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Business Tax S Corporation Tax Tax

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 […]

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Federal Income Tax S Corporation Tax Tax 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. […]

Categories
Business Tax S Corporation Tax Tax

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 […]

Categories
Business Tax S Corporation Tax

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 […]

Categories
Business Tax S Corporation Tax Tax

The Timing Trap: Failed Installment Sales

What happens if you sell an asset and are to receive payments in the future, but your accountant fails to elect the installment method? Do you have to report the full amount of the gain in the year of sale? What happens if the buyer fails to make the payments in subsequent years? The IRS […]

Categories
Business Tax S Corporation Tax Tax

S Corp Conversions: Watch out for Disappearing AAA

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 […]

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C Coproration Tax S Corporation Tax Tax

The Importance of Accounting for C Corporation Expenses

It is important to keep accurate books and records. Accurate books and records can result in significant tax savings. This is particularly true for entrepreneurs who own more than one business. When one or more of these businesses are taxed as a C corporation, the stakes can be even higher. The Nzedu v. Commissioner, T.C. […]