McGregor Tax & Accounting, Inc.

🏠 Your First House Flip Lost Money. Can You Deduct the FULL Loss?

If your first house-flipping project ended in a loss, don’t automatically assume you’re stuck with the $3,000 capital loss limitation.

Depending on the facts and circumstances, you may be able to deduct the entire loss in the current year.

The key question is:

👉 Are you a real estate INVESTOR or a real estate DEALER?

Investors generally report their properties as investments, which can subject losses to the capital loss rules—including the $3,000 annual limitation against ordinary income.

Dealers, on the other hand, are considered to be operating a business. Their losses can generally be deducted against ordinary income without the $3,000 capital loss limitation.

But here’s where it gets interesting…

🚨 Dealer status isn’t determined simply by how many houses you’ve flipped.

The IRS and courts look at the facts and circumstances, including:

• Why did you purchase the property?
• Did you substantially renovate or rehabilitate it?
• How quickly did you put it on the market?
• Were you actively involved in the project?
• Did you operate in a businesslike manner?
• Did you have a business plan and maintain appropriate records?

And there’s an important trade-off.

Dealer treatment may allow you to deduct losses currently, but when those flips become profitable, the profits are generally ordinary income rather than capital gains.

Dealer property also generally does not qualify for Section 1031 treatment or installment-sale reporting.

📌 Thinking about turning house flipping into a business?

Set it up correctly from the beginning. Maintain a written business plan, keep separate books and bank accounts, track your time and expenses, and consistently treat the activity as a business.

The tax treatment of that first flip can make a BIG difference.

🏡 Before you buy, renovate, or sell, talk to your tax professional about whether you’re building an investment portfolio—or a real estate business.

Tax rules are fact-specific. This post is for educational purposes and is not tax advice for any specific situation.

McGregor Tax & Accounting, Inc. Tax Preparation and Planning, Consultation and Advisory Services, Payroll, Audit Representation, and Bookkeeping Services. Specializing in Small and Closely Held Businesses.

When your office manager also has CDO. It’s like OCD but with the letters in alphabetical order as they should be. 😂

🚗 IRS Increases Mileage Rates for the Second Half of 2026

The IRS has announced a midyear increase to the standard mileage rates due to rising fuel prices. If you use your vehicle for business or other qualifying purposes, be sure you’re using the correct rate based on when the miles were driven.

Effective July 1, 2026:

✅ Business: 76¢ per mile (up from 72.5¢)
🏥 Medical: 23.5¢ per mile (up from 20.5¢)
🇺🇸 Moving (eligible active-duty military & certain intelligence community members): 23.5¢ per mile (up from 20.5¢)
❤️ Charitable: 14¢ per mile (unchanged)

⚠️ Important: There are now two mileage rates for 2026.

📅 January 1 – June 30, 2026: Use the original IRS mileage rates.
📅 July 1 – December 31, 2026: Use the new rates listed above.

If you track your mileage manually or through an app, make sure your records clearly separate miles driven before and after July 1 to ensure accurate deductions.

Have questions about how this impacts your taxes or business? We’re here to help!

https://www.forbes.com/sites/kellyphillipserb/2026/07/13/irs-announces-increase-in-standard-mileage-rates-for-the-second-half-of-2026/?fbclid=IwZnRzaATDQFpwZG9mA2ZkaWQWUKgtxgWxPH3MzYyFFB1GtkcbswNLomV4dG4DYWVtAjExAHNydGMGYXBwX2lkCjY2Mjg1NjgzNzkAAR5ykq3XKnNxLN-vEDmSIcnAn9JOF8fKZEipuyNdyz6OCVqMWI5e4_pLCfxstg_aem_PT4dG_xa0uG1DjISUSUrkQ

IRS Announces Increase In Standard Mileage Rates For The Second Half Of 2026 Higher fuel prices prompted the IRS to raise the business, medical, and qualified moving rates for mileage on or after July 1, 2026.

💳 **Business and Personal Expenses Don't Mix**

Think it's okay to run a few personal expenses through your business? A recent Tax Court case (Waimana Enterprises, Inc. v. Commissioner), shows just how costly that mistake can be.

A business owner used corporate funds to pay for personal expenses like:
✈️ Family vacations
🎓 Private school and college tuition
💆 Personal massage therapy
🏠 Other non-business purchases

The IRS determined these weren't legitimate business expenses and reclassified them as **taxable distributions (constructive dividends)**. The result? **More than $2 million in additional taxes and civil fraud penalties.**

✅ The lesson is simple:

* Keep business and personal finances separate.
* Only deduct expenses that are ordinary, necessary, and directly related to your business.
* Maintain good records and documentation for every deduction.

A quick conversation with your tax advisor before making a questionable purchase can save you thousands—or even millions—later.

📞 If you're ever unsure whether an expense is deductible, we're happy to help before it becomes an expensive problem.

🇺🇸 Happy 4th of July from all of us at McGregor Tax & Accounting! 🇺🇸

This weekend we celebrate the freedoms that make this country so special and honor those who have served to protect them.

We are incredibly grateful for the trust our clients place in us throughout the year. Thank you for allowing us to be part of your financial journey.

We hope you and your family enjoy a safe, relaxing, and memorable Independence Day filled with friends, family, and fireworks! 🎆

Happy Independence Day! ❤️🤍💙

🤖 Thinking of using an IRS chatbot for tax answers? Proceed with caution.

Recent reports highlight that AI-powered tax chatbots may provide incorrect or incomplete information, especially when dealing with complex tax situations. While these tools can be helpful for general guidance, they should not be relied upon as the sole source for important tax decisions.

Tax laws are nuanced, and even a small detail can significantly impact your filing, deductions, credits, or compliance obligations.

✅ Verify information through official IRS publications.
✅ Seek professional advice for complex tax matters.
✅ Don't assume an AI-generated answer is always accurate.

If you have questions about your tax situation, our team is here to help you navigate the rules with confidence and clarity.

IRS chatbot results may be wrong The IRS has been offering live chat applications and automated chatbots, but their incorrect answers could prompt taxpayers to file incorrect tax returns.

Trump Account Update

🚨 SCAM ALERT: Fake IRS CP53E Notices 🚨

We are seeing an increase in fraudulent “CP53E” notices being mailed to taxpayers. These notices may look official, but they are designed to steal your personal and banking information.

⚠️ Red flags include:
• Requests for immediate payment or personal information
• Threats or urgent language
• Incorrect contact information
• Links or QR codes directing you away from IRS.gov

The IRS will NEVER:
❌ Demand payment through gift cards, Venmo, Cash App, or cryptocurrency
❌ Threaten immediate arrest
❌ Ask for sensitive information by text, email, or social media

If you receive a CP53E notice — or any IRS letter you are unsure about — do NOT respond before verifying it.

📞 Contact our office and we will help you determine whether the notice is legitimate.

Protect yourself and share this post to help others avoid becoming victims of tax scams.

The IRS doesn't want paper checks anymore and we agree; paying electronically is best. 2025 balances due and first quarter estimates are due tomorrow, April 15th.

To pay IRS online click here:
https://www.irs.gov/payments