A few days ago the Senate failed to pass Senate bill S. 2343, the “Stop the Student Loan Interest Rate Hike Act of 2012 which would have limited the ability of S corporation shareholders to classify payments made to them by their corporations as distributions thereby avoiding self employment tax. Tony Nitti has the story: The bill would have [...]
Tags: Legislative Watch · S Corporations · Tax Policy
Joe Kristan reminds us once again of why you should not use the sole proprietor form of business: A scary headline: “Freelance? An IRS audit may be in your future.” A Tax Court case yesterday shows why a Schedule C on your return might interest the tax man. A New York City taxpayer filed a [...]
Tags: LLC's · S Corporations · Tax Tips
The Treasury Inspector General for Tax Administration says the IRS needs to improve the quality of its audits of small corporations. Listen: TIGTA reviewed whether IRS examiners followed proper procedures and guidelines when auditing the returns of small corporations. The IRS defines small corporations as corporations with assets of less than $10 million. Many corporations in the [...]
Tags: Announcements · IRS Audits · S Corporations
Tony Nitti has published a great piece over at The Tax Adviser which explains the current state of affairs on the issue of compensation of S Corporation shareholders. Here is the Executive Summary, but read the whole thing. S corporation shareholders generally prefer dividend distributions of their S corporations’ profits over compensation payments from the [...]
Tags: S Corporations · Tax Tips
Paul Caron reports that Bradley T. Borden (Brooklyn) has posted a defense of pass-through entities in Three Cheers for Passthrough Taxation, 131 Tax Notes 1353 (June 27, 2011), on SSRN. Here’s the abstract: This report addresses recent suggestions by the Obama administration, lawmakers, and others that some passthrough entities should be taxed as corporations. It argues [...]
Tags: C Corporations · S Corporations · Tax Policy
Martin A. Sullivan (Tax Analysts) has published Why Not Tax Large Pass Throughs as Corporations?, 131 Tax Notes 1015 (June 6, 2011): Most large profitable American businesses must pay the corporate income tax. Others are completely exempt from it. The unfairness of this is so plain even a 5-year-old can understand it. … The essence of [...]
Tags: Corporate Tax · S Corporations
Secretary of the Treasury Tim Geithner recently told the Senate Finance Comittee that removing small business owners’ option to be taxed as a corporation or an individual is an essential part of tax reform: Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses [...]
Tags: S Corporations · Tax Policy · The Economy
