Bourbonnais Tax Associates LLC

07/16/2026

Before you pay that IRS penalty notice — the rules just changed.

Last week, the IRS announced the Automatic Exemption from Penalty — a new program that replaces the old First Time Abatement process. Same eligibility. No longer requires you to know to ask. Here are three things you need to know right now:

1️⃣ First Time Abatement was always available. Three years of clean compliance history — no penalties in the prior three years, returns filed, taxes paid — and your current penalty goes away. Failure to file, failure to pay, failure to deposit. Individuals, S corps, partnerships, corporations — all eligible. About 1.5 million people qualified each year. Only 220,000 were getting it because most didn't know it existed.

2️⃣ The IRS just made it automatic — but we're in the transition. The new Automatic Exemption from Penalty (AEP) applies to 2025 returns and 2026 quarterly filings. Some qualifying taxpayers are still receiving penalty notices right now because their returns were processed before the system was ready. Check your IRS transcripts before you pay anything. If you got a notice and believe you qualify, call the IRS — you can still request FTA manually during the transition.

3️⃣ For small partnerships, there's a second tool — and the IRS uses the wrong one first. Revenue Procedure 84-35 abates late filing penalties for qualifying small domestic partnerships (10 or fewer individual partners) without the three-year reset that FTA and AEP carry. But the IRS applies FTA first. If AEP consumes the abatement card on a filing penalty, you may not have it available for a different penalty next year. For qualifying partnerships, explicitly invoking 84-35 preserves FTA.

If you've gotten a penalty notice recently — or you're expecting one — don't write the check before you've looked at your options.

▶️ Check the video for more

07/13/2026

Join us Tuesday evening!

𝐓𝐑𝐄𝐈𝐀 𝐖𝐚𝐤𝐞 𝐅𝐨𝐫𝐞𝐬𝐭
July 14, 2026, 6:30 PM - 8:30 PM

Carolina Ale House, 11685 Northpark Drive, Wake Forest NC 27587
Hosted by Bill and Laura Bourbonnais

This month:

𝑻𝒉𝒆 𝑻𝒓𝒖𝒕𝒉 𝑨𝒃𝒐𝒖𝒕 𝑨𝑰 𝒊𝒏 𝑹𝒆𝒂𝒍 𝑬𝒔𝒕𝒂𝒕𝒆 𝑰𝒏𝒗𝒆𝒔𝒕𝒊𝒏𝒈 𝒘𝒊𝒕𝒉 𝑷𝒂𝒖𝒍 𝑵𝒐𝒗𝒂𝒌, 𝒇𝒐𝒖𝒏𝒅𝒆𝒓 𝒐𝒇 𝑹𝒐𝒄𝒌𝒚

Paul Novak brings 20 years of pharmaceutical operations and data analytics into real estate investing, where he's spent the last several years building and testing his own portfolio. He's the founder of Rocky, an AI-powered confidence engine built to help investors cut through the noise on deal analysis, sharpened through his own live deals and his firsthand experience on where AI genuinely helps investors and where it can lead them astray. He speaks on practical AI for real estate investors: what it's good for, where it fails, and how to evaluate any tool before trusting it with capital decisions.

Events

07/10/2026

Your tax return just told you what you owed.

Here are three things it didn't tell you.

1️⃣ What you could have saved. The return is a compliance document — backward-looking by design. The planning window for most of those numbers closed December 31. Reading it in April and not liking the number? You're reading a history book.

2️⃣ The gap. Taxable income is not the same as what taxable income could have been. The deductions you qualified for but didn't take, the entity structure that would have worked better, the timing decisions that weren't made — none of it shows up on any line. For business owners and real estate investors, that gap can be tens of thousands of dollars a year.

3️⃣ Whether you're ahead or behind. A big refund isn't a win — it's an interest-free loan to the IRS. Owing a small balance isn't a failure — it may mean your cash flow was managed well. The bottom line doesn't tell you whether your tax situation is well-managed. Only a forward-looking plan does.

Your return is the scoreboard after the game. Strategy happens during the game.

▶️ Details in the video.

