S Corporation Tax Update

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "S Corporation Tax Update"

Transcription

1 S Corporation Tax Update Fifty Third Annual Arkansas Federal Tax Institute Jillian G. Yant, CPA Overview S Corporation Basis Tax Extenders Net Investment Income Tax Reasonable Compensation Late S Elections 1

2 Basis in S Corporation Proposed regulations from 2012 were made final on July 23, 2014 Treasury Decision 9682 Final regulations clarify when a shareholder can increase basis in the S corporation s indebtedness to the shareholder Two standards: Shareholder loan to S corporation must be bona fide Guarantee of S corporation debt actual cash outlay Treasury Decision 9682 Bona Fide Debt Determined under general federal tax principles Must consider all facts and circumstances Final regulations state that the debt must run directly from the S corporation to the shareholder If loan is bona fide, shareholder s basis of indebtedness can be increased by the loan amount Back to back loan transactions 2

3 Treasury Decision 9682 Guarantee of Debt Under final regulations, shareholder does not obtain basis of indebtedness by merely guaranteeing debt to the S corporation by a third party If shareholder makes a payment on a bona fide loan of the S corporation that the shareholder guaranteed, basis can be increased by the amount of each payment. Comments on TD 9682 Be cautious of circular flow of funds Potential abuse if loans aren t actually bona fide, but final regulations don t require documentation of such Courts have been inconsistent with defining economic outlay, so the final regulations don t rely upon this test 3

4 Tax Extenders Congress s lame duck session will address over 60 tax extenders Over 50 expired on December 31, 2013, for individuals, businesses and energy tax incentives What s up for consideration? Reduced recognition period for S corp built in gains tax attributable to prior C corporation status from 10 years to 5 years ( 1374) S corp making charitable contribution of property ( 170) Tax Extenders What s up for consideration? 179 expense has reverted to a $25,000 deduction with a $200,000 limit Extender would provide a $500,000 deduction with a $2 million investment limit Bonus depreciation has expired and extender would put 50% bonus depreciation in place Some are pushing for permanent bonus depreciation 4

5 Tax Extenders What s up for consideration? Work Opportunity Tax Credit ( 51) Extension of New Market Tax Credit ( 45D) Research Tax Credit at 20% level ( 41) Some support for this to be permanent 15 year straight line recovery period for qualified leasehold/retail improvements and restaurant property ( 168) Net Investment Income Tax NII has definitely impacted our planning and recommendations to taxpayers Passive v. Active IRS issued final regulations (TD 9644) in November 2013 to interpret 1411 Apply to tax years beginning January 1, 2014, and can be retroactively applied to 2013 Because 469 doesn t provide sufficient guidance as it pertains to 1411, proposed regulations have been issued and are still pending. 5

6 Net Investment Income Tax Three general categories of NII Category 1 portfolio income not from a T or B Category 2 passive income from a T or B Category 3 net gains from the sale of property If the property sold is a nonpassive interest in a S corp, gain from the sale is NII only to the extent that income from a deemed sale of the entity s property would be NII IRS has totally rewritten the regs for disposition of interests in a partnership or S corp and reissued them in the pending proposed regs 469 applies to all three categories of NII Net Investment Income Tax Trade or Business 1411 does not explain when an activity is a trade or business IRS has declined to provide bright line examples, but refers taxpayers to 162 The IRS s position is that this is a factual question Investment activities are not a trade or business 6

7 Net Investment Income Tax Real Estate Professionals 469 states that rental income is per se passive, and this rule applies to 1411 to determine if an activity is passive Exception for real estate professionals who materially participate, which is defined as a taxpayer in real property business ( 469(c)(7)) Some relief is given in (g)(7) with a safe harbor if the professional participates in rental real estate activities for more than 500 hours per year Net Investment Income Tax Grouping and Regrouping NII may cause taxpayers to reconsider previous groupings Final NII regulations give taxpayers the opportunity to regroup their activities once, in the first tax year beginning after in which the taxpayer meets NII income threshold and has NII This may already be a moot point for some taxpayers, and an outstanding opportunity for others 7

8 Reasonable Compensation S corporations must pay reasonable compensation to a shareholder employee in return for services provided by the employee before any non wage distributions may be made. To determine reasonable compensation we need to know what the shareholder employee has done for the S corporation Reasonable Compensation Need to look to the source of S corp gross receipts Three major sources Services of the shareholder Services of non shareholder employees, or Capital and equipment If gross receipts and profits arise from items 2 and 3, then it should not be associated with shareholderemployee s personal services and it s reasonable that distributions would be received along with wages 8

9 Reasonable Compensation Evaluating the main sources of gross receipts: If most of the S corporation s gross receipts are associated with the shareholder s personal services, then most of the profit distribution should be allocated as compensation Shareholder employee should also be compensated for administrative work performed by other income producing employees or assets Reasonable Compensation Factors to Consider: Training and experience Duties and responsibilities Time and effort devoted to the business Dividend history Payments to non shareholder employees Timing and manner of paying bonuses to key people What comparable businesses pay for similar services Compensation agreements Use of a formula to determine compensation 9

