All Episodes

Jeremy closes out his partnership series by tackling outside basis, how partnership liabilities affect that basis, and what happens when a partner exits. Using a case study of two LLC members with mounting losses, he walks through abandonment, a buyout by the remaining partner, a partnership redemption, and a sale to a third party, comparing the tax results of each. He also covers Section 751 hot assets and why unrealized receivables and appreciated inventory can turn part of a capital gain into ordinary income. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy breaks down how partnerships can divide profits among partners who contribute very different things — cash, property, or just time and effort — without running afoul of federal tax law. Using a hypothetical partnership as a running example, he covers what makes an allocation legitimate versus a tax dodge, and why the IRS cares so much about the difference. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy digs into what actually makes someone a partner for federal tax purposes, tracing the definition back to the Supreme Court's Tower and Culbertson decisions and the "hypothetical liquidation" test for capital interests. From there, he unpacks the messier question of self-employment tax on partnership income: the undefined "limited partner as such" exception under IRC Section 1402(a)(13), and the current circuit split between the Tax Court's functional analysis (Renkemeyer, Soroban) and the Fifth Circuit's state-law approach in Sirius Solutions, with Denham Capital Management still pending at the First Circuit. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Two friends sharing a short-term rental, a married couple flipping houses, siblings splitting the income from a property they own together: any of these could be a partnership for federal tax purposes, often without the owners realizing it. This episode works through how federal tax law defines a partnership, when one actually forms, and why mere co-ownership does not automatically create one, drawing on Subchapter K, the regulations, and foundational cases like Tower and Culbertson. It also separates two regimes that frequently get conflated, the qualified joint venture under Section 761 and the community property LLC exception under Revenue Procedure 2002-69, and closes with a framework for making the call. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

A buyer who wants a business but not its liabilities will often buy the assets instead of the stock, and that one decision reshapes how the entire deal gets reported. This episode breaks down the S corporation asset sale from the ground up: allocating the purchase price across seven asset classes using the residual method under Section 1060, reporting it on Form 8594, and handling goodwill and other Section 197 intangibles. It also covers why each asset's character drives the gain that passes through to shareholders, and what documentation has to be locked down before you prepare a single return. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

When ownership in an S corporation changes hands, the tax consequences routinely catch both clients and their advisors off guard. Jeremy walks through the two critical questions that drive correct reporting — who or what acquired the stock, and when did the transfer actually occur for tax purposes — and explains how the answers determine whether a transaction is treated as a capital sale, a stock redemption, or a distribution. He also covers the two close-the-books elections available under IRC Section 1377(a)(2) and Reg. 1.1368-1(g), and why locking in those elections before filing — ideally before the transaction closes — can make a significant difference in how income gets allocated between outgoing and incoming shareholders. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

S corporations maintain three separate ledgers — retained earnings, AAA, and shareholder stock basis — and each one answers a different question about the entity and its owners. Understanding why they diverge, and which one actually governs whether a distribution is taxable or a loss is deductible, is where a lot of tax professionals run into trouble. Jeremy walks through the mechanics of all three, including Form 7203, the order-of-operations rules for calculating stock basis, and what's really going on when a practitioner misclassifies distributions in excess of basis as shareholder loans. Jeremy's Article on S Corp Ledgers https://www.jwells.tax/p/the-three-ledgers-of-an-s-corporation Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Buying a vehicle through your business sounds like a clean tax win, but the rules around ownership, usage, and substantiation make it far more complicated — and far riskier — than most owners realize. Jeremy breaks down what actually determines whether a vehicle expense is deductible, why mileage logs are full of trips the IRS won't allow, and how a shift in business use percentage can trigger depreciation recapture that wipes out years of deductions. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