07/10/2026

"Please do not confuse your TikTok videos with my Certified Tax Planner license."

I keep this shirt for a reason. Because social media tax advice isn't always wrong - but it almost always leaves out the part that matters.

New Three Things Thursday - three tax strategies going viral right now, and what the videos aren't telling you:

1️⃣ The truck deduction. Section 179 and bonus depreciation are real. But 100% deduction requires 100% business use. Zero miles = zero deduction. And when you sell? Depreciation recapture comes due — and the video that got you excited won't be there to explain the bill.

2️⃣ Hiring your kids. Real strategy. But the IRS requires reasonable compensation for actual work. Stock photos of babies cost less than a box of Pampers. And S corp owners — F**A taxes still apply to your kids' wages. The sole proprietor exemption doesn't follow you into the S corp.

3️⃣ The Augusta Rule and the Ferrari. Section 280A(g) is real — rent your home to your business for up to 14 days, rental income is tax-free. But fair market value applies to your actual home. For most people, this saves a few thousand dollars a year. It is not how someone pays zero tax on seven million dollars of income. The Ferrari math doesn't work.

Before you act on anything you see in a tax video, run it by someone who has to answer for it under Circular 230.

▶️ Video link in the comments.

06/25/2026

"How much more can I take in distributions before I hit the next tax bracket?"

It's a common question. It's also the wrong question.

New Three Things Thursday — three things every S corp and partnership owner needs to know about profit and distributions:

1️⃣ Profit is taxable. Distributions are not. You're taxed on your share of the business's net income as reported on your K-1 — not on what you take out. Distributions are the cash transfer of profits you've already been taxed on.

2️⃣ When you take the money out doesn't change what you owe. Leaving money in the business doesn't reduce your tax bill. Your K-1 is based on profit earned, not cash distributed. Owners who don't understand this end up with a big tax bill and insufficient cash to pay it.

3️⃣ Your P&L and your tax return are often different numbers. Accounting profit and taxable income aren't the same. Non-deductible expenses push taxable income up. Section 179 and bonus depreciation push it down. That gap is where tax planning lives.

If you run an S corp, a partnership, or a multi-member LLC — this one's worth your time.

06/18/2026

You can owe income tax to a state you've never lived in.

In some cases — a state you've never even visited.

New Three Things Thursday — three things about state income tax nexus that most business owners and real estate investors were never told:

1️⃣ Physical nexus follows activity. Own rental property in another state? That property is your physical presence there. During the rental years it may not matter much — losses often mean no income to tax anyway. But when the property sells, the gain is sourced to where the property is. Not where you live. Where it sits.

2️⃣ Wayfair changed the rules. Quill v. North Dakota gave businesses a physical presence shield for 26 years. South Dakota v. Wayfair (2018) removed it for sales tax — and states immediately started applying the same economic nexus logic to income tax. You don't have to set foot in a state to potentially owe them taxes anymore.

3️⃣ One remote employee can create nexus you never planned for. The post-COVID shift to virtual work created income tax exposure across state lines for thousands of businesses. Factor-based nexus, convenience of the employer doctrine — these are real obligations most business owners discovered after the fact.

If you have employees in multiple states, own out-of-state real estate, or your clients span state lines — this one's for you.

05/21/2026

The IRS charged a lot of people penalties and interest during COVID. A federal court just said those charges may not have been legal.

Three things you need to understand before July 10th - and one of them involves a change to USPS postmark rules that almost nobody knows about.

05/14/2026

Bonus depreciation is back at 100%.

Which means the cost segregation pitch is everywhere right now. And most of the people selling these studies aren't asking the most important question first.

New Three Things Thursday — three things about cost seg you probably weren't told:

1️⃣ The strategy is legitimate. Your tax situation might not be. Accelerated depreciation only helps you if you can actually deploy the losses. The passive activity rules determine that — and if you're above the income thresholds with no path to non-passive treatment, you just paid for a study that generated suspended losses you may never use.

2️⃣ Online instant cost seg tools are not engineering studies. The IRS Audit Technique Guide was updated in 2025. The AmeriSouth case is now cited 21 times in that guide — nearly as many as the landmark HCA case that set the original standard. IRS examiners are using it. Online tools have no engineering basis and nobody to defend the work.

