S Corporation Officer/Shareholder/Owner Compensation

Reasonable Compensation How the IRS and Tax Court Assess S Corporation Officer/Shareholder/Owner Compensation S corps are pass-through entities, whereby the IRS does not tax income at the corporate level, but allows income to flow through directly to S corp shareholders. The result is that income is only taxed once on shareholders’ personal tax returns, eliminating […]

Overview of Various Types of IRA’s

At one time, there was relatively little confusion about IRAs because there was only one type available. Now, however, IRAs have proliferated—there are o the “traditional” IRA, which may be funded with o deductible o and/or nondeductible contributions, o  Roth IRA, o SEP-IRA, o and SIMPLE IRA. Some of these IRAs have similar features, but […]

S Corps to reduce self-employment income

Using S corporations to reduce self-employment income o Income that you generate conducting your business as a sole proprietorship (or through a wholly-owned limited liability company (LLC)) is subject to both income tax and self-employment tax. The self-employment tax is imposed on 92.35% of self-employment income at a 12.4% rate for social security up to […]

taxes folder

Alternative Minimum Tax

The tax law gives special treatment to certain kinds of income and allows special deductions for certain kinds of expenses. The AMT was designed to increase the tax bill of taxpayers who take undue advantage of these tax benefits to avoid significant tax liability. The basic mechanism by which the AMT accomplishes its objective is […]

Giving Tax Friendly Gifts

As I illustrate below, taxpayers can transfer substantial amounts free of gift taxes to their children or other donees through the proper use of this exclusion. The statutory exclusion amount ($10,000) is adjusted for inflation annually, using 1997 as the base year. The amount of the exclusion for 2017 is $14,000.  The amount of the exclusion […]

The Telecommuting Tax Adventure

So you work at home, and communicate with your employer mainly by telephone, e-mail, fax, electronic data transfer, express mail services, etc., you should know about the strict rules that govern whether you can deduct your home office expenses. You may deduct your home office expenses if your home office is for the convenience of […]

Independent Contractor or Employee

The question of whether a worker is an independent contractor or employee for federal income and employment tax purposes is a complex one. It is intensely factual, and the stakes can be very high. If a worker is an employee, the company must withhold federal income and payroll taxes, pay the employer’s share of FICA […]

Keeping life insurance out of your estate

How to make sure the life insurance benefits your family will receive after your death and avoid the federal estate tax. Under the estate tax rules, insurance on your life will be included in your taxable estate if either:  Your estate is the beneficiary of the insurance proceeds, or  You possessed certain economic ownership rights (“incidents […]

real estate professional

How to qualify as a real estate professional

How to qualify as a real estate professional: 1. First, you must materially participate (see below) in a real estate business. The business of renting and leasing realty is a real estate business. 2. Second, more than 50% of the personal services you perform in all businesses during the year must be performed in real […]

Small employer health insurance credit

The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate-income workers and lower-income workers. For tax-exempt employers, the credit is a refundable tax credit limited to the amount of the payroll taxes (as defined below). During the first phase of the credit, (i.e., tax years beginning in 2010, 2011, 2012, or […]

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David DennisCertified CPA