Many owners of small corporations wear a lot of hats. They run sales. They buy inventory. They manage the staff and keep the customers happy. Most of them also draw a salary through payroll like everyone else on the team. Then the year winds down. Business was good, and the owners want to take more…
Category: Tax
Tax
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Gas Royalties Cost a Social Club Its Tax-Exempt Status
Plenty of hunting clubs, golf clubs, and lake associations own land that is worth far more than the club ever paid for it. A gas company comes knocking. It offers a signing bonus and royalties, and the board votes yes. The members keep shooting skeet and fishing the creek. Nothing about the club seems to…
When Your Appraiser Pleads the Fifth in Tax Litigation
Big charitable deductions are often built on appraisals. Valuation questions turn into tax questions and, ultimately, tax disputes. When a business or partnership donates land, the tax deduction is only as good as the appraiser’s number. The taxpayer picks the appraiser, pays the appraiser, and attaches the appraisal to the tax return. Years later, the…
Can Sweat Equity Partner Deduct Partnership Losses?
One person has the money. The other has the know-how or desire to work. They go into business together. The money partner puts up all the capital and the other partner does the work. It is one of the most common deals in small business, real estate, and investing. Now add a twist. To keep…
Can Divorce Decree Exempt Ex’s Half House Proceeds from IRS Collections?
A couple owns a house together. They also owe the IRS. The marriage ends, and the divorce decree says the wife gets all of the money when the house sells. The husband agrees to pay the IRS debt and keep her out of it. That seems like a clean split. Then the house sells. The…
Replacement Receipts to Prove a Hurricane Casualty Loss?
For those who have suffered damage in a natural disaster, this type of article has real meaning. The consequences of the event are one thing. The aftermath and clean up another. The incurance fights another. And then in the end, the fight with the IRS. Since we are in Houston, we experienced and saw a…
Does a Promise to Repay Made Later Turn the Money Into a Loan?
Money hits the business bank account. There is no contract, no promissory note, no invoice. Everyone involved knows what the money is for, and everyone assumes the paperwork will get sorted out later. This happens all the time in deal-driven businesses. Two people who have worked together for years agree to fund a purchase. One…
Did the IRS Really Mail That Notice by Certified Mail?
You file a Form 8857 asking the IRS for innocent spouse relief. Then you wait. Months go by. Nothing shows up in your mailbox. So you eventually file a petition with the U.S. Tax Court to get someone to look at your case. Then the IRS tells you that you are too late. It says…
For the COVID Sick Leave Credit, What is a Real Business?
The COVID pandemic impacted just about every business in the U.S. Right or wrong, Congress acted to prevent the financial fallout. This was accomplished in large part by making refundable tax credits available to businesses and business owners. Small business owners spent 2020 and 2021 and the years that follow trying to claim the tax…
The Attorney Took Their Cut. Why Do You Owe Tax on It?
Imagine you sue a company over a mistake on your credit report. You win a settlement. Your lawyer takes their cut off the top, and you walk away with a small check for what feels like a big fight. Then a Form 1099 shows up, and it reports the entire settlement as your income—including the…