10 Reasonable Compensation Definitely a prevalent issue in IRS exams IRS Inspector General found that in 2000 about 440,000 single shareholder S corporations paid no salary to their owners, costing the government billions in lost payroll taxes IRS has stepped up audits as a result and enforcement on S corps that paid owners little or no salary This can now be easily identified on Form 1125 E if an entity has total receipts of $500,000 or more Reasonable Compensation Several court cases support the IRS s authority to reclassify other forms of payment to a shareholderemployee as wages, which are then subject to employment taxes (and penalties and interest ) Joly vs. Commissioner, 211 F. 3d 1269 (6 th Cir., 2000) Veterinary Surgical Consultants, P.C. vs. Commissioner, 117 T.C. 141 (2001) Joseph M. Grey Public Accountant, P.C. vs. Commissioner, 119 T.C. 121 (2002) David E. Watson, PC vs. U.S., 668 F. 3d 1008 (8 th Circ. 2012) 10

11 Late Elections Rev. Proc supersedes Rev. Proc and (effective ), which provide late filing relief for the following elections: S corporation Electing Small Business Trust Qualified Subchapter S Trust Qualified Subchapter S Subsidiary Late corporate classification elections Requires more informative statements completed by both the corporation and individual shareholders Late Elections Rev. Proc includes four flow charts to aid in determining if the entity is eligible for simplified relief Copies follow the slides Must satisfy the general requirements of Section 4 and the specific requirements applicable to the taxpayer under Sections 5 through 7 of the revenue procedure 11

12 Late S Elections Include statement on the top of Form 2553 FILED PURSUANT TO REV. PROC Must attach a reasonable cause/inadvertence statement with a dated declaration that states: Under penalties of perjury, I (we) declare that I (we) have examined this election, including the accompanying documents, and, to the best of my (our) knowledge and belief, the election contains all of the relevant facts relating to the election, and such facts are true, correct, and complete. Late S Elections Must attach a separate statement for each shareholder of the S corporation stating that his/her pro rata portion has been properly reported on all affected tax returns. Must also include the same perjury statement as the attachment for the S corporation Strong recommendation to have a power of attorney signed specifically for Form

13 Questions? Thank you for attending! Jillian G. Yant, CPA JPMS Cox, PLLC 13

Objectives. Discuss S corp fringe benefits.

Objectives. Discuss S corp fringe benefits. S Corporations Objectives Define an S corp. Identify the benefits of being an S corp. Determine how an entity elects to be an S corp. Establish how an S corp is taxed. Describe the S corp shareholder s

More information

S Corporations General Overview

S Corporations General Overview S Corporations General Overview Richard Furlong Jr. Senior Stakeholder Liaison Define an S Corp An "S corporation" is a an entity that qualifies as a small business corporation that has an S election in

More information

1/5/2016. S Corporations. Objectives. Define an S Corp

1/5/2016. S Corporations. Objectives. Define an S Corp S Corporations Objectives Define an S corp. Identify the benefits of being an S corp. Determine how an entity elects to be an S corp. Establish how an S corp is taxed. Describe the S corp shareholder s

More information

S Corporation Update. Charles E. Marston, CPA, MST Tax Principal, S.R. Snodgrass, P.C. cmarston@srsnodgrass.com

S Corporation Update. Charles E. Marston, CPA, MST Tax Principal, S.R. Snodgrass, P.C. cmarston@srsnodgrass.com Charles E. Marston, CPA, MST Tax Principal, S.R. Snodgrass, P.C. cmarston@srsnodgrass.com Agenda I. S Corp basics overview II. What s new? Late election relief NII tax Reasonable comp/sh loans Self employment

More information

U.S. Income Tax Return for an S Corporation

U.S. Income Tax Return for an S Corporation Form 1120S U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. Information about Form 1120S and

More information

LLC Classification. Tax Law Basics of an LLC Kristy S. Maitre, Tax Specialist Center for Agricultural Law and Taxation

LLC Classification. Tax Law Basics of an LLC Kristy S. Maitre, Tax Specialist Center for Agricultural Law and Taxation Tax Law Basics of an LLC Kristy S. Maitre, Tax Specialist Center for Agricultural Law and Taxation What is a Limited Liability Company? A creation of an entity based on state law varies from state to state

More information

THE AMERICAN LAW INSTITUTE Continuing Legal Education

THE AMERICAN LAW INSTITUTE Continuing Legal Education 41 THE AMERICAN LAW INSTITUTE Continuing Legal Education American Taxpayer Relief Act: What You Need To Know for Tax Planning and Compliance January 22, 2013 Video Presentation Service Issues Proposed

More information

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A.