3️⃣ The exit math matters. Unrecaptured Section 1250 gain waits at the sale at 25%. Your hold period, your tax bracket at exit, whether a 1031 is in the plan — all of it has to be modeled before cost seg makes sense. A 1031 defers the recapture. It doesn't make it disappear.

If someone's pitching you on cost seg right now, watch this first.

▶️ Watch the video here.

04/17/2026

If your rental real estate is throwing off losses you can't seem to use - you're not doing something wrong.

You may just be caught in a trap most investors don't know exists.

New Three Things Thursday - why your rental losses are stuck, and what it actually takes to unstick them:

1️⃣ Rental real estate is passive by default. Always. Passive losses can only offset passive income - not your wages, not your business income. There's a limited $25,000 exception, but it phases out starting at $100,000 of income and has never been inflation-adjusted since 1986.

2️⃣ Real Estate Professional Status (REPS) is the gateway that converts rental losses to non-passive. But it requires more than 50% of your total working hours in real estate AND 750+ hours annually — and married couples can't combine hours. You still need material participation in each property.

3️⃣ REPS is a specific tool for a specific problem — not a master key. It doesn't override basis limitations, your Realtor® spouse doesn't qualify you, and it won't survive audit without documentation. Section 162 status is a lower bar for some issues, but it opens the QBID door in both directions — profitable years and loss years. You don't get to choose.

If you own rental real estate - or you're planning to - these distinctions matter.

▶️ Watch our video for more

04/08/2026

𝗛𝗲𝗮𝗱𝘀 𝗨𝗽 - 𝗧𝗵𝗲 𝗣𝗼𝘀𝘁 𝗢𝗳𝗳𝗶𝗰𝗲 𝗝𝘂𝘀𝘁 𝗖𝗵𝗮𝗻𝗴𝗲𝗱 𝘁𝗵𝗲 𝗥𝘂𝗹𝗲𝘀, 𝗮𝗻𝗱 𝗜𝘁 𝗖𝗼𝘂𝗹𝗱 𝗔𝗳𝗳𝗲𝗰𝘁 𝗬𝗼𝘂𝗿 𝗧𝗮𝘅 𝗗𝗲𝗮𝗱𝗹𝗶𝗻𝗲

Here's something most people don't know: under federal tax law, if you mail a tax return or payment and the postmark is on or before the due date, the IRS considers it on time — even if it arrives later. That's been the rule for decades.

The problem? The U.S. Postal Service quietly changed how postmarks work, effective December 24, 2025.

**Here's what changed.**

Under the old system, your postmark reflected the day you dropped something in a mailbox or handed it to a postal worker. Under the new rules, the postmark isn't applied until your mail reaches an automated processing facility — and that could be one to three days *after* you actually mailed it.

Drop a return in a blue mailbox on Wednesday and your mail doesn't hit a processing facility until Friday? Your postmark reads Friday, not Wednesday. If your deadline was Thursday, you just filed late — even though the envelope left your hands before the deadline.

**Who this affects most:**

- Anyone mailing a return, extension request, or tax payment close to a deadline
- Taxpayers in rural areas (mail travels further before it hits a processing facility)
- Anyone filing paper-only forms like Form W-7 or Form 706

**What to do instead:**

1. **File and pay electronically whenever possible.** You get instant confirmation and zero postmark risk. This is the cleanest solution.

2. **If you must mail something close to a deadline, go inside the post office.** Don't use the blue box. Walk up to the counter and use Certified Mail, Registered Mail, or ask for a Postage Validation Imprint. This gives you a receipt that proves your mailing date.

3. **A stamp and a mailbox is no longer enough protection near a deadline.** That's the short version.

**The bottom line:**

This change flew under the radar, but the IRS didn't update the rules to match — a postmark that's one day late is still a late filing. The penalty exposure is real. April 15 is a week away. If you're mailing anything to the IRS between now and then, take the extra five minutes and do it right.

Questions? Drop a comment below.