Jeremy Wells, EA, CPA

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 Ledgershttps://www.jwells.tax/p/the-three-ledgers-of-an-s-corporationConnect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://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 Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of Earmark Media

Jeremy breaks down the three ways an S-corporation election can terminate: voluntary revocation (including the lesser-known withdrawal option from the IRM), ceasing to qualify as a small business corporation, and excessive passive investment income. He walks through the specific mechanics of each termination method, from shareholder consent requirements to the 100-shareholder limit and the one-class-of-stock rule.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of Earmark Media

Jeremy dives into the often-overlooked legal requirements for taxpayer recordkeeping under IRC Section 6001, explaining why accurate books aren't just nice to have: they're mandatory. He breaks down the Cohan rule (and why it's widely misunderstood), explores how good recordkeeping can shift the burden of proof to the IRS under Section 7491, and offers practical ways tax professionals can encourage better client recordkeeping without becoming bookkeepers themselves.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of Earmark Media

Jeremy concludes his three-part series on losses by examining IRC Section 1033, the tax code's provision for what happens after you replace property lost to casualty, theft, or government condemnation. When clients receive insurance payouts or condemnation proceeds, they face a critical decision: recognize the gain immediately or defer it by purchasing qualifying replacement property within specific timeframes. Jeremy breaks down the "similar use" requirements, the two to four year replacement periods depending on property type, and how basis carries over to help clients avoid unexpected tax bills when bad things force them to start over.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of the Earmark Media

Jeremy explores the complex world of theft loss deductions, examining how digital asset scams have renewed interest in these tax provisions under the Tax Cuts and Jobs Act. The episode breaks down the three key criteria for claiming theft losses, explains why timing of discovery matters more than when the theft occurred, and analyzes five modern scam scenarios from IRS Chief Counsel guidance including pig butchering schemes and romance scams. Jeremy concludes with a fascinating 1984 court case involving Civil War veterans' land rights that shows even tax court judges can disagree on fundamental questions of tax law.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of the Earmark Media

Natural disasters, accidents, and sudden destructive events can create significant financial hardship, but the tax code provides some relief through casualty loss deductions. This episode breaks down the complex rules governing what qualifies as a deductible casualty loss, including the critical distinction between personal and business losses under the Tax Cuts and Jobs Act. Jeremy walks through the three-part test for casualty losses, calculation methods using fair market value changes, and the reporting requirements on Form 4684, using a real-world hurricane damage scenario to illustrate these concepts.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of the Earmark Media

Jeremy breaks down the complex rules surrounding Section 121's capital gains exclusion for home sales, using the Weber v. Commissioner tax court case to illustrate how taxpayers can lose out on excluding up to $500,000 in gains. The episode covers the critical two-out-of-five year ownership and use tests, explains how rental conversions can disqualify you from the exclusion, and details the partial exclusion exceptions for employment changes, health issues, and unforeseen circumstances. Understanding these nuances is essential since home sales often represent the largest financial transactions in taxpayers' lives.Connect with Jeremyhttps://www.linkedin.com/in/jwellstaxhttps://www.steadfastbookkeeping.comSubscribe on YouTubehttps://www.youtube.com/@TaxinActionEarn CPE for Listening to This Podcasthttps://www.earmark.app/This podcast is a production of the Earmark Media