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Chapter 18 Corporations: Distributions Not in Complete Liquidation Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe Copyright 2004 South-Western/Thomson Learning Taxable Dividends

More information

Tax Issues for Bankruptcy & Insolvency

Tax Issues for Bankruptcy & Insolvency Tax Issues for Bankruptcy & Insolvency By David S. De Jong, Esquire, CPA Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig, PC 25 West Middle Lane Rockville, Maryland 20850 301-838-3204 ddejong@steinsperling.com

More information

Presented By: Tracy Monroe, CPA, MT

Presented By: Tracy Monroe, CPA, MT Presented By: Tracy Monroe, CPA, MT Tax extenders for individuals Tax planning Ohio update On December 18, 2015 the President signed the Protecting Americans from Tax Hikes (PATH Act): Extended many expired

More information

Compensating Owners and Key Employees of Partnerships and LLC's

Compensating Owners and Key Employees of Partnerships and LLC's College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 2013 Compensating Owners and Key Employees of

More information

INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS

INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS INTERNATIONAL TAX COMPLIANCE FOR GOVERNMENT CONTRACTORS Mark T. Gossart Alison N. Dougherty September 26, 2012 2012 All Rights Reserved 805 King Farm Boulevard Suite 300 Rockville, Maryland 20850 301.231.6200

More information

BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO ) ) ) ) ) ) BACKGROUND

BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO ) ) ) ) ) ) BACKGROUND BEFORE THE TAX COMMISSION OF THE STATE OF IDAHO In the Matter of the Protest of, Petitioners. DOCKET NO. 26198 DECISION BACKGROUND On December 19, 2013, the Audit Bureau (Audit of the Idaho State Tax Commission

More information

Internal Revenue Service Number: 200422052 Release Date: 5/28/04 Index Number: 0561.05-00, 0562.03-02, 0851.00-00, 0852.01-00

Internal Revenue Service Number: 200422052 Release Date: 5/28/04 Index Number: 0561.05-00, 0562.03-02, 0851.00-00, 0852.01-00 Internal Revenue Service Number: 200422052 Release Date: 5/28/04 Index Number: 0561.05-00, 0562.03-02, 0851.00-00, 0852.01-00 ------------------------------ ----------------------------- ----------------------

More information

PARTNERSHIP/LLC TAX UPDATE. Cancellation of Debt Income. COD Income & Form 982 11/26/2013

PARTNERSHIP/LLC TAX UPDATE. Cancellation of Debt Income. COD Income & Form 982 11/26/2013 11/26/ PARTNERSHIP/LLC TAX UPDATE Indiana Tax Institute December 12, Indianapolis, IN 10:45 to 11:45 AM Cancellation of Debt Income Form 1099 C Sec. 61(a)(12) treats as additional gross income Sec. 108

More information

Tax-Saving Opportunities for "Active" Business Owners

Tax-Saving Opportunities for Active Business Owners S CORPORATIONS Tax-Saving Opportunities for "Active" Business Owners S corporations now provide business owners with a unique opportunity to minimize earnings subject to both the recently imposed additional

More information

2013 Federal Income Tax Update with The American Taxpayer Relief Act of 2012

2013 Federal Income Tax Update with The American Taxpayer Relief Act of 2012 THE UNIVERSITY OF TENNESSEE 2013 SINGLETON B. WOLFE MEMORIAL TAX CONFERENCE OCTOBER 31, 2013 2013 Federal Income Tax Update with The American Taxpayer Relief Act of 2012 JOHN D. HOUSTON, CPA Certified

More information

REIT; DIVIDENDS PAID DEDUCTION; REINVESTMENT PLAN

REIT; DIVIDENDS PAID DEDUCTION; REINVESTMENT PLAN Rev. Rul. 2002- [Ruling that discount is not a dividend] ISSUE REIT; DIVIDENDS PAID DEDUCTION; REINVESTMENT PLAN What are the Federal income tax consequences arising from the issuance of shares of a publiclytraded

More information

T.C. Memo. 2013-180 UNITED STATES TAX COURT. GLASS BLOCKS UNLIMITED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

T.C. Memo. 2013-180 UNITED STATES TAX COURT. GLASS BLOCKS UNLIMITED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent T.C. Memo. 2013-180 UNITED STATES TAX COURT GLASS BLOCKS UNLIMITED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 3396-11. Filed August 7, 2013. Fredrick Blodgett (an officer),

More information

Avoiding traps when electing S corporation status for an LLC

Avoiding traps when electing S corporation status for an LLC Checkpoint Contents Federal Library Federal Editorial Materials Federal Taxes Weekly Alert Newsletter Preview Documents for the week of 03/28/2013 - Volume 59, No. 13 Articles Avoiding traps when electing

More information

2013 Year-End Tax Planning Letter

2013 Year-End Tax Planning Letter PLAN AHEAD 2013 Year-End Tax Planning Letter You are receiving this letter because your income tax rates have increased based on 2012 data. Please be sure to talk with your advisor to discuss anticipated

More information

Presentation for. CSEA IRS/Practitioner Fall Seminars. S Corporation. Darrell Early, IRS. Date September 27, 2012

Presentation for. CSEA IRS/Practitioner Fall Seminars. S Corporation. Darrell Early, IRS. Date September 27, 2012 Presentation for CSEA IRS/Practitioner Fall Seminars S Corporation Darrell Early, IRS Date September 27, 2012 Agenda What is an S Corporation? Why would a Corporation make the S election? How does a Corporation

More information

U.S. Corporation Income Tax Return For calendar year 2015 or tax year beginning, 2015, ending, 20

U.S. Corporation Income Tax Return For calendar year 2015 or tax year beginning, 2015, ending, 20 Form 1120 Department of the Treasury Internal Revenue Service A Check if: 1a Consolidated return (attach Form 851). b Life/nonlife consolidated return... 2 Personal holding co. (attach Sch. PH).. 3 Personal

More information

Note: Form 2553 begins on the next page.

