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Jason Arsenault CPA, LLC, 204 East Aztec Avenue, Gallup, NM (2026)

09/22/2026

Own Rental Property? Here's a Tax Form Landlords Often Overlook.

You hire a plumber.

A painter.

A handyman.

Maybe an accountant or property manager.

Then tax season arrives.

Should you be issuing 1099s to the people working on your rentals?

For some small landlords, the answer may be no.

But there's another question worth asking:

Are you treating your rental like an investment—or like a business?

That distinction can matter.

Rental real estate that qualifies as a trade or business may potentially qualify for the Section 199A Qualified Business Income deduction.

The IRS also provides a special rental-real-estate safe harbor that can help certain landlords establish business treatment for §199A purposes when its requirements are satisfied.

And landlords may have another valuable tool:

The $2,500 De Minimis Safe Harbor

If you don't have an applicable financial statement, qualifying purchases of tangible property costing $2,500 or less per invoice or item may potentially be deducted rather than capitalized and depreciated.

Here's where planning matters.

If you're telling the IRS:

"My rental operation is a business."

Your bookkeeping, documentation, information reporting and overall tax treatment should support that position.

Don't wait until you're preparing the return to decide how you're treating the rental.

Run It Like a Business.

Separate books and records
Track rental services and hours when relying on the §199A safe harbor
Collect W-9s from contractors when appropriate
Determine which information returns you're required to file
Document repairs and improvements
Make applicable tax elections on time

Good rental-property tax planning isn't just finding deductions.

It's making sure the entire tax return tells the same story.

09/21/2026

Selling Your Business or Investment Property?
Ask Yourself: Do I Really Want All the Money This Year?

Suppose you've spent 20 years building a business.

You sell it for $1 million.

The buyer pays you $1 million at closing.

That's great...

Until you realize you've potentially triggered a very large taxable gain in one year.

But what if you don't need all $1 million today?

That's where an installment sale may be worth considering.

What If the Buyer Paid You Over Time?

Instead of:

$1,000,000 today

you might negotiate:

$200,000 down

plus payments over the next several years.

If the transaction qualifies, you generally recognize the eligible installment gain as you receive the payments.

That potentially gives you:

Cash flow over several years

Tax deferral

The possibility of recognizing income in different tax years

Interest income on the seller-financed balance

More financing flexibility for the buyer

How Does the Tax Work?

Each payment isn't necessarily entirely taxable.

Generally, a payment can contain:

1. Interest — generally taxable as ordinary income.

2. Gain — calculated using the installment-sale gross-profit percentage.

3. Return of basis — generally not taxable.

Here's a simplified example.

You have a $600,000 contract price and $150,000 gross profit.

Your gross-profit percentage is:

$150,000 ÷ $600,000 = 25%

After accounting for interest, generally 25% of each principal payment represents installment gain, while the remaining 75% represents recovery of basis.

That's fundamentally the same concept described in the article and remains part of the IRS's current installment-sale rules.

But Ask These Questions Before You Do It

Am I comfortable becoming the bank?

You're trading some cash today for a promise that the buyer will pay you tomorrow.

That creates credit risk.

A tax deferral isn't particularly valuable if the buyer never pays you.

What exactly am I selling?

Not everything qualifies.

For example, the installment method generally isn't available for regular inventory sales, dealer property held for sale to customers, or publicly traded stocks and securities.

And selling an entire business can be more complicated because you're often selling multiple assets. The tax treatment doesn't necessarily apply uniformly to every dollar of the purchase price.

Does the property have depreciation recapture?

This is a big one.

An installment sale doesn't necessarily mean you can spread all of the tax over the payment period. Depreciation recapture can have to be recognized in the year of sale even though you haven't received all the cash yet.

Am I charging enough interest?

You can't simply sell something for $1 million over 15 years at 0% interest and characterize every payment as purchase price.

Federal rules can impute interest when a seller-financed transaction doesn't provide adequate stated interest. The applicable rates change monthly.

