Recent Articles

Income Taxes

Tax assessed by the Internal Revenue Service and the State Government on the adjusted income earned by the individual. For the IRS, Form 1040 is filed to report and calculate the associated income tax.

Bookkeeping – Tracking Income Taxes (Lesson 58)

06/17/2017

It is important for the bookkeeper to track income taxes for the business and the owners.  Tracking includes apprising management of current status and pending obligations.  In addition, the bookkeeper must make sure the payments are made to the [...]

Economic Substance Principle

12/26/2016

The Internal Revenue Service uses an economic substance test to identify sham transactions that exist solely to reduce or eliminate taxes.    In addition,  the courts use this same doctrine to rule on the legitimacy of activity between two or [...]

Using Cash in Construction

11/19/2015

There is a notion in business that using cash to pay for materials or service is illegal.  IT IS NOT ILLEGAL TO PAY FOR MATERIALS OR SERVICE WITH CASH.  It is illegal to do this if you do not properly document the transaction.  This is especially [...]

Capital Gains – Introduction to Fundamentals

04/03/2015

When an individual or business sells an asset, the gain or loss is classified into one of two distinct tax groups – ordinary or capital.  The tax classification is strictly tied to the nature of the asset sold.  For most businesses, the assets [...]

Mileage Deduction – Rate for 2015

01/01/2015

On December 10, 2014, the Internal Revenue Service announced the mileage rate deduction for 2015.  They increased the amount allowed 1.5 cents to 57.5 cents per mile.  So how do you calculate and use the mileage rate formula for tax purposes?  If [...]

Mailbox Rule in Business

12/03/2014

There is one tax rule that confuses business owners and it relates to the year-end practice of paying bills and receiving compensation for receivables.  This is referred to as the ‘Mailbox Rule’.  This is strictly a tax issue for cash basis [...]

Form 1099-C: Cancellation of Debt

06/16/2014

If you received a 1099-C, the first question you ask is: ‘Do I have to include this in my taxable income?’  Well, the answer is ‘it depends’.  Not what you want to hear but there is a lot of variables involved in answering this question.  [...]

Current Liabilities Section of the Balance Sheet

12/10/2013

The current liabilities section of the balance sheet identifies those amounts due to third parties within the current year.  These include accounts payable, credit card accounts, accrued payroll, taxes, unearned revenue, deposits and those amounts [...]

Internal Revenue Service – Definition of Revenue

08/22/2013

The Sixteenth Amendment to the Constitution of the United States gives authority to Congress to tax income.  The Internal Revenue Service defines revenue via a term ‘Gross Income’.  In Chapter 26 of the Federal Code (Chapter 26 is the Internal [...]
1 2