Note: Form 2553 begins on the next page. Note: Form 2553 begins on the next page. Cincinnati Fax Number for Filing Form 2553 Has Changed The fax number for filing Form 2553 with the IRS center in Cincinnati has changed. The new number is 855-270-4081.

More information

Choice of Entity: Corporation or Limited Liability Company?

Choice of Entity: Corporation or Limited Liability Company? March 2014 Choice of Entity: Corporation or Limited Liability Company? By Gianfranco A. Pietrafesa* Attorney at Law There are many different types of business entities, including corporations, general

More information

S Corporation Webinar Series: Webinar 5

S Corporation Webinar Series: Webinar 5 S Corporation Webinar Series Webinar 5: Special Problems with Eligibility and Elections with Jim Hamill, Director of Tax Practice at Reynolds, Hix & Co., P.A. in Albuquerque, NM 4 S Corporation Webinar

More information

S Corporations: 2013 Tax Update and M&A Issues & Considerations. November 15, 2013

S Corporations: 2013 Tax Update and M&A Issues & Considerations. November 15, 2013 S Corporations: 2013 Tax Update and M&A Issues & Considerations November 15, 2013 48th Annual Bank & Capital Markets Tax Institute S Corporations: 2013 Tax Update and M&A Issues & Considerations November

More information

Internal Revenue Service

Internal Revenue Service Internal Revenue Service Number: 200750009 Release Date: 12/14/2007 Index Numbers: 368.04-00, 355.01-00 ---------------------- -------------------------------------------------- --------------------------------------

More information

The 3.8% Medicare Surtax on Investment Income

The 3.8% Medicare Surtax on Investment Income Wealth Strategy Report The 3.8% Medicare Surtax on Investment Income OVERVIEW Beginning in 2013, certain investment income will be subject to an additional 3.8% surtax, enacted as part of the Health Care

More information

WithumSmith+Brown, PC Certified Public Accountants and Consultants BE IN A POSITION OF STRENGTH. withum.com

WithumSmith+Brown, PC Certified Public Accountants and Consultants BE IN A POSITION OF STRENGTH. withum.com 1 Objectives for Today s Webinar What are the different types of K-1s? K-1 line items where do they end up? My income is greater than the cash I received why would that be? 2 What is a Schedule K-1 Form?

More information

Business Entity Selection

Business Entity Selection Business Entity Selection Chris Stevenson, Esq. Drummond Woodsum cstevenson@dwmlaw.com (t) 800-727-1941 General Issues A corporation can generate double taxation as profits are taxed at the corporate level

More information

8.0 DISTRIBUTIONS/ACCUMULATED ADJUSTMENTS ACCOUNT (AAA)

8.0 DISTRIBUTIONS/ACCUMULATED ADJUSTMENTS ACCOUNT (AAA) Page 1 of 23 Table of Contents 8.0 DISTRIBUTIONS/ACCUMULATED ADJUSTMENTS ACCOUNT (AAA) 8.1 The Accumulated Adjustments Account (AAA) 8.2 The Importance of the Accumulated Adjustments Account 8.3 Do I Have

More information

FORM NP OCCUPATIONAL LICENSE TAX NET PROFIT RETURN

FORM NP OCCUPATIONAL LICENSE TAX NET PROFIT RETURN City of Henderson PO Box 671 Henderson, KY 42419-0671 OCCUPATIONAL LICENSE TAX NET PROFIT RETURN DUE APRIL 15TH OR THE 15TH DAY OF THE 4TH MONTH FOLLOWING THE CLOSE OF THE FEDERAL TAX YEAR FORM NP Name

More information

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith.

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith. State of South Carolina Department of Revenue 301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214 Website Address: http://www.sctax.org SC REVENUE RULING #06-12 SUBJECT: Tax Rate Reduction

More information

2016/2015 Annual Business Income Tax Update

2016/2015 Annual Business Income Tax Update 2016/2015 Annual Business Income Tax Update Page 0 Table of Contents PATH Act Permanent Provisions Code Sec. 179 Small Business Expensing 1 Qualified Leasehold/Retail Improvements, Restaurant Property.

More information

PROPOSED CHANGES TO THE TAXATION OF PARTNERSHIP EQUITY-BASED COMPENSATION

PROPOSED CHANGES TO THE TAXATION OF PARTNERSHIP EQUITY-BASED COMPENSATION PROPOSED CHANGES TO THE TAXATION OF PARTNERSHIP EQUITY-BASED COMPENSATION John Gatti For various non-tax reasons, the use of entities that are taxed as partnerships including limited liability companies,

More information

1120-S S Corp Return Preparation Tips. Presented by Tony Nitti, CPA, MT National Tax Services Group

1120-S S Corp Return Preparation Tips. Presented by Tony Nitti, CPA, MT National Tax Services Group 0 1120-S S Corp Return Preparation Tips Presented by Tony Nitti, CPA, MT National Tax Services Group A QUICK PRIMER 1 S Corporations generally do not pay tax at the entity level. Instead, the income or

More information

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1.

