Category: Taxation-Corporate

Many people invest in marketable securities, including stocks, bonds, money market funds and real estate investment trusts (REITs). But a less conventional investment option that’s historically paid off for many investors is purchasing a home or condo to rent out to third parties. This alternative may help diversify your existing portfolio and hedge against public market trends. With any investment, there are no guarantees of success, especially if you have a short time horizon. But rental properties may be a… Read more ›

The April tax filing deadline has passed, but that doesn’t mean you should push your taxes out of your mind until next year. Here are three tax-related actions that you should consider taking in the near term (if you filed on time and didn’t file for an extension). Retain the requisite records (2022 taxes) Depending on the specific issue, the IRS has years to audit your tax return so it’s critical to maintain the records you may need to defend… Read more ›

  Let’s say you have an unincorporated sideline activity that you think of as a business, including an activity involving horses. If you have a net loss (deductible expenses exceed revenue) on that activity and you think you can deduct that loss on your personal federal income tax return, think again! In IRS audits and in court cases involving money-losing sidelines, the tax agency frequently argues the activities are hobbies, rather than businesses. Be aware that the federal income tax… Read more ›

Court Determines that an Activity Was Engaged in for Profit Taxpayers who are in business to make a profit can generally deduct related expenses on their tax returns. If the IRS doubts a profit motive exists, it may deem an activity to be a hobby with a limited ability to deduct costs. The burden to prove there’s a profit motive is on the taxpayer. In one recent case, the IRS found a “green” home construction partnership was engaged in for… Read more ›

Q. If you itemize deductions on your tax return, which one of the following can you claim a charitable deduction for? a. The value of blood donated to a blood bank b. Money given to the Boy Scouts or Girl Scouts c. The value of your time or services volunteering at a charity d. Money you must pay to a homeowners’ association The answer is b Generally, you can only deduct contributions of money or property you make to a… Read more ›

When was the last time you reviewed the insurance coverage on your business property? If you have an insurance agent who works closely with your company, you may be accustomed to periodic reviews to keep your insurance up to date. However, if you bought insurance based primarily on price, these reviews might be left up to you. Some business owners learn the hard way that they didn’t buy enough coverage after suffering losses from floods, fires, thefts, vandalism, lightning, hurricanes,… Read more ›

  The IRS continues to zero in on what it calls the “tax gap” — the amount between the taxes that are voluntarily paid and the amount the tax agency believes is actually due. To this end, the IRS has issued a series of documents to provide better understanding of the tax code. One example is specifically directed at the construction industry. The tax agency emphasizes instances where taxpayers failed to report, or under-reported, income from construction activities. This applies… Read more ›

Let’s say a partner in your law firm exits partway through the firm’s tax year. How are partnership tax items for that year allocated between the departing partner and the remaining partners? There is more than one way to handle this situation. In general, three methods are allowed for making such allocations. Here is a quick summary of how the three methods can work. 1. Proration Method This option is very simple, but it may not accurately reflect economic reality…. Read more ›

  If your not-for-profit organization operates on a calendar-year tax basis, the deadline for filing your 2021 Form 990 (Form 990 EZ for certain small organizations) is right around the corner — May 15, 2022. Besides filing on time, you must ensure the information provided on your form is accurate. Pay particular attention to the following eight issues that commonly trip up nonprofits: 1. Unrelated business income tax (UBIT). If your not-for-profit regularly engages in activities that generate profits, for… Read more ›

The IRS has announced additional relief for pass-through entities required to file two new tax forms — Schedules K-2 and K-3 — for the 2021 tax year. Certain domestic partnerships and S corporations won’t be required to file the schedules, which are intended to make it easier for partners and shareholders to find information related to “items of international tax relevance” that they need to file their own returns. In 2021, the IRS released guidance providing penalty relief for filers… Read more ›