The Section 199A qualified business income deduction can put serious tax savings on the table for small business owners — but only if you understand how it actually works. Jeremy walks through who qualifies, how taxable income thresholds and specified service trade or business rules affect the deduction, and how wage and property limitations come into play for higher earners. He also covers the new $400 minimum QBI deduction introduced by the One Big Beautiful Bill Act, effective for tax year 2026. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Part two of worker classification moves beyond the common law control test to cover the specific worker categories defined in the tax code — statutory employees, statutory non-employees, and the rare but real dual-status worker. Jeremy also walks through the relief options available to both employers and workers when a classification goes wrong, including Section 3509, Section 530, and Form SS-8. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Worker classification has never been more complicated—and the stakes for getting it wrong fall on both employers and workers. Jeremy breaks down how federal tax law defines "employee" using the common law control standard, walking through the three categories of evidence the IRS uses to evaluate any working relationship. This is part one of a two-part series on worker classification and misclassification. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Electing S corporation status can be a powerful tax move — but only when it's the right move. Jeremy walks through the technical requirements of Form 2553, how to pursue relief for a late S election under Rev Proc 2013-30, and the ownership, balance sheet, and state tax factors that too many practitioners overlook before recommending the election. If you or your clients have been tempted by an overly simple "just elect S" rule of thumb, this episode is required listening. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Cost of goods sold isn't just a special category of expenses — for tax purposes, it's actually part of the definition of gross income, and only manufacturing, merchandising, and mining businesses qualify to report it. Jeremy breaks down what Treasury Regulation 1.61-3 actually says, why service businesses shouldn't have COGS on their returns even when the financial statements show it, and why getting this wrong can be catastrophic for cannabis businesses operating under IRC Section 280E. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy walks through the case of a Florida surgeon who lost a $288,000 refund after his CPA failed to file three years of returns, exploring how the failure to file and failure to pay penalties work and why they matter so much. He breaks down the critical differences between these two penalties, explains why an extension to file is never an extension to pay, and covers the Supreme Court's position on taxpayer responsibility even when relying on professionals. The episode also details how first time abatement works, what qualifies as reasonable cause for penalty relief, and why the IRS applies its own administrative waivers before considering statutory reasonable cause exceptions. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy breaks down the 2025 Besaw v. Commissioner tax court case, where a taxpayer lost a $6,760 charitable deduction despite everyone agreeing the donation actually happened. The case reveals why blank Goodwill receipts aren't sufficient, what "contemporaneous written acknowledgement" really means under IRC Section 170, and exactly what documentation taxpayers must maintain—whether they're filing Form 8283 or not. Learn the substantiation requirements for non-cash donations under $250, over $250, and over $5,000, plus how to properly value donated household goods and clothing using fair market value standards. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy concludes the three-part series by examining the remaining four fringe benefits from IRC Section 132—qualified transportation, moving expense reimbursements, retirement planning services, and military base realignment benefits—many of which have been significantly limited by recent tax legislation. He also covers achievement awards, athletic facility exclusions, and provides essential guidance on accountable plans, explaining the three critical requirements employers must follow to ensure expense reimbursements remain tax-free for employees while maintaining deductibility for the business. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy continues his series on IRC Section 132 fringe benefits, focusing on working condition fringes and de minimis benefits—two categories that help employees be more productive or boost workplace morale. From company vehicle mileage tracking and employer-provided cell phones to why office snacks are excludable but gift cards never are, this episode clarifies which everyday workplace benefits can legally avoid taxation. Jeremy emphasizes the critical importance of documentation and explains the strict substantiation requirements that apply to many of these benefits. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Section 132 allows employers to provide certain fringe benefits tax-free, but only if they follow specific rules. Jeremy breaks down no additional cost services, like airline employees flying on empty seats, and qualified employee discounts, explaining the 20% cap on services and the gross profit limitation on products. He covers the critical "line of business" requirement, who qualifies as an employee beyond current workers, and why highly compensated employees face stricter rules. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy explores the hobby loss rule through the landmark case of artist Susan Crile, who successfully defended her art business against IRS claims despite reporting losses in nearly all of 25 years. The episode breaks down the nine-factor test used to determine whether an activity has a genuine profit motive, examining how professional conduct, record-keeping, and business decisions matter more than consistent profitability. This case offers crucial lessons for practitioners working with creative professionals, startups, and any clients going through extended periods without turning a profit. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media

Jeremy wraps up his two-part series on S corporation terminations by diving into what happens after an election ends, whether intentional or inadvertent. He explains the IRS's relief procedures for common mistakes like violating the one-class-of-stock rule, the crucial five-year waiting period before re-electing, and why a terminated S corp doesn't just revert back to an LLC but becomes a C corporation instead. The discussion includes real tax court cases and the specific steps needed to clean up termination issues before the IRS discovers them. Connect with Jeremy https://www.linkedin.com/in/jwellstax https://www.steadfastbookkeeping.com Subscribe on YouTube https://www.youtube.com/@TaxinAction Earn CPE for Listening to This Podcast https://www.earmark.app/ This podcast is a production of Earmark Media