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1. Section 121. Exclusion of gain from sale of principal residence 26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1,

More information

2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager

2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager WINTER 2014-2015 2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager Individual Taxation Many of the tax breaks which expired at the

More information

Willamette Management Associates

Willamette Management Associates Valuation Analyst Considerations in the C Corporation Conversion to Pass-Through Entity Tax Status Robert F. Reilly, CPA For a variety of economic and taxation reasons, this year may be a particularly

More information

Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity

Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity Health Care Forensic Analysis Insights Considerations in the Health Care Company Tax Status Conversion from C Corporation to Pass-Through Entity Robert F. Reilly, CPA For a variety of economic and taxation

More information

What s News in Tax Analysis That Matters from Washington National Tax

What s News in Tax Analysis That Matters from Washington National Tax What s News in Tax Analysis That Matters from Washington National Tax S Corporations Versus Partnerships: FICA, SECA, and NII Taxes The employment tax treatment of shareholders in S corporations is generally

More information

IRS Issues Reliance Proposed Regulations On Some Net Investment Income Tax Issues. Background

IRS Issues Reliance Proposed Regulations On Some Net Investment Income Tax Issues. Background /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Special Report Series on Section 1411

More information

Introduction to M&A Tax: Due Diligence Traps in S Corp Acquisitions (Slides)

Introduction to M&A Tax: Due Diligence Traps in S Corp Acquisitions (Slides) College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 2012 Introduction to M&A Tax: Due Diligence

More information

Good News on the 3.8% Net Investment Income Tax

Good News on the 3.8% Net Investment Income Tax December 24, 2013 Good News on the 3.8% Net Investment Income Tax The IRS recently released its final regulations under Section 1411 on the new 3.8% net investment income tax (TD 9644, 11/26/2013). These

More information

BSM Connection elearning Course

BSM Connection elearning Course BSM Connection elearning Course Basics of Medical Practice Finance: Part 1 2009, BSM Consulting All rights reserved. Table of Contents OVERVIEW... 1 FORMS OF DOING BUSINESS... 1 BUSINESS FORMATS AT A GLANCE...

More information

S Corporation vs. LLC in California Here is an overview of the differences between doing business as an S corporation or as an LLC.

S Corporation vs. LLC in California Here is an overview of the differences between doing business as an S corporation or as an LLC. S Corporation vs. LLC in California Here is an overview of the differences between doing business as an S corporation or as an LLC. After you have read this article, we can discuss in detail what would

More information

Choice of Entity. Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield

Choice of Entity. Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield Choice of Entity Paul E. Costantino, CPA, MST Costantino Richards Rizzo, LLP, Wakefield I. Overview of Entities The entity selection process is one of the first steps in the formation of any business,

More information

Home Based Business Tax Opportunities RICHEY, MAY & CO., LLP 9605 S. KINGSTON CT., STE. 200 ENGLEWOOD, CO 80112 WWW.RICHEYMAY.COM

Home Based Business Tax Opportunities RICHEY, MAY & CO., LLP 9605 S. KINGSTON CT., STE. 200 ENGLEWOOD, CO 80112 WWW.RICHEYMAY.COM Home Based Business Tax Opportunities RICHEY, MAY & CO., LLP 9605 S. KINGSTON CT., STE. 200 ENGLEWOOD, CO 80112 WWW.RICHEYMAY.COM 1 Disclaimer: Use of Information: The information in this summary is provided

More information

New section 1411 regulations answer a number of questions

New section 1411 regulations answer a number of questions New section 1411 regulations answer a number of questions Taxpayers receive some favorable guidance in the final regulations interpreting the 3.8 percent net investment income tax Prepared by: Ed Decker,

More information

Tax Law Snapshot for Small Businesses 2014 Filing Season

Tax Law Snapshot for Small Businesses 2014 Filing Season Tax Law Snapshot for Small Businesses 2014 Filing Season As the economy recovers, you want to position your business for growth. By combining unrivaled education, training and experience and adherence

More information

ADDITIONAL MEDICARE TAX ON EARNED INCOME

ADDITIONAL MEDICARE TAX ON EARNED INCOME Assisting Family Lawyers With Navigating the 2013 Tax Changes Under the Patient Protection Care Act (PPACA) and the Health Care and Education Reconciliation ACT (HCERA) On June 28, 2012, the United States

More information

Treatment of COD Income by Partnerships

Treatment of COD Income by Partnerships Treatment of COD Income by Partnerships Stafford Presentation January 28, 2015 Polsinelli PC. In California, Polsinelli LLP Allocation of COD Income COD income is allocated to those partners who are partners

More information

H.R. 3221 Housing Assistance Tax Act of 2008

H.R. 3221 Housing Assistance Tax Act of 2008 H.R. 3221 Housing Assistance Tax Act of 2008 July 23, 2008 I. ASSISTANCE FOR HOME BUYERS AND HOME OWNERS Refundable first-time home buyer credit. The bill would provide a refundable tax credit that is

More information

*Brackets adjusted for inflation in future years. 2015 Long Term Capital Gains & Dividends Taxable income up to $413,200/$457,600 0% - 15%*

*Brackets adjusted for inflation in future years. 2015 Long Term Capital Gains & Dividends Taxable income up to $413,200/$457,600 0% - 15%* Income Tax Planning Overview The American Taxpayer Relief Act of 2012 extended prior law for certain income tax rates; however, it also increased income tax rates on upper income earners. Specifically,

