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Federal Income Tax

Planning for Start-Up Businesses, Yacht Rental Example

New businesses may not be immediately profitable.  To help mitigate the financial risk, many businesses are started by workers who have a day job.  If the business is not immediately profitable it can help the owner finance the business if the owner is able to use the tax losses from the business to offset the […]

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Federal Income Tax Real Estate Tax

The Trade or Business Requirement for the Sec. 199A Deduction

The new Sec. 199A deduction that provides a 20 percent benefit for flow through entities has been in the news as of late.  The Yaryan v. Commissioner, T.C. Memo. 2018-129, case provides an opportunity to consider one aspect of this new Sec. 199A deduction.  Specifically, the Treasury released regulations that adopt a “trade or business” standard […]

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Federal Income Tax Tax Tax Deductions

Family Cattle Operation Denied Tax Deductions

In Barnhart Ranch Co. v. Commissioner, No. 16-60834 (5th Cir. 2017), the court considered who was entitled to deduct expenses for cattle that were descended from cattle the taxpayers inherited and other cattle that were subsequently purchased. The case shows how important it is to implement an accounting system to capture income and expenses in […]

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Federal Income Tax

Start-Up Expense Limitation

The Start-Up Expense Limitation: Starting a Business in Retirement There are several occupations where highly skilled individuals are forced to retire due to mandatory retirement provisions. These individuals often use their skills to start new businesses during retirement. The court addressed this situation in Tizard v. Commissioner, T.C. Summary 2016-42. The case provides an example […]

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IRS Audits Tax Procedure

Who Can Sign a Form 2848 Power of Attorney for a LLC

We are often asked who can sign a POA or Form 2848, Power of Attorney and Declaration of Representative, for a limited liability company or LLC. The IRS addressed this in AM 2015-004. About Form 2848 – Power Of Attorney The Form 2848 allows the IRS to disclose taxpayer information to persons who represent the […]

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Business Tax S Corporation Tax Tax

Using a Subchapter S Corporation to Reduce Payroll Taxes for a Sole Proprietorship or Partnership?

Sole proprietors and partners who provide services to their partnership business have to pay self-employment taxes on the income they earn from the business. Self-employment taxes include Social Security and Medicare taxes. The owner of the sole proprietorship is then able to deduct one half of this amount in determining his federal income tax liability. […]

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IRS Debts Tax Procedure

Payroll Taxes: The Single Member LLC Owner (Again)

Many taxpayers do not understand the implications of operating a business as a LLC when it comes to payroll tax liabilities. Apparently even some accounting firms do not fully understand this concept. The recent McNamee v. Dept. of Treasury case involves a six-person accounting firm that was operated as a single member LLC. The accounting […]