The tax code provides specific rules for when taxpayers can claim deductions for losses. These are rules enacted by Congress. There are other so-called “judicial doctrines” that allow the courts to override the rules set by Congress. There are several of these that frequently come up in tax disputes, such as the economic substance doctrine……
Tag: Business Tax
Tax Planning With Disproportionate Distributions from S Corporation
There are several rules one has to meet for a legal entity to qualify as an S corporation. One of the rules is the requirement that shareholders of S corporations get identical distributions. Because this is a qualification to be an S corporation, one might think that the consequence of violating this rule is that……
Strategic S Corp Conversion to Avoid Tax Basis Limitation
Time. We can’t stop it, but we can use it. We can use it to take advantage of compounding to grow our savings. We can use it to pay down debt to increase equity. And we can use it for tax planning. Time is one aspect of tax planning. It can help taxpayers avoid just……
Income Shifting to Reduce Tax for Real Estate Sale
Income shifting is a fundamental income tax planning concept. It involves strategically allocating income among related taxpayers to minimize the overall tax liability. This may be intended to use up tax attributes of one taxpayer (such as deductions or tax credits), take advantage of tax deferral options to delay paying taxes, or take advantage of……
What is a Partnership: State Law vs. Federal Tax Law
One of the nuances that come up in tax planning involves the interplay of state law and federal tax law. This brings in all of the nuances and challenges under state law to federal tax law. For example, one common nuance in business transactions arises when the parties to a business arrangement do not document……
Triggering Losses by Selling a Business: NQDC Example
Timing issues are one of the aspects of effective tax planning. There are scores of options for timing and tax deferral and recognition that depend on the taxpayer’s circumstances. For example, for corporate taxpayers, these timing issues may involve timing the receipt of income using the installment rules or the use of losses or foreign……
The Disguised Dividend for Owner-Employees
The corporation can be viewed from a number of different perspectives. One way is to view it as a group of people coming together to perform some business activity, with each having different relationships and risks in the arrangement. The role any one individual plays in the corporation may not be clearly defined. The owner-employee……
Tax Implications of Debt vs. Equity in Related Entities
Investors who engage in successful ventures often also invest in less successful ones. In some cases, one venture ends up funding another. When a taxpayer operates through multiple legal entities, this can lead to numerous complexities. For example, “due to” and “due from” intercompany transactions raise questions, even if they do not involve international transfers.……
Tax on Employer-Provided Lodging
Did you know that as an employee, you may be able to exclude the value of lodging provided by your employer from your income taxes? According to Sec. 119 of the Internal Revenue Code, there are certain conditions that must be met in order for an employee to exclude employer-provided housing costs from their income.……