Santa Monica Tax News

For high-income real estate investors, two of the most powerful tax strategies are 1031 exchanges and cost segregation — but they serve fundamentally different purposes. Many taxpayers view these strategies as interchangeable tools for reducing taxes. In reality, they operate in entirely different ways. One defers gain. The other accelerates deductions. Understanding how each strategy...Continue reading→

Real estate remains one of the most powerful tax-advantaged investments — but for high-income taxpayers, the ability to use losses is often limited. Many investors assume that depreciation and operating losses will offset other income. In reality, the passive activity loss rules frequently prevent those losses from being used currently. For high-income individuals in Santa...Continue reading→

The $10,000 SALT cap continues to be one of the most significant limitations affecting high-income taxpayers — particularly in California. For taxpayers in Santa Monica and throughout the state, the inability to deduct full state and local taxes has materially increased effective federal tax rates. In response, many states — including California — have adopted Pass-Through...Continue reading→

Estimated tax penalties are one of the most common — and avoidable — tax costs for high-income individuals and business owners. Many taxpayers assume that penalties arise only when taxes are unpaid. In reality, penalties are triggered when taxes are paid too late during the year, even if the full amount is ultimately paid by the...Continue reading→

The Limited Partner Exception Has Become a High-Stakes Tax Issue For years, the IRS has aggressively challenged partnerships that exclude limited partners’ distributive shares of income from self-employment tax. The dispute centers on one statutory provision: IRC §1402(a)(13) — commonly known as the “limited partner exception.” In simple terms, the rule states that a limited...Continue reading→

OBBBA 2025 Enhanced Senior Deduction: A Four-Year Planning Window for High-Income Taxpayers Age 65+ The One Big, Beautiful Bill Act (OBBBA) permanently eliminated personal exemptions. At the same time, it introduced a temporary enhanced deduction for taxpayers age 65 and older. For tax years 2025 through 2028, eligible taxpayers may claim: $6,000 per qualifying spouse...Continue reading→

Estimated tax penalties are not triggered by total tax due — they are triggered by timing mistakes. For higher-income professionals, business owners, and investors in Santa Monica, underpayment penalties often arise not from negligence, but from uneven income and miscalculated safe harbor planning. Understanding how penalty calculations actually work can significantly reduce unnecessary interest and...Continue reading→

Estimated tax penalties are one of the most common and avoidable issues facing self-employed individuals, investors, and business owners. With fluctuating income, investment gains, and evolving tax rules, many taxpayers either underpay or miscalculate quarterly obligations. For Santa Monica professionals and small business owners, managing estimated taxes properly is not just about compliance — it...Continue reading→

IRS notices often arrive because of small reporting mistakes rather than intentional noncompliance. With increased automation, data matching, and information reporting, even routine errors can result in correspondence, penalties, or audits. For Santa Monica taxpayers, especially self-employed individuals, investors, and business owners, understanding these common tax traps can help avoid unnecessary stress and expense. Below...Continue reading→

Recent tax law updates affect more than income and deductions — they also reshape retirement planning and compliance requirements. Many of these changes take effect quietly but can have long-term financial consequences if ignored. For Santa Monica taxpayers, especially business owners and high-income earners, retirement strategy and compliance planning are now tightly connected. Below is...Continue reading→

Recent federal tax law changes have reshaped not only how income is taxed, but also how taxpayers should plan ahead. With many provisions now permanent and others newly introduced, proactive tax planning has become more important than ever—especially for California residents navigating a dual federal and state system. Below is a practical overview of key...Continue reading→

The One Big Beautiful Bill Act of 2025 (OBBBA) did more than reshape individual tax rules — it introduced major changes affecting businesses of all sizes. From research deductions and depreciation to employee credits and entity-level planning, OBBBA significantly alters the tax landscape for business owners. Employee Retention Credit: Enforcement and Disallowances Increase OBBBA significantly...Continue reading→