can contribute up to $7,500 (2026 limit) to a traditional or Roth IRA.

If you want to discuss this one-time project strategy, please call me directly at 408-778-9651.

• By Leon Clinton
• May 15, 2026