There are those who make things happen. They are usually the ones doing what it takes even when doing so is difficult, tiring, and draining. They are the ones that often make personal sacrifices and take risks to succeed. They are the ones that had the luck or grit to stick with something to see…
Category: Business Tax
Business Tax
Comprehensive legal representation for businesses of all types and sizes in all aspects of tax law, from formation and structuring to transactional tax planning. Give us a call to see how we can help, (713) 909-4906.
S Corporation Election Not Signed by Community Property Spouse is Valid
There are tax implications for just about everything we do. Even simple business transactions present tax opportunities and pitfalls. While we prefer to focus on tax opportunities, we also spend a lot of time fixing tax problems. We are in Texas, which is a community property state. So one issue we see over and over…
Contribution to Corporation, then Sale of the Corporation
Most income tax planning involves questions about income, deductions or credits, character, or timing, or some combination of these questions. When viewed from these categories, even simple transactions can present tax planning opportunities. The contribution of property to a corporation by its shareholder is an example. A contribution triggers taxable income to the shareholder. Our…
Funding a Business: LLC Capital Contribution vs. Loan
Taxpayers have several choices to make when starting a business. One of these choices is how to fund the business. They can fund the business with capital contributions or debt (or a combination thereof). The IRS and courts will usually follow the method the taxpayer uses. Many taxpayers do not consciously decide this issue. They…
Limited Partner Subject to Self-Employment Tax
When it comes to tax law, there are quite a few known-unknowns. These are tax questions that have been raised tangentially in court cases and rulings, but have not been fully answered. These situations confuse taxpayers. Tax practitioners are often asked to provide answers. The answers from tax practitioners often differ, as practitioners have different…
S Corp Election Terminated by Standard LLC Language
If you make an S corporation election and do not fix the standard language that is typically included in the LLC company agreement, you’ll void the S corporation election. This is an issue that is usually identified by during an audit by the IRS. Many taxpayers overlook this issue until it is too late (it…
Loan to an S Corporation to Allow Tax Loss
Tax basis can limit a shareholder’s loss from an S corporation. If an S corporation has a tax loss but the shareholder doesn’t have sufficient tax basis to take the loss, the shareholder will typically have to loan money to the S corporation. This tax debt basis makes the loss allowable in the current year.…
The IRS Recent Focus on S Corp Owners
The IRS has announced several new compliance campaigns focusing on S corporations. This is needed as the audit rate for S corporation is extremely low. The most recent IRS compliance campaign focuses on shareholder stock basis issues for S corporation owners. Those who have significant S corporation losses or large distributions should take time to…
Using Warrants to Make Future Purchases of S Corporation Stock
Can you make a gift to charity but retain the right to pull back the value of the gift in the future, and still get a charitable deduction for the gift? The court said “no” in In Re Stapley, No. 09-47699 RLE (Bankr. N.D. Cali. 2019). The failed tax shelter included an S corporation whose…
Can the IRS Ignore the Legal Existence of a Corporation?
If a taxpayer forms a legal entity and it is taxed as a C corporation, can the IRS disregard the legal existence of the corporation and assess the corporation’s tax to the owner? The court addresses this in Russell v. Commissioner, T.C. Memo. 2019-146. Facts & Procedural History The taxpayer filed his personal income tax…