Am I selling it to a relative?

Be careful.

Related-party installment sales have additional rules. For example, if the related buyer disposes of the property within two years, the original seller can be forced to recognize additional gain, subject to exceptions. And installment treatment for depreciable property sold to certain related persons is generally restricted unless an exception applies.

Here's the Bigger Question

When somebody offers you $1 million for your business or investment property, the first question shouldn't necessarily be:

"How much will I get?"

It should also be:

"How and when should I get paid?"

Those can be two very different tax questions.

An installment sale won't eliminate your gain.

It can change when you recognize it.

And sometimes controlling when income hits your tax return is one of the most valuable tools in tax planning.

09/16/2026

Could Hiring Your Child Lower Your Business Taxes?

If you own a business and your teenager helps with:

Social media
Inventory
Cleaning the office
Website
Filing and scanning
Taking photos
Other legitimate business tasks

Here's a question worth asking:

Why give your child an allowance when your business could potentially pay them wages?

Done correctly, hiring your child can create several tax-planning opportunities.

First: Your business gets a deduction.

If your child actually works in the business and receives reasonable compensation, their wages can generally be a deductible business expense.

Giving your child $10,000 from your personal bank account doesn't create a business deduction.

Paying them $10,000 for legitimate work potentially does.

Second: Your child may owe little or no federal income tax.

The article uses the 2026 single standard deduction of $16,100. A child with $16,100 of wage income and no other complications could potentially have no federal taxable income after the standard deduction.

But here's where it gets really interesting.

Third: You've created earned income for a Roth IRA.

For 2026, the article identifies the IRA contribution limit as $7,500, limited by the child's earned income. It makes the excellent point that when the child's current federal tax is already zero, a Roth can make considerably more sense than taking a traditional IRA deduction that's worth nothing today.

Imagine your 14-year-old legitimately earns $7,500 working in the family business.

That could potentially mean:

Business deduction for Mom and Dad → $7,500 of earned income for the child → $7,500 contributed to a Roth IRA.

Now you've moved beyond saving taxes.

You're potentially starting your child's retirement account decades before most people do.

And What About Payroll Taxes?

This is where your business entity really matters.

If a child under 18 works for a parent's sole proprietorship, wages generally aren't subject to Social Security and Medicare taxes.

The same treatment can apply to a partnership where each partner is a parent of the child. Wages to the child are also generally exempt from FUTA until age 21.

But...

An S Corporation Is Different.

Your S corporation isn't your child's parent.

The special parent-child payroll-tax exemption doesn't apply, so wages paid by the S corporation are generally subject to the normal payroll taxes.

That doesn't mean an S-corp owner shouldn't hire their child.

It means the tax benefit isn't identical.

Don't Just Put Your Kid on Payroll

This is where people can get themselves into trouble.

Ask:

Does my child actually perform work?

Is the work appropriate for their age?

Am I paying what I would reasonably pay someone else for that work?

Am I tracking their hours?

Am I actually paying the money to my child?

Am I running it through payroll and issuing a W-2?

The article recommends contemporaneous time sheets, documentation supporting the pay rate, payroll checks and an audit trail into the child's account.

And there's a great cautionary story in the article: a lawyer employed her young children but didn't issue W-2s, maintain payroll records or retain evidence such as checks and time sheets. The court dramatically reduced her deductions and imposed penalties.

One More 2026 Wrinkle: QBI

There's something business owners can easily overlook.

Wages paid to your child reduce business income and therefore can also reduce the Section 199A/QBI deduction.

So you shouldn't calculate the tax savings simply as:

Child's wages × parent's tax bracket.

09/04/2026

What If Your Child Doesn't Use All Their 529 Money?

That's one of the biggest concerns I hear about 529 plans.

"What happens if I save all this money and my child doesn't go to college?"

The answer has gotten a lot better.

Ask yourself:

Could another child use it?

