Someone I know tried the IRA-LLC structure for a different business (not blogging) and ran into major issues. The Self-Directed IRA custodian charged insane fees, and when the business generated over $1,000 in UBTI, they had to file Form 990-T which was a nightmare without professional help. Plus, their IRA had to pay the business fairly if they wanted to be involved personally. They ended up paying themselves a "fair market salary" from the IRA-owned LLC, which means that money was essentially taxed anyway (defeating some of the purpose), plus they had extra compliance costs. For a blog specifically, seems like WAY more headache than benefit unless you're planning to generate massive profits without personal involvement.

Just to add another consideration - what about SEO expenses and content creation costs? If the blog is in your IRA, you can't personally pay for things like hosting, domain registration, SEO tools, etc. All expenses MUST come from IRA funds. And if your blog needs capital for growth (better design, hiring writers, marketing), you're limited to what's in your IRA. You can't just add personal funds whenever needed without doing a formal IRA contribution (with all the normal limits).

Don't forget that the wash sale rule can seriously mess with your "simple" profit and loss calculation. If you sell a security at a loss and buy the same or "substantially identical" security within 30 days before or after the sale, you can't immediately claim that loss for tax purposes. I learned this the hard way last year trading tech stocks. Thought I had a $15k net loss only to discover that most of my losses were disallowed because I kept jumping in and out of the same stocks. The losses didn't disappear forever, but they got added to the cost basis of my replacement shares instead of offsetting my gains.

Another thing to consider is that if trading is your actual job/business rather than just investing, the tax treatment can be completely different. If you qualify as a "trader" in the eyes of the IRS (which has specific requirements about frequency, volume, and intent), you might be eligible for "trader tax status" and could potentially elect the Section 475 mark-to-market accounting method. This would treat all your trades as ordinary income/loss rather than capital gains/losses, bypassing the $3,000 capital loss limitation and wash sale rules. But this is a serious election with major implications and specific deadlines.

One strategy that worked well for my electrical contracting business was setting up a Cash Balance Plan in addition to our 401(k). Last year I was able to contribute over $150,000 pre-tax between the two plans. It's especially effective when you're in those higher tax brackets. Also, make sure your brother-in-law is tracking meals properly. Construction businesses can often deduct 100% of certain meals (not the standard 50%) when they're for jobsite employees. My CPA caught this and it saved us about $7k last year.

Something nobody has mentioned yet - if your brother-in-law does a lot of government/public works contracts, he might qualify for certain credits or deductions related to those projects. My construction company primarily does municipal work and we qualify for several incentives including some energy-efficiency credits when we incorporate certain materials or methods. Also, has he considered restructuring some of his personal expenses? For example, if he frequently entertains clients at his home, a portion of his housing costs might be deductible. Or if family members legitimately work in the business, spreading income among family can reduce the overall tax burden.

One option nobody's mentioned yet - if this was 2024 income and you haven't filed yet, you could open a SEP IRA and contribute some of your 1099 earnings to that. You can contribute up to 25% of your net earnings and it's tax-deductible, which could significantly reduce what you owe. You need to open the account before you file your taxes, but you have until the filing deadline to fund it. Could be a good way to save for retirement AND reduce your current tax bill.

Quick tip from someone who's been a contractor for years - start tracking EVERYTHING for 2025! Get a dedicated credit card for business expenses, save all receipts, and track mileage with an app. Common deductions people miss: home internet (% used for work), cell phone (% for work), home office (if you have dedicated space), health insurance premiums, half of self-employment tax, business travel, professional development/courses, software subscriptions, and office supplies.

Don't forget about state taxes too! The home office deduction can sometimes save you money on state income taxes depending on where you live. In my case, I saved about 6% on state taxes on top of the federal savings, which added up to a few hundred extra dollars. Also, if you're self-employed, the home office deduction can help reduce your self-employment taxes too, which is huge since those are like 15.3% on top of regular income tax.

I find the simplified option much easier than tracking all those expenses. You can deduct $5 per square foot for up to 300 square feet instead of calculating percentages of all your bills. So if your office is 10% of your 2000 sq ft home (200 sq ft), that's a $1000 deduction. Less paperwork and less audit risk.