When we think of taxes, we often think of income taxes. But for business owners, they also have to contend with payroll and/or self-employment taxes. These other taxes can be substantial for businesses and their owners. This is why Congres and taxpayers have devised several ways to avoid these taxes. The rules are nuanced enough……
Tag: Choice of Entity
Forget the 5-Year Rule – Change Entity Classification Early
Many believe that once you elect an entity’s tax classification, you are locked into that choice for at least 5 years. Conventional wisdom says that the tax status cannot be changed within a 5-year or 60-month period. However, a recent IRS private letter ruling shows this is not necessarily the case. In PLR 202341001, the……
Choice of Entity: Tax Plans for Pharmacies
Our laws have long said that taxpayers are free to structure their legal affairs to minimize their taxes. Congress has even provided very specific provisions to accomplish this. Section 1202 stock is an example. This provision is intended to encourage start-ups to take business risks by rewarding those who are successful by allowing them to……
Qualifying for Section 1244 Stock Losses
The Tax Cuts & Jobs Act of 2017 changed the choice of entity decision quite a bit. It affords corporate taxpayers the benefit of the lower flat 21 percent tax rate. It provides non-corporate businesses a 20% qualified business income deduction. There were other changes too. This is in addition to the existing tax rules……