No, for mortgage interest deduction, the loan MUST be secured by the residence. The "tracing" rules you're thinking of apply to investment interest expense - where interest can be deductible if the loan proceeds were used to purchase investments. But that's a completely different deduction category with different limitations.

This is really helpful advice, especially about tracking the documentation! I'm new to homeownership and didn't realize how important it would be to keep detailed records of how loan proceeds were used. One question about the refinancing option - when you say "roll the SBLOC into a mortgage refinance," do you mean taking out a larger mortgage to pay off the SBLOC entirely? And would timing matter much, or could this be done anytime as long as the rates make sense? Also wondering about the itemizing vs standard deduction piece. With a $490k home, property taxes alone might be pretty significant depending on location, so itemizing could potentially make sense even without the mortgage interest.

If you lease, the leasing company gets the depreciation deductions since they own the vehicle. But you can still deduct your lease payments as a business expense based on your business use percentage. Some accountants say leasing can be better for cash flow even though you lose the big upfront Section 179 deduction.

This is exactly the kind of comprehensive breakdown I was looking for! I had no idea about the potential to stack the EV tax credit with Section 179. That could make a huge difference in the total tax benefits. Quick question about the state incentives you mentioned - do you know if those are typically available regardless of whether you buy or lease? And are there any restrictions on vehicle price or manufacturer for the state rebates? I'm trying to figure out if it makes more sense to go with the Cybertruck or a Model X for my business, and the total incentive package could be a deciding factor. Also, when you mention tracking charging costs - can you deduct home charging expenses if you have a home office setup?

You're thinking of the $400 threshold for self-employment tax, which is correct. If your net earnings from self-employment (your profit after expenses) are less than $400, you won't owe self-employment tax. However, you still need to report the income on Schedule C regardless of the amount. All income is technically taxable and reportable, even if it's just $20. The $400 threshold only applies to whether you pay the self-employment tax portion, not whether you need to report it. If your mystery shopping is showing a loss after deducting all legitimate expenses, you might still want to report it on Schedule C to establish a history of your business activity, especially if you plan to continue and potentially make a profit in future years.

Thanks for explaining! So even though I won't owe self-employment tax, I still need to report everything on Schedule C. Good to know I was confusing the reporting requirement with the tax threshold. I'll make sure to include all my mystery shopping income and expenses even though my net profit was only about $350.

This is really smart advice about tracking the personal use potential! I never thought about separating required purchases with no personal benefit from things like clothing that I might actually wear later. Quick question - what about when you're required to buy specific products during retail mystery shops but the company lets you keep them? Like if I have to buy a specific brand of shampoo to evaluate the checkout experience, but then I get to keep the shampoo plus get reimbursed for it. How would that affect the deductibility? Also, great point about saving screenshots of the assignment requirements. I've been good about keeping receipts but hadn't thought to document the actual shop instructions that prove why each purchase was necessary.

This is really solid advice! I'm just starting to navigate this with my small consulting C Corp and the documentation piece seems crucial. When you mention "strategic business partnerships," are you talking about actual equity investments in other companies, or more like joint ventures and revenue-sharing arrangements? I'm particularly interested in your point about timing the facility expansion planning. How detailed do those preliminary steps need to be to satisfy the IRS if they ever question the retained earnings? Like, would getting a few contractor quotes and maybe some preliminary site surveys be enough, or do you need full architectural plans? Also, did you run into any issues with the equipment investments being questioned as personal use versus business use? I'm looking at some technology upgrades that could benefit the business but I want to make sure I structure it properly from a tax perspective.

@Anastasia Kozlov Great questions! For strategic partnerships, I ve'done both equity investments and revenue-sharing arrangements. The equity investments have been smaller stakes usually (10-25% in) companies that either supply us or serve similar markets. Revenue-sharing deals are easier to structure but equity investments can provide better long-term returns if you pick the right partners. On the facility expansion documentation - you don t'need full architectural plans, but you want enough detail to show serious intent. We had contractor quotes, a preliminary site study, and basic floor plan sketches when the IRS reviewed our situation during an audit two years ago. The key is showing progressive steps over time rather than just saying we "might expand someday. Board" meeting minutes documenting your expansion timeline are also really important. For equipment investments, the key is making sure everything is used exclusively for business purposes. We keep detailed usage logs for any equipment that could potentially have personal use applications. For technology upgrades, document exactly how each piece of equipment enhances your business operations - increased efficiency, new service capabilities, etc. The IRS is generally pretty reasonable about legitimate business equipment purchases. One tip: consider leasing some equipment through your C Corp rather than purchasing outright. It can provide better cash flow and the lease payments are fully deductible business expenses.

This is exactly the kind of comprehensive approach I was looking for! The three-bucket strategy makes a lot of sense for balancing liquidity needs with growth potential. I'm particularly intrigued by your supplier investment - that sounds like a win-win situation where you're getting both financial returns and operational benefits. Could you share more details about how you structured that supplier investment? Was it a straightforward equity purchase, or did you negotiate some kind of convertible arrangement? I'm wondering about the legal complexities of having a financial stake in a key supplier - are there any conflicts of interest or procurement issues you've had to navigate? The formal investment policy idea is brilliant too. Did you work with your attorney to draft that, or is there a template approach that works well for smaller C Corps? I imagine having that documented framework would make board meetings much more efficient when evaluating new investment opportunities. Thanks for mentioning the dividend received deduction - that's definitely something I need to discuss with my CPA as we look at potential stock investments!

Great question about record-keeping! From what I understand, TreasuryDirect automatically maintains records of when you purchase gift bonds versus when they're delivered to recipients' accounts. You can see the purchase dates, delivery dates, and issue dates in your account history. That said, it's always good practice to keep your own records, especially screenshots or printouts showing the purchase dates and delivery dates of gift bonds. This could be helpful if you ever need to demonstrate the timing for tax purposes or if there are questions about which year the bonds count toward annual limits. The Treasury's electronic records should be sufficient, but having your own backup documentation gives you extra peace of mind, especially when you're strategically timing deliveries across tax years like this.

This is excellent advice about the logistics! I'm just starting to explore this I-Bond gifting strategy and hadn't thought about the account setup complexities. Quick question - when you mention account verification problems, was this related to identity verification for new TreasuryDirect accounts, or something else? I want to make sure I get everything properly configured before attempting to purchase any gift bonds. Also, do you know if there are any restrictions on how long you can keep bonds in your gift box before delivering them, or can you theoretically hold them indefinitely until you decide to deliver?