MBO CPAs Venice, FL

06/03/2026

🧱 An inherited traditional IRA must be fully emptied within 10 years for most non-spouse heirs, a rule the SECURE Act put in place in 2019.

The stretch IRA, which let heirs spread withdrawals across their own lifetime, is gone.

How the heir times withdrawals inside that 10-year window is where the real tax bill is decided.

On an $800,000 IRA, spreading withdrawals evenly keeps a household earning $180,000 mostly in the 24% bracket, for about $186,000 in federal tax.

Waiting and pulling the entire balance in year 10 stacks $800,000 on top of that income in a single year, reaching the 37% bracket and roughly $256,000 in tax.

That is about $70,000 more for the same inheritance, and it comes entirely from timing.

These figures are federal only, state income tax is on top, and a growing balance raises the amounts further.

One trap: if the original owner had already started required minimum distributions, the heir must take a distribution every year, and missing one carries a 25% penalty on the shortfall.

The planning lever for the original owner is a Roth conversion during their lifetime, which leaves heirs the same 10-year clock but tax-free withdrawals.

Five groups are exempt from the 10-year rule entirely: surviving spouses, minor children until they reach majority, disabled or chronically ill individuals, and heirs less than 10 years younger than the original owner.



P.S. Every Friday I send a short email with the week's top post, my take on the best article I read, and what I'm writing about on the site. Link in the comments.

*The content shared here is for educational and informational purposes only. It is not personalized investment, tax, legal, or financial advice. Consult a licensed professional before making decisions based on your specific situation.*

05/20/2026

Upcoming race in memory of Steve Smith. You don't want to miss this one.

05/20/2026

📊 This is an updated version of a post I ran about 3 months ago. One figure in the original caption was wrong: the IRA catch-up contribution for those 50 and older is $1,100 in 2026, not $1,000. SECURE 2.0 indexed that limit starting in 2024.

The 401(k) deferral limit is $24,500 for 2026. The standard catch-up for ages 50-59 and 64+ is $8,000, bringing the total to $32,500.

The new SECURE 2.0 super catch-up for ages 60-63 is $11,250. A 62-year-old maxing out a 401(k) can contribute up to $35,750 in 2026 when combined with the base deferral.

IRA contributions are $7,500 for 2026, with a $1,100 catch-up for those 50 and older for a total of $8,600. The catch-up is now indexed to inflation.

Three items are marked NEW because they came from the One Big Beautiful Bill Act, not the annual inflation adjustment. The senior deduction gives taxpayers 65 and older an additional $6,000 deduction, phasing out above $75,000 (single) or $150,000 (joint). The SALT cap increased from $10,000 to $40,400 for most filers through 2029. The estate tax exemption was permanently raised to $15,000,000 per person, replacing a scheduled drop to roughly $7,000,000 that was set to happen this year.

The 0% capital gains rate for married filers applies to income up to $98,900 in 2026. The annual gift exclusion is $19,000 per recipient.

All figures apply to the 2026 tax year, with returns due in April 2027.



P.S. Every Friday I send a short email with the week's top post, my take on the best article I read, and what I'm writing about on the site. Link in the comments.

04/20/2026

Remember to talk to your CPA before adding your kids to your deed or transferring your house to your kids.

💰 Adding a child to your deed transfers ownership during your lifetime. The child receives your original cost basis on the transferred portion, not the stepped-up basis they would get if they inherited at death.

The tax math depends on how the transfer is structured. If you deed the entire home to your child (as shown in the image), they inherit 100% of your original basis. On a home bought for $80,000 and worth $350,000 at death, that is a $270,000 taxable gain and up to $40,500 in federal capital gains tax at the 15% rate.

The more common move is adding a child as a joint tenant, which typically transfers 50% ownership. In that case, only the child's half carries the original basis. The parent's half still receives a stepped-up basis at death, reducing the taxable gain to roughly $135,000 and the tax to roughly $20,250.

Adding a child to the deed also exposes the home to the child's creditors, divorce proceedings, and lawsuits. The transfer may trigger Medicaid's lookback period depending on state law.

One exception worth knowing: if the child lived in the home as a primary residence for at least 2 of the last 5 years before selling, the Section 121 exclusion can shelter up to $250,000 of gain ($500,000 if married filing jointly).

A TOD deed avoids the basis problem entirely. No ownership transfers during your lifetime. The beneficiary gets a full stepped-up basis at death. TOD deeds for real estate depend on state law, and not every state allows them.

04/19/2026

📊 The IRS can tax income that was never distributed to you in four distinct scenarios, and each works through a different mechanism.

The mutual fund scenario surprises people every December: a fund manager sells appreciated positions throughout the year, then distributes the realized gains to all shareholders of record — including people who bought shares in November and held them for weeks. The fund can finish the year down 10% and still generate a taxable distribution.

The K-1 phantom gain in real estate is particularly disorienting because investors track two numbers: what they put in and what they got back. If those two numbers look like a loss, they expect a loss on their return. What they don't track is what depreciation deductions did to their tax basis in the years between.

Forgiven debt has one major exception: if you were insolvent at the time of forgiveness — meaning your total liabilities exceeded total assets — the canceled debt income can be excluded, up to the amount of insolvency. This requires filing Form 982 and documenting your financial position at the time of cancellation.

The K-1 business income scenario applies to any pass-through entity. S-corps, general partnerships, and limited partnerships all work this way. The business can have a profitable year on paper, retain all the cash for reinvestment, and issue K-1s that create tax liability for every owner.

None of these four scenarios involve a tax error. They are working as designed.

The insolvency exclusion for canceled debt and the suspended passive loss offset for real estate phantom gains are the two most commonly overlooked ways to reduce the tax hit.

04/18/2026

If you owe the IRS, here is a tool

Taxpayers can explore payment plans, collection delays, or compromise offers through a streamlined, privacy protected tool.

04/16/2026

Here is a good article on many things I am asked about.

📊 Gifts you receive are not taxable income regardless of amount. The $19,000 annual exclusion determines whether the giver must file a gift tax return (Form 709).

Even above $19,000, no gift tax is owed until the giver exceeds the $15 million lifetime exemption. The recipient never owes income tax on a gift.

Inheritances now includes the caveat that inherited retirement accounts are taxed on withdrawal. An inherited Traditional IRA is taxable as ordinary income when distributions are taken. An inherited Roth IRA is generally tax-free if the original account met the 5-year rule.

Tips and overtime are now correctly framed as federal income tax deductions under the OBBBA, not full exclusions. The income is still reported, still subject to Social Security and Medicare payroll taxes, and still potentially subject to state income tax. The deduction applies to federal income tax only, for 2025 through 2028.

Social Security was the most-asked-about omission across all three versions of this post. It is not on the list because it is not fully tax-free. Up to 85% of Social Security benefits can be taxed depending on combined income. Taxation begins at $25,000 combined income for single filers and $32,000 for married filing jointly.

The 0% long-term capital gains rate applies based on taxable income, not gross income. The 2026 standard deduction ($16,100 single / $32,200 MFJ) reduces your AGI before the threshold is applied.

VA disability benefits have been excluded from federal income tax for decades. The prior version incorrectly labeled this as new.

04/15/2026

Today is April 15. Not only are 2025 tax returns due, but first quarter estimated tax payments are also due. If you need to make a quick payment, you can use your Online Account.

Get started at www.irs.gov/estimatedtaxes.

02/28/2026

02/26/2026

Taxpayers are shifting back toward human tax professionals, with trust in AI for filing slipping across every generation, survey shows.