Sharon is a real estate professional (not a Realtor®) who owned a number of commercial and residential rental properties. She was also involved in buying and flipping houses. She was actively involved in one aspect of her business and passively involved in another. With no tax planning, she was doing everything as a sole proprietor and not taking advantage of all available deductions. Plus, as a sole proprietor, her current business entity provided no liability protection. Not only was she paying too much in taxes, she was also paying more than she needed to for health insurance for her family, and liability insurance.
Solution: With proper business entity selection for her two business, a plan to accelerate depreciation on the rental properties, employing family members and adding deductible fringe benefits including a health plan, she was able to reduce her taxes, improve cash flow, protect herself from liability and deduct the cost of health coverage and liability insurance.