As published in the Winter Park/Maitland Observer, Thursday Jan. 3, 2012 Edition Offers... Read More »
Articles in category 'S Corporations'
Senate Votes Down S Corporation Changes
A few days ago the Senate failed to pass Senate bill S. 2343, the “Stop the Student Loan Interest Rate Hike Act of 2012 which would have limited the ability of S corporation shareholders to classify payments made to them by their corporations as distributions thereby avoiding self employment tax. Tony Nitti has the story: The bill would have…
Read Full Article Categorized in: Legislative Watch, S Corporations, Tax PolicyIncreased Audit Risk Accompanies Schedule C Filings
Joe Kristan reminds us once again of why you should not use the sole proprietor form of business: A scary headline: “Freelance? An IRS audit may be in your future.” A Tax Court case yesterday shows why a Schedule C on your return might interest the tax man. A New York City taxpayer filed a…
Read Full Article Categorized in: LLC's, S Corporations, Tax TipsTIGTA: Closely Held Businessmen More Likely to Structure Transactions to Avoid Taxes
The Treasury Inspector General for Tax Administration says the IRS needs to improve the quality of its audits of small corporations. Listen: TIGTA reviewed whether IRS examiners followed proper procedures and guidelines when auditing the returns of small corporations. The IRS defines small corporations as corporations with assets of less than $10 million. Many corporations in the…
Read Full Article Categorized in: Announcements, IRS Audits, S CorporationsCompensation of S Corporation Shareholders
Tony Nitti has published a great piece over at The Tax Adviser which explains the current state of affairs on the issue of compensation of S Corporation shareholders. Here is the Executive Summary, but read the whole thing. S corporation shareholders generally prefer dividend distributions of their S corporations’ profits over compensation payments from the…
Read Full Article Categorized in: S Corporations, Tax TipsA Defense of Pass Through Entities
Paul Caron reports that Bradley T. Borden (Brooklyn) has posted a defense of pass-through entities in Three Cheers for Passthrough Taxation, 131 Tax Notes 1353 (June 27, 2011), on SSRN. Here’s the abstract: This report addresses recent suggestions by the Obama administration, lawmakers, and others that some passthrough entities should be taxed as corporations. It argues…
Read Full Article Categorized in: C Corporations, S Corporations, Tax PolicyPass Through Entities, Corporate Tax Inequality and Abolishing the Corporate Tax
Martin A. Sullivan (Tax Analysts) has published Why Not Tax Large Pass Throughs as Corporations?, 131 Tax Notes 1015 (June 6, 2011): Most large profitable American businesses must pay the corporate income tax. Others are completely exempt from it. The unfairness of this is so plain even a 5-year-old can understand it. … The essence of…
Read Full Article Categorized in: Corporate Tax, S CorporationsGeithner Wants to Punish the Job Creators by Getting Rid of Pass-Through Entities?
Secretary of the Treasury Tim Geithner recently told the Senate Finance Comittee that removing small business owners’ option to be taxed as a corporation or an individual is an essential part of tax reform: Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses…
Read Full Article Categorized in: S Corporations, Tax Policy, The EconomyAdvice to Would-Be Schedule C Filers: “DON’T”
Robert Flach announces his publication of a new newsletter for sole proprietors and single-member schedule C filers entitled, aptly enough, The Schedule C Letter: THE SCHEDULE C LETTER is a bi-weekly newsletter that provides tax planning and preparation advice, information, and resources for sole proprietors and one-person LLCs who report their business activity on IRS Schedule C.¹ I have…
Read Full Article Categorized in: Business advice, C Corporations, S Corporations, Self-Employed Taxpayers, Tax TipsIRS to Pursue Non Filing Businesses
Frequent readers of this blog know that we have maintained - ad nauseum, I am sure, for some – that all small businesses should incorporate or operate as an LLC in part because they are less likely to undergo IRS scrutiny. Well, if you can believe the Government Accountability Office GAO), this may all be about to change. WebCPA…
Read Full Article Categorized in: C Corporations, IRS Audits, S Corporations, Self-Employed Taxpayers, Unfiled ReturnsMay Tax Advisors tell their Clients to Form S Corporations to Reduce Their Chances of Audit
Every year the IRS publishes audit statistics showing that it audits S Corporation returns much less frequently than it audits sole proprietorship (schedule C) returns. Consequently, one of the factors business owners and their advisors have traditionally considered before choosing a form of business is the relative likelihood of IRS scrutiny of the business’s tax return. No surprises there, right? Well, not so fast. Last…
Read Full Article Categorized in: IRS Audits, S Corporations, Self-Employed TaxpayersRepeal the New 1099 Law
The National Association for the Self-Employed reports that the recently enacted Healthcare law will have an onerous record-keeping effect on small businesses: Many of the nation’s entrepreneurs are about to become more familiar with IRS Form 1099. According to a new law set to go into effect in 2012, business owners will be required to submit a…
Read Full Article Categorized in: Business Transactions, C Corporations, IRS Procedure, S Corporations, Self-Employed TaxpayersS Corporation Loss Basis Worksheets
Because of the prolonged recession we expect to see many businesses report losses from their 2009 operations. Losses from S Corporations are deductible on a taxpayer’s Form 1040 only to the extent of the shareholder’s stock plus debt basis. Tax preparers should maintain the following two worksheets (courtesy Small Business Taxes and Management) for each of their…
Read Full Article Categorized in: Individual Taxation, S Corporations, Tax TipsS Corporation Sale of Built-in Gain Assets
As a general rule, S corporations do not pay taxes, but rather their income is reported and taxed on the individual tax returns of their shareholders. However, a corporation that was originally formed as a C corporation is subject to a built-in gains tax on any appreciation in the value of its assets that arose prior to its conversion to…
Read Full Article Categorized in: S Corporations, Tax Tips5 Top Reasons to Incorporate (in Addition to My Fees)
There’s been a lot of crazy talk lately among non-lawyer, non-CPA bloggers accusing lawyers and CPAs of advising their clients to incorporate merely to get additional fees. These bloggers offer no evidence to support their claims and merely assume that because lawyers and CPAs sometimes incorporate their clients for a fee that they are advising them to incorporate for…
Read Full Article Categorized in: LLC's, S Corporations, Tax TipsS Corporation Wages and Distributions: Basic Tax Planning
A majority of American small businesses use the S corporation form of doing business. This article discusses one of the main tax planning techniques an S corporation can use to save taxes. The S Corporation and Payments to Shareholder/Employees? An S corporation is a pass-through entity and does not pay federal income tax. The net earnings…
Read Full Article Categorized in: S Corporations, Taxes 101