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. Subchapter…
Category: Business Tax
Business Tax
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Taxes & Limited Liability Companies
A Limited Liability Company (“LLC”) is a popular business entity choice for entrepreneurs and small business owners. It offers the flexibility of a partnership or sole proprietorship, while also providing limited liability protection for its owners. Once formed, LLC owners have the ability to determine how the entity is taxed for Federal income tax purposes,…
Valuation Challenges and Pitfalls in Tax Cases
Valuing property for tax purposes is complex and can be a critical issue as it can result in significantly higher or lower taxes. The Garwood v. Commissioner, T.C. Memo. 2004-195, case offers a fascinating example of the challenges and pitfalls involved in valuation, particularly in the context of tax court cases. This case involved the…