More information

Taxation of Receipts of Profits and Capital Interests In Connection With Performance of Services

Taxation of Receipts of Profits and Capital Interests In Connection With Performance of Services Taxation of Receipts of Profits and Capital Interests In Connection With Performance of Services Susan K. Richter and Charles R. Beaudrot, Jr. Morris Manning Martin, LLP Atlanta, Georgia I. Introduction

More information

This revenue procedure specifies the conditions under which the Internal Revenue

This revenue procedure specifies the conditions under which the Internal Revenue Part III Administrative, Procedural, and Miscellaneous 26 CFR 601.201: Rulings and determination letters. (Also Part I, 267, 511, 512, 707, 761, 856, 1031, 1361; 1.761-1, 1.761-2; 301.7701-1, 301.7701-2,

More information

Internal Revenue Service Number: 200405009 Release Date: 01/30/2004 Index Number: 355.04-00

Internal Revenue Service Number: 200405009 Release Date: 01/30/2004 Index Number: 355.04-00 Internal Revenue Service Number: 200405009 Release Date: 01/30/2004 Index Number: 355.04-00 --------------------- -------------------------------- --------------------------------------------------- --------------------------------------

More information

Factoring of Receivables

Factoring of Receivables LMSB-04-0606-004 Internal Revenue Service Factoring of Receivables Audit Technique Guide (ATG) NOTE: This guide is current through the publication date. Since changes may have occurred after the publication

More information

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT Case: 15-60341 Document: 00513365306 Page: 1 Date Filed: 02/02/2016 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT LARRY WILLIAMS; DORA WILLIAMS, Petitioners - Appellants United States Court

More information

The 3.8% Surtax on Investment Income - Individuals

The 3.8% Surtax on Investment Income - Individuals WEALTH STRATEGY REPORT The 3.8% Surtax on Investment Income - Individuals OVERVIEW Beginning in 2013, certain investment income will be subject to an additional 3.8% surtax (the surtax). This surtax is

More information

Guidance under Section 1032 Relating to the Treatment of a Disposition by One Corporation of the Stock of Another Corporation in a Taxable Transaction

Guidance under Section 1032 Relating to the Treatment of a Disposition by One Corporation of the Stock of Another Corporation in a Taxable Transaction [4830-01-U] DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-106221-98] RIN 1545-AW53 Guidance under Section 1032 Relating to the Treatment of a Disposition by One Corporation of

More information

Tax Update. Rod Mauszycki, CliftonLarsonAllen

Tax Update. Rod Mauszycki, CliftonLarsonAllen Tax Update Rod Mauszycki, CliftonLarsonAllen Government s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subside

More information

Valuation of S-Corporations

Valuation of S-Corporations Valuation of S-Corporations Prepared by: Presented by: Hugh H. Woodside, ASA, CFA Empire Valuation Consultants, LLC 777 Canal View Blvd., Suite 200 Rochester, NY 14623 Phone: (585) 475-9260 Fax: (585)

More information

The Act introduces a number of incentives, which address various aspects of the business enterprise.

The Act introduces a number of incentives, which address various aspects of the business enterprise. A DV I S O RY October 2010 Tax Provisions of the Small Business Jobs Act of 2010: Stimulating Investment and Entrepreneurship with US$12 Billion in Tax Incentives Paid for by Corresponding Revenue Raisers

More information

Federal Tax Status of a Series Limited Liability Company

Federal Tax Status of a Series Limited Liability Company Page 1 of 6 Checkpoint Contents Tax News Journal Preview (WG&L) Business Entities (WG&L) Federal Tax Status of a Series Limited Liability Company, Business Entities (WG&L) LLCs Federal Tax Status of a

More information

Briggs & Veselka Co. CPAs and Business Advisors. Small Business Jobs Act September 2010

Briggs & Veselka Co. CPAs and Business Advisors. Small Business Jobs Act September 2010 More Depreciation Deductions (buying fixed assets for your business) Section 179 Expense is raised to $500,000 o Section 179 is the immediate write off of an asset s purchase price in the year the asset

More information

Tax Items For Businesses Ohio Tax Law Changes

Tax Items For Businesses Ohio Tax Law Changes FRUSH & ASSOCIATES, INC. OVERVIEW Recap of 2013 ACA Act NII Surtax Medicare Wage Surtax Tax Items For Businesses Ohio Tax Law Changes Circular 230 Disclosure Pursuant to the rules of professional conduct

More information

2014 PARTNERSHIP RETURN OF INCOME CHECKLIST MINI (FORM 1065)

2014 PARTNERSHIP RETURN OF INCOME CHECKLIST MINI (FORM 1065) Client name and number Prepared by Date Reviewed by Date GENERAL INFORMATION DONE N/A 1) Consider if conflict(s) of interest exist between the entity and its owners. 2) Consider obtaining signed engagement

More information

Getting the Jump on Year-End Tax Planning Ideas for Individuals

Getting the Jump on Year-End Tax Planning Ideas for Individuals Getting the Jump on Year-End Tax Planning Ideas for Individuals Broadcast Date: Sept. 26, 2012 Copyright 2012 All-Star Tax Series, LLC 3.8% Medicare Surtax As applied to individuals, tax is 3.8% of lesser