Could it pay eligible student loans?

Could it be used for an apprenticeship or other qualifying education?

And here's the one many parents still don't know about:

Could I turn some of it into my child's retirement savings?

Potentially, yes.

Under current law, as much as $35,000 of qualifying unused 529 money can potentially be rolled into a Roth IRA for the beneficiary over time.

For 2026, the annual transfer can generally be as much as $7,500, subject to the beneficiary's IRA contribution limit and compensation.

There are rules.

The 529 generally needs to have been open for more than 15 years.

Recent contributions are subject to a five-year lookback.

The transfer needs to go directly to the beneficiary's Roth IRA.

And the lifetime limit is $35,000.

But think about what that could mean.

A child finishes school with money left in the 529.

Instead of Mom and Dad thinking:

"What are we going to do with this?"

Some of that money could potentially become the beginning of the child's retirement account.

And if you're in New Mexico, 529 planning is especially worth looking at because New Mexico's Education Plan provides a state income-tax deduction for contributions.

Maybe the better question isn't:

"What if I put too much in a 529?"

It's:

"Am I taking advantage of all the ways a 529 can now be used?"

Arsenault CPA Firm

09/01/2026

Can I Hang My Baseball Card Collection in My Office and Write It Off?

It's a question a business owner could reasonably ask.

"I've got $20,000 worth of baseball cards, signed jerseys and autographed baseballs. What if I decorate my office with them? Now they're being used in my business. Can I depreciate them?"

Probably not.

And it brings up an interesting tax rule.

Ask Yourself: Is This Actually Something That Wears Out?

For property to qualify for depreciation, the IRS generally requires it to have a determinable useful life.

Think:

Computers become obsolete.

Office furniture wears out.

Equipment deteriorates.

Vehicles accumulate miles.

But what happens to a Mickey Mantle baseball card hanging on your office wall?

Hopefully...

Nothing.

In fact, you probably bought it expecting it to maintain or increase in value.

Putting something in your office doesn't automatically make it depreciable.

What About My Signed Jersey?

Same question.

Is this a normal business display that actually has a limited useful life?

Or is it really a valuable collectible that you're displaying in your office?

Those aren't necessarily the same thing.

The IRS itself distinguishes between potentially depreciable business displays and non-depreciable art, antiques and collectibles.

Here's Another Question to Ask Yourself

Why do I own the collection?

That can lead us down an entirely different tax road.

Are you:

A collector?
You're primarily collecting because you enjoy it.

An investor?
You're buying memorabilia expecting it to appreciate.

Running a collectibles business?
You're regularly buying and selling memorabilia with a genuine profit motive.

A dealer?
You're holding cards and memorabilia primarily for sale to customers.

Those distinctions matter.

For example, property held primarily for sale to customers is generally inventory, and inventory isn't depreciated.

And if you're holding collectibles as investments, the tax treatment when you eventually sell them is different from ordinary stocks and other investments. Long-term collectibles gains can fall into the special 28% rate-gain category.

So Before You Move Your Baseball Cards Into the Office...

Ask yourself:

Am I actually using these in my business?

Do they have a determinable useful life?

Are they really collectibles or investments?

Am I actually in the business of buying and selling memorabilia?

And perhaps the most important question:

Would I have bought these if I didn't own a business?

Putting your personal collection on the office wall doesn't magically turn it into a tax deduction.

Although it might make for a pretty great office.

08/31/2026

You Trade Stocks. But What Does the IRS Think You Are?

Buying and selling stocks doesn't automatically make you a stock trader for tax purposes.

For federal taxes, you could be an:

Investor. Trader. Or Dealer.

And those classifications can produce very different tax results.

Ask Yourself These Questions

1. Am I buying stocks primarily to build wealth over time?

Do you expect to make money from appreciation, dividends and interest?

Do you commonly hold investments for longer periods?

Do you trade when opportunities arise rather than continuously?

