Double Tax on Inter-Company Transfers

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…

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…

S Corp Election Terminated by Standard LLC Language

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

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 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

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…

S Corp Conversions: Watch out for Disappearing AAA

The Irs Recent Focus On S Corp Owners

Small and medium-sized business can save quite a bit in taxes by using S corporations. But with this tax savings comes complexity. This complexity comes from how S corporations flow through profit and have the profit taxed on the individual owner’s personal tax return. The rules for tracking this are, well, lacking. Accountants are often…

Guaranteeing a Loan for Your S Corporation

Guaranteeing A Loan For Your S Corporation

In Phillips v. Commissioner, No. 17-14439 (11th Cir. 2018), the court concluded that a judgment against the owner of an S corporation for guaranteeing the business debts does not increase the owners tax basis in the S corporation.  This is one area where a little advance planning can go a long way to avoiding a tax…

Court Says Rent Income from S Corp Not Subject to Self-Employment Taxes

Court Says Rent Income From S Corp Not Subject To Self-employment Taxes

In Martin v. Commissioner, 149 T.C. 12 (2017), the court concluded that S corporation shareholders can avoid self-employment taxes by holding their farming operations in their S corporation. While the court case considered farming operations, its holding is not limited to farming operations. The case provides authority shareholders may cite in support of similar but…