More information

Use of a Special Purpose LLC or S Corp to Own an Aircraft

Use of a Special Purpose LLC or S Corp to Own an Aircraft Use of a Special Purpose LLC or S Corp to Own an Aircraft Presenter: Keith G. Swirsky, President GKG Law, P.C. 1054 31st St., Suite 200 Washington, D.C. 20007 kswirsky@gkglaw.com www.gkglaw.com Tel: (202)

More information

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns

North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns June 3 2016 North Carolina s Reference to the Internal Revenue Code Updated - Impact on 2015 North Carolina Corporate and Individual income Tax Returns Governor McCrory signed into law Session Law 2016-6

More information

Post Election Focus: Stars, Stripes & Taxes

Post Election Focus: Stars, Stripes & Taxes Post Election Focus: Stars, Stripes & Taxes Presented By: Margo Cook, CPA December 6, 2012 Click HERE to listen to webinar. Post Election Focus: Stars, Stripes & Taxes Presented By: Margo Cook, CPA December

More information

Choice of Entity: Corporation or Limited Liability Company?

Choice of Entity: Corporation or Limited Liability Company? September 2012 Choice of Entity: Corporation or Limited Liability Company? By Gianfranco A. Pietrafesa* Attorney at Law There are many different types of business entities, including corporations, general

More information

TAX CONSIDERATIONS OF TRANSFERS TO AND DISTRIBUTIONS FROM THE C OR S CORPORATION

TAX CONSIDERATIONS OF TRANSFERS TO AND DISTRIBUTIONS FROM THE C OR S CORPORATION TAX CONSIDERATIONS OF TRANSFERS TO AND DISTRIBUTIONS FROM THE C OR S CORPORATION C. Wells Hall, III Mayer, Brown, Rowe & Maw LLP Charlotte, North Carolina The College of William & Mary 52 nd Tax Conference

More information

TAX CONSIDERATIONS BUSINESSES. Marty Verdick

TAX CONSIDERATIONS BUSINESSES. Marty Verdick TAX CONSIDERATIONS FOR SMALL BUSINESSES Marty Verdick RSM McGladrey, Inc. Overview of Topics General federal tax issues Federal tax incentives Entity selection tax issues State tax issues Sales & use tax

More information

The goal today is to accomplish three things:

The goal today is to accomplish three things: MARK SHERMAN, CPA The goal today is to accomplish three things: 1. Educate you on The Mortgage Forgiveness Debt Relief Act of 2007. 2. Show you how to save taxes on your real estate business. 3. Help you

More information

What s News in Tax Analysis That Matters from Washington National Tax

What s News in Tax Analysis That Matters from Washington National Tax What s News in Tax Analysis That Matters from Washington National Tax An Income Tax by Any Other Name... Is an Income Tax The Unearned Income Medicare Contribution Tax, imposed by section 1411, is neither

More information

6.10 Remedying S Corporation Election and Shareholder Consent Problems

6.10 Remedying S Corporation Election and Shareholder Consent Problems Checkpoint Contents Federal Library Federal Editorial Materials WG&L Federal Treatises Corporate Taxation Bittker, Streng & Emory: Federal Income Taxation of Corporations & Shareholders: Forms Chapter

More information

Small Business and Work Opportunity Act of 2007 January 12, 2007

Small Business and Work Opportunity Act of 2007 January 12, 2007 Small Business and Work Opportunity Act of 2007 January 12, 2007 Small Business Incentives Section 179 Small Business Expensing. In lieu of depreciation, small business taxpayers may elect to deduct (or

More information

Supplementary Slides AES 2015

Supplementary Slides AES 2015 Supplementary Slides AES 2015 March 15 April 15 June 30 Sept 15 Sept 30 Oct 15 Nov 15 P/S S corp 6 Mos. C Corp 5Mos. Trust 5.5 Mos. Indiv FBAR 6Mos. 5500 23A 3.5 Mos. New Slide S Corp Stock Sale A/B FMV

More information

Instructions for Form 8582 Passive Activity Loss Limitations

Instructions for Form 8582 Passive Activity Loss Limitations 2007 Instructions for Form 8582 Passive Activity Loss Limitations Department of the Treasury Internal Revenue Service Section references are to the Internal rental passive activities. Overall loss is limited,

More information

T H E 3. 8 P E R C E N T T A X O N N E T I N V E S T M E N T I N C O M E

T H E 3. 8 P E R C E N T T A X O N N E T I N V E S T M E N T I N C O M E Insights on... WEALTH PLANNING T H E 3. 8 P E R C E N T T A X O N N E T I N V E S T M E N T I N C O M E Final Regulations and Continuing Developments Suzanne Shier, Wealth Planning Practice Executive and

More information

Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities

Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities State of California Franchise Tax Board 4905BE Booklet Offer In Compromise for Business Entities What you should know before preparing an Offer in Compromise Are you an OIC Candidate? If your business

More information

Another Look at U.S. Federal Income Tax Treatment of Contingent Earnout Payments

Another Look at U.S. Federal Income Tax Treatment of Contingent Earnout Payments Another Look at U.S. Federal Income Tax Treatment of Contingent Earnout Payments idan netser I. Introduction The sale of a company in an M&A transaction often involves consideration to the selling shareholders