You're probably closer to an INVESTOR.

That's where most people fall.

Your gains and losses generally receive capital treatment. Long-term holdings can qualify for preferential capital-gain rates, but capital losses are generally limited to $3,000 against ordinary income each year, with the remainder carried forward.

And unlike when this article was originally written, investors generally cannot deduct ordinary investment-management expenses as miscellaneous itemized deductions under current law.

2. Am I trying to make money from DAILY movements in stock prices?

Ask yourself:

• Do I trade frequently?

• Are my holding periods generally short?

• Is the dollar volume substantial?

• Do I trade continuously and regularly throughout the year?

• Do I spend significant time doing it?

• Am I pursuing trading as a meaningful source of income?

You might qualify as a TRADER.

Calling yourself a “day trader” doesn't make you one.

The IRS looks at what you actually do.

And trader status can matter.

A qualifying trader can deduct ordinary and necessary trading-business expenses on Schedule C.

But here's something that surprises people:

Your trading profits generally aren't subject to self-employment tax.

3. Do I buy and sell securities TO CUSTOMERS?

This is completely different.

Are you acting as a merchant, intermediary or market maker?

Do you regularly buy or sell securities to customers as part of your business?

Now we may be talking about a DEALER.

Most individuals buying and selling stocks through their own brokerage accounts aren't dealers.

The distinguishing feature is customers.

And Here's the Really Interesting Question...

4. If I'm a trader, should I elect Mark-to-Market treatment?

A qualifying trader can potentially make a Section 475(f) mark-to-market election.

Without the election, a trader's securities gains and losses generally remain capital.

With a valid election, trading-business securities are generally treated as if sold at fair market value at year-end, and the resulting gains and losses are ordinary.

That means:

Trading losses generally aren't subject to the $3,000 capital-loss limitation.

Wash-sale rules generally don't apply to securities covered by the election.

You also give up capital-gain treatment on those trading positions.

And this isn't something you generally decide after having a terrible year.

The election has a strict deadline. For example, the IRS says the election for 2026 generally had to be made by the unextended due date of the 2025 return.

So Ask Yourself:

Am I investing?

Am I actually operating a trading business?

Am I selling securities to customers?

And if I'm a trader, have I considered the Section 475 election before the deadline?

Those aren't just labels.

They can completely change how your gains, losses and expenses are treated for taxes.

08/26/2026

Fraud Has Always Been Part of Business. AI Is About to Change It.

Business fraud isn't new.

Someone pockets cash.

An employee creates a fake vendor.

A bookkeeper pays themselves twice.

A company creates shell companies to move money around.

We've been dealing with versions of these schemes forever.

But AI changes the game.

Imagine an employee creating a fake vendor.

AI can help create the company name, logo, website, invoices, email correspondence and supporting documents.

Need approval from the boss?

A fraudulent email can sound exactly like the boss.

We're already at the point where even a voice or video call isn't necessarily proof.

In one case, a finance employee transferred approximately $25 million after participating in a video conference with what appeared to be the company's CFO and several coworkers.

They were all deepfakes.

That's the scary side of AI.

But There's Another Side.

AI is also becoming a very powerful fraud detector.

Instead of an accountant manually looking through thousands of transactions, technology can analyze huge amounts of financial data looking for things that don't make sense.

For example:

A vendor sharing an address with an employee.

Payments consistently just below an approval limit.

Duplicate invoices with slightly different descriptions.

Payments at unusual times.

A new vendor suddenly receiving large payments.

Transactions that don't match the company's historical patterns.

That doesn't mean AI replaces the accountant.

It gives the accountant a much bigger flashlight.

And I think that's where business accounting is headed.

Instead of discovering fraud six months later during an audit or reconciliation, accounting systems will increasingly be capable of asking:

"Why did this transaction happen?"

almost immediately.

The FBI already describes business email compromise as one of the most financially damaging online crimes, and AI makes impersonation increasingly convincing.