More information

2015 S CORPORATION INCOME TAX RETURN CHECKLIST (FORM 1120S) (MINI)

2015 S CORPORATION INCOME TAX RETURN CHECKLIST (FORM 1120S) (MINI) Client name and number Prepared by Date Reviewed by Date GENERAL INFORMATION DONE N/A 1) Identify authorized officer who will sign the return. 2) Consider if any conflict(s) of interest exist(s) between

More information

UNDERSTANDING U.S. TAXATION OF FOREIGN INVESTMENT IN REAL PROPERTY

UNDERSTANDING U.S. TAXATION OF FOREIGN INVESTMENT IN REAL PROPERTY UNDERSTANDING U.S. TAXATION OF FOREIGN INVESTMENT IN REAL PROPERTY Steven Hadjilogiou, Baker & McKenzie LLP, Miami Michael Melrose, Baker & McKenzie LLP, Miami OVERVIEW OF TOPICS Taxation of Income from

More information

Corporate Tax Segment 5A Dividends

Corporate Tax Segment 5A Dividends Corporate Tax Segment 5A Dividends University of Leiden International Tax Center May 2007 Professor William P. Streng University of Houston Law Center 4/30/2007 (c) William P. Streng 1 Nonliquidating Distributions

More information

An Overview of Tax Filing Requirements for Real Estate Broker/Agents

An Overview of Tax Filing Requirements for Real Estate Broker/Agents An Overview of Tax Filing Requirements for Real Estate Broker/Agents A two-partner, 25 person firm with 80 years history servicing clients in the areas of: real estate, auditing, accounting, tax, valuation

More information

Shareholder's Instructions for Schedule K-1 (Form 1120S)

Shareholder's Instructions for Schedule K-1 (Form 1120S) 2000 Department Shareholder's Instructions for Schedule K-1 (Form 1120S) Shareholder's Share of Income, Credits, Deductions, etc. (For Shareholder's Use Only) Section references are to the Internal Revenue

More information

CORPORATION TAX ORGANIZER (FORM 1120, 1120S)

CORPORATION TAX ORGANIZER (FORM 1120, 1120S) This organizer is designed to assist you in gathering the information necessary to prepare the current year s tax returns. Please complete it and provide details and documentation as requested. The Internal

More information

NET INVESTMENT INCOME TAX AND PASS-THROUGH ENTITIES: NEW PROPOSED RULES. By Sam Starr Ryan Prillaman Bloomberg Tax Specialists

NET INVESTMENT INCOME TAX AND PASS-THROUGH ENTITIES: NEW PROPOSED RULES. By Sam Starr Ryan Prillaman Bloomberg Tax Specialists /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Special Report Series on Section 1411

More information

Tax Basics: What Every Bankruptcy Attorney Should Know

Tax Basics: What Every Bankruptcy Attorney Should Know Tax Basics: What Every Bankruptcy Attorney Should Know 1 Areas of Focus 1. Secured tax claims and tax claims entitled to priority 2. Nondischargeable tax claims 3. The short tax year election 4. Cancellation

More information

Number, street, and room or suite no. If a P.O. box, see the instructions. City or town, state or province, country, and ZIP or foreign postal code

Number, street, and room or suite no. If a P.O. box, see the instructions. City or town, state or province, country, and ZIP or foreign postal code Form 1065 Department of the Treasury Internal Revenue Service A Principal business activity U.S. Return of Partnership Income For calendar year 2015, or tax year beginning, 2015, ending, 20. Information

More information

DESCRIPTION OF THE PLAN

DESCRIPTION OF THE PLAN DESCRIPTION OF THE PLAN PURPOSE 1. What is the purpose of the Plan? The purpose of the Plan is to provide eligible record owners of common stock of the Company with a simple and convenient means of investing

More information

Federal Tax Selected Start-Up Issues

Federal Tax Selected Start-Up Issues Federal Tax Selected Start-Up Issues Nicholas (Nick) Connors, IRS, San Jose 1 Topics Federal Entity Selection And: Flow-Through Loss Limitation issues Start-Up and R&D expenses 2 Choice of Entity Five

More information

UNITED STATES FEDERAL INCOME TAXATION

UNITED STATES FEDERAL INCOME TAXATION UNITED STATES FEDERAL INCOME TAXATION United States Internal Revenue Service Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice

More information

Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers

Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers March 6, 2013 Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers By Robert A.N. Cudd and Michelle M. Jewett With the imposition of a new 3.8% net investment income

More information

2010 FOCUS ON BUSINESS

2010 FOCUS ON BUSINESS 2010 FOCUS ON BUSINESS December 1, 2010 FEDERAL TAX UPDATE 2010 SMALL BUSINESS JOBS ACT & MISCELLANEOUS TAX PROVISIONS PRESENTED BY: DAVID P. VENISKEY, CPA TAX PARTNER EFP ROTENBERG, LLP TAX RATES Income

More information

Instructions for Form 8960

Instructions for Form 8960 2014 Instructions for Form 8960 Net Investment Income Tax Individuals, Estates, and Trusts Department of the Treasury Internal Revenue Service Section references are to the Internal Revenue Code unless

More information