What Should Small Business Owners Do?

The answer isn't complicated.

Don't let AI replace internal controls.

A phone call to a known number before changing a vendor's bank information is still valuable.

Two people approving large payments is still valuable.

Bank reconciliations are still valuable.

Separating who enters bills from who approves payments is still valuable.

And having someone regularly review the financial statements is still valuable.

AI will make fraudsters better.

Hopefully, it's also going to make accountants better at catching them.

08/21/2026

Buy Inventory in December...Deduct It in December?

That sounds wrong.

But for some qualifying small businesses...

It may be possible.

Most business owners assume inventory works like this:

Buy products.

Put them on the shelf.

Wait until they're sold before getting a tax deduction.

That's still true for many businesses.

But some qualifying small businesses using the cash method and the proper accounting method may be able to deduct inventory when it's purchased and received, even if it's still sitting on the shelf at year-end.

Here's the Catch

This isn't a year-end tax trick.

It depends on how your books are maintained throughout the year.

If your accounting system treats purchases as inventory assets...

You generally don't get an immediate deduction.

If your books consistently expense qualifying purchases under an allowable method...

The tax result follows your books.

This Is Why Setup Matters

The biggest mistake I see isn't buying inventory...

It's letting QuickBooks make accounting decisions for you.

Many businesses unknowingly use the default inventory setup and miss planning opportunities simply because that's how the software was originally configured.

Before You Make a Large Year-End Purchase...

Ask yourself:

Does my business qualify?

Are my books using the correct accounting method?

Am I buying real inventory for business—not just chasing a tax deduction?

Tax planning isn't just about what you buy.

Sometimes it's about how your books are set up before you buy it.

One accounting method could change the timing of a six-figure deduction.

08/20/2026

Think Your QuickBooks Is Fine?

These 3 mistakes could be costing your business thousands.

Every tax season, I meet business owners who tell me,

"My QuickBooks is up to date."

Then we open the file...

Duplicate income.

Missing expenses.

Accounts that haven't been reconciled in months.

Here are the three biggest mistakes I see:

1. Never Reconciling Your Bank Accounts

If your books don't match the bank, your financial statements probably aren't accurate.

One small mistake today can become dozens of errors by year-end.

2. Using the Default Chart of Accounts

QuickBooks isn't customized for your business.

If your chart of accounts isn't set up correctly, your Profit & Loss statement may not tell the real story.

Good decisions require good numbers.

3. Entering Everything Manually

QuickBooks' bank feeds exist for a reason.

Manually entering transactions often leads to duplicates, missed transactions, and wasted hours.

Here's the Real Cost...

Messy books don't just create headaches.

They can lead to:

Missed tax deductions

Poor business decisions

IRS problems

Expensive cleanup work later

The good news?

All three mistakes are fixable.

And it's much cheaper to fix them now than during tax season.

08/19/2026

Self-Employed and Receive Tips?

There's good news...and one important catch.

If you're self-employed and receive tips from your clients, Congress created a new tax deduction that could reduce your federal income tax.

That includes many professions like:

Hair Stylists

Barbers

Dog Groomers

Massage Therapists

Nail Technicians

Tattoo Artists
..and many other service businesses.

Here's How It Works

Your tips are still part of your business income.

That means they belong on your Schedule C and are generally still subject to self-employment tax (Social Security and Medicare).

But...

Those same tips may qualify for a separate deduction that reduces your income tax.

Don't Make This Mistake

Don't issue yourself a Form 1099.

Instead...

Report all of your tips as business income.

Keep good records.

Save reports from your POS system, booking software, or daily tip logs.

One More Thing...

If you receive cash tips...

Keeping accurate records is more important than ever.

Good documentation can make all the difference if the IRS ever asks questions.

The goal isn't to hide tips.

It's to report them correctly...
..and claim every deduction you're legally entitled

Jason Arsenault CPA, LLC